You are here: Home / Archives for Tax Alerts

CRA announces maximum pensionable earnings for 2012

January 24, 2012 By Leave a Comment

The maximum pensionable earnings under the Canada Pension Plan (CPP) for 2012 will be $50,100—up from $48,300 in 2011. The new ceiling was calculated according to a CPP legislated formula that takes into account the growth in average weekly wages and salaries in Canada.

Contributors who earn more than $50,100 in 2012 are not required or permitted to make additional contributions to the CPP.

The basic exemption amount for 2012 remains $3,500. Individuals who earn less than that amount do not need to contribute to the CPP.

The employee and employer contribution rates for 2012 will remain unchanged at 4.95%, and the self-employed contribution rate will remain unchanged at 9.9%.

The maximum employer and employee contribution to the plan for 2012 will be $2,306.70, and the maximum self-employed contribution will be $4,613.40. The maximums in 2011 were $2,217.60 and $4,435.20.

Guaranteed Income Supplement for Seniors

January 24, 2012 By Leave a Comment

The Federal Guaranteed Income Supplement (GIS) is available to low-income seniors living in Canada, who are receiving (or are eligible to receive) the Old Age Security Pension (OAS).  An application must be filed to receive this supplement – it is not done automatically when you file a tax return.  Once a person is receiving the GIS, it will be automatically adjusted each year after the income tax return is filed.  However, if there is a reduction in your pension or employment income, Service Canada may calculate your GIS benefit by estimating your pension and employment income for the current year, instead of using last year’s pension and employment income.  If you or your spouse or common-law partner have a lower income this year for either of these reasons, you should contact Service Canada.  Your benefits may increase.

For January to March 2012, the maximum combined payment from OAS plus GIS is $1,272.48 ($540.12 OAS + $732.36 GIS) per month, for a single person.  This maximum is reached if there is no income other than OAS and GIS.


For more information visit the Tax Tips website

Harper Government Highlights Tax Relief for 2012

January 20, 2012 By Leave a Comment

The Harper Government today highlighted the following important tax changes taking effect in 2012:

  • The final stage of the tax reduction plan introduced by the Harper Government in 2007 comes into force on January 1, 2012, when the federal general corporate income tax rate is reduced to 15 per cent. This type of broad-based tax reduction plays a well-recognized role in improving productivity and economic growth rates, thereby creating more and better-paying jobs for Canadians and raising their standard of living. As other nations face the prospect of tax increases due to unsustainable budget deficits and spending commitments, Canadians are benefiting from permanent tax relief that is broad-based and structurally sound.
  • Effective January 1, 2012, the Family Caregiver Tax Credit will provide new tax support for caregivers of infirm dependent family members. Announced in Budget 2011, this new 15-per-cent non-refundable tax credit on an amount of $2,000 will provide tax relief for caregivers of all types of infirm dependent relatives, including, for the first time, spouses, common-law partners and minor children.
  • The temporary 50-per-cent straight-line accelerated capital cost allowance rate for investments in manufacturing or processing machinery and equipment was extended to include investments undertaken in 2012 and 2013. This extension was announced in Budget 2011 to help businesses in manufacturing and processing industries restructure and retool to position themselves for long-term success.

Save More in 2012 With the Tax-Free Savings Account

January 20, 2012 By Leave a Comment

Canadians will have a new $5,000 of room to invest in their Tax-Free Savings Account (TFSA).

“TFSAs will continue to enable Canadians to more easily meet their savings goals by allowing them to earn investment income absolutely tax-free,” said Minister Flaherty. “Savings contribute to economic growth by increasing the funds available for economic investment, which leads to a higher capacity to produce goods and services and improves the standard of living of Canadians.”

Each year, an individual’s annual TFSA contribution room is made up of three components:

  • the annual TFSA dollar limit of $5,000;
  • any unused contribution room from the previous year; and
  • the total amount of withdrawals from the individual’s TFSA made in the previous year.

For more information visit the Department of Finance website.

Estate Planning

January 9, 2012 By Leave a Comment

There are several areas that are included in estate planning. Here is a brief list of some of them:

  • You should have a will that includes your desires and tax considerations.
  • You should consider steps to minimize probate fees (or Estate Administration Tax) on your death, if applicable.
  • You should have enough insurance to meet the needs of your family on your death.
  • If you have any assets in other countries or you are a U.S. citizen, you must consider the effects of foreign estate taxes.
  • If you plan to leave assets to your children who may be or are married, you can plan around the provincial family laws that apply on marriage breakdown.

To discuss any of these tax aspects of estate planning, talk to your Padgett Business Services representative.

Letter Campaign Initiative

December 22, 2011 By Leave a Comment

The Canada Revenue Agency will be conducting its letter campaign for the third year in a row to give Canadians the information they need to understand their tax obligations. The Audit Division in each tax services office will begin the campaign in early 2012.

