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Employer-Paid Disability Premiums

March 23, 2012 By Leave a Comment

If you think that paying for your employee’s disability premiums is always a good thing, think again.  As a non-taxable fringe benefit, payments they receive upon their disability will be, in most cases, FULLY taxable to them!

Payments received due to disability are not taxable if:

  • Your employees paid the premiums on the policy with after-tax funds, OR,
  • You paid the premiums but deducted the amount from their income.

The cost of disability insurance – even over a good amount of time – can be far less than the tax due on the income received under the policy. Like all insurance, it all depends on whether you actually collect under the policy.

Employees vs. Independent Contractors

March 6, 2012 By Leave a Comment

It’s crucial to know whether your workers are employees or independent contractors. Big dollars may be at stake in the form of Federal and provincial assessed penalties resulting from mis-classification. The validity of your company’s pension plan may also be at stake.

A periodic review of the status of your workers to see if they are properly classified is critical, but the process isn’t easy due to the complexity of the issue. The Canada Revenue Agency has published a guide called “Employee or Self-Employed?”, which contains an extensive analysis to determine whether there is an employer – employee relationship or a business relationship. The four factors which are considered are: control of the worker, ownership of the tools, chance of profit/risk of loss and integration. There is no litmus test for exactly how many factors must be satisfied, nor are the factors uniformly applied.

If you’d like to discuss these complex rules with us and see how they apply to your business in order to make sure that none of your workers are misclassified, please call our office to arrange for an appointment.

Claiming Automobile Expenses

March 6, 2012 By Leave a Comment

One of the more common expenses claimed by taxpayers are automobile expenses (applies to any motor vehicle such as van, bus, pickup truck, station wagon, SUV or other truck). Many individuals use their automobile for work or business and incur personal expenses in doing so. It is important to note that only expenses of a business nature are eligible as a deduction against their related income. As such, the Canada Revenue Agency (CRA) has strict requirements in ensuring that only business-related expenses are claimed. As a result, the retention of automobile tax records becomes imperative for every taxpayer that uses an automobile for work or business.

Registered Educational Savings Plan (RESP)

March 6, 2012 By Leave a Comment

A RESP is a savings plan for post-secondary education which allows funds to accumulate on a tax-deferred basis up to certain limits. There is no annual limit for contributions. For each beneficiary the lifetime limit on contributions is $50,000. Although there is no tax deduction, the interest and income earned within the plan is sheltered, which means that the tax is only payable on the funds withdrawn to fund the student’s education. And it is taxed at the student’s low rate.

Annual Tax Expenditures & Evaluations Report

January 20, 2012 By Leave a Comment

This report provides estimates and projections of the revenue impacts of federal tax measures designed to support the economic and social priorities of the Government of Canada.

The publication reflects tax relief measures from the Next Phase of Canada’s Economic Action Plan, the Harper Government’s low-tax plan for jobs and growth.

“In an uncertain global economy, our Government will stay the course with our low-tax plan for jobs and growth—a plan that has worked and served Canadians well,” said the Honourable Jim Flaherty, Minister of Finance.

“Our economic leadership will continue as we stick to our plan to return to fiscal balance in the medium term, implement our deficit reduction action plan to find savings within government spending, and take targeted actions when necessary to support the recovery.”

For more information visit the Department of Finance website.

We’re Moving

January 10, 2012 By Leave a Comment

On February 6th 2012, Padgett Business Services will be moving to our new offices in Kanata South on 160 D Terence Matthews Crescent Suite 2.

“We are really going to enjoy this new location,” said Karen Jerome, CMA, “it will facilitate our continued growth and I think clients and prospective clients will find it more convenient.  We’re all looking forward to the new office; the office is situated close to other businesses, fitness facilities, and restaurants.”

Our new address effective February 6 will be:

160 D Terence Matthews Crescent
Suite 2
Kanata, Ontario
K2M 0B2
 

For more information please contact via  email

Padgett Nominated for Professional Services Business of the Year

January 10, 2012 By Leave a Comment

KANATA, Ontario – Padgett Business Services® was recently nominated for Professional Services Business of the Year through the Kanata Chamber of Commerce.  Padgett is a financial reporting, tax consulting, and payroll business that specializes in servicing independent businesses with less than 20 employees. Karen Jerome opened her office in 2007, which is located in the Beaverbrook Mall in Kanata.

“It is an honour to have been nominated for this award with the Kanata Chamber of Commerce.  Our specialized advice and personalized service will always be the strength behind what we do for small business owners,” said Karen. “These are the tools that have taken our Kanata office to the forefront of our company and Padgett to the forefront of our industry.”

The Kanata Chamber of