Two types of letters will be sent to Canadians across the country. Some taxpayers will receive a letter explaining the eligibility criteria for certain deductions they have claimed on their recent income tax returns. Others will receive a letter with the same information, but it will also inform them that their income tax returns may be selected for audit.

The goal of the campaign is to educate taxpayers about certain claims they have made in the past and to promote compliance with the Income Tax Act. The CRA is  asking individuals to review their income and expense claims related to rental and/or business activities and employment expenses, and to review the calculation of capital gains or losses arising from dispositions of publicly-traded shares or mutual fund units.

They also want to allow taxpayers to amend their income tax returns by completing an adjustment request in cases where they may have claimed deductions in error or provided inaccurate information.

Canada Revenue Agency will be conducting its letter campaign for the third year in a row to give Canadians the information they need to understand their tax obligations. The Audit Division in each tax services office will begin the campaign in early 2012.

Two types of letters will be sent to Canadians across the country. Some taxpayers will receive a letter explaining the eligibility criteria for certain deductions they have claimed on their recent income tax returns. Others will receive a letter with the same information, but it will also inform them that their income tax returns may be selected for audit.

The goal of the campaign is to educate taxpayers about certain claims they have made in the past and to promote compliance with the Income Tax Act. We are asking individuals to review their income and expense claims related to rental and/or business activities and employment expenses, and to review the calculation of capital gains or losses arising from dispositions of publicly-traded shares or mutual fund units.

We also want to allow taxpayers to amend their income tax returns by completing an adjustment request in cases where they may have claimed deductions in error or provided inaccurate information.

Employers: Expect Canada Pension Plan changes in January 2012

December 22, 2011 By Leave a Comment

Important facts for employers

Starting January 1, 2012, you must deduct CPP contributions for all employees aged 60 to 65-even if the employee is receiving a CPP or Quebec Pension Plan (QPP) retirement pension and did not contribute previously.

You must also deduct CPP contributions for all employees who are 65 to 70 years of age unless they elect not to contribute to the CPP by giving you a signed and completed copy of Form CPT30, Election to Stop Contributing to the Canada Pension Plan, or Revocation of a Prior Election. They must also send the original to the Canada Revenue Agency (CRA).

Your employees cannot contribute to the CPP after the month in which they turn 70 years of age.

Management of Canada’s Official International Reserves

December 12, 2011 By Leave a Comment

This annual report provides details on official international reserves operations, primarily related to the Exchange Fund Account (EFA), which is a portfolio of assets held under the Currency Act to provide foreign currency liquidity to the Government and to promote orderly conditions for the Canadian dollar in the foreign exchange markets, if required.

The report notes:

  • The market value of Canada’s official international reserves increased to US$60.6 billion as of March 31, 2011 from $56.7 billion as of March 31, 2010. This increase reflects the launch of the Government’s new liquidity plan, in which liquid foreign exchange reserves will increase by US$10 billion by the end of 2011–12.
  • The EFA continued to earn positive returns for the Government in 2010–11 as the foreign currency assets held in the account earned an average positive spread of 49 basis points over the foreign liabilities used to fund the assets, up from 42 basis points in the previous year.
  • The EFA’s investment exposure was managed prudently within acceptable limits specified in the Statement of Investment Policy.

Some Gifts Come Early! Get your 2011 T4’s prepared for free!

December 5, 2011 By Leave a Comment

When the holiday season is over, it will be back to business as usual. One of your first administrative duties in the New Year might involve preparing the T4’s for your business. New government rules require any business with more than 50 T4’s to file electronically. Submissions via paper, DVD, CD, or diskette are no longer acceptable. Many of our clients decided to make their lives less stressful by outsourcing their payroll preparation to PayTrak Payroll Services. Now there is even more incentive for you to consider using our services too.

For any new client, who engages our service and has a payroll started before December 15th, we are offering to prepare your 2011 T4’s for free!

PayTrak offers a complete payroll service that is easy to use, flexible and gives you the option of paying your employees by cheque or direct deposit. And a Customer Service Representative is assigned to your account so you always deal with the same person.

For more information, contact your Padgett Business Services representative, call us at 1-877-316- 2999 or visit us at www.paytrak.ca

$750,000 CAPITAL GAINS DEDUCTION

December 5, 2011 By Leave a Comment

You can make use of the lifetime $750,000 capital gains deduction if you dispose of shares in a qualified small business corporation, a qualified farm property, or a qualified fishing property. If you have already claimed the $100,000 personal capital gain exemption (ended in 1994) then this reduces the available lifetime capital gains to $650,000. You must also verify whether you have claimed allowable business investment losses (ABIL) in prior years or have cumulative net investment losses (CNIL) as of December 31, 2011, as these items will also affect the amount of exemption that can be claimed.

« Older Posts
Newer Posts »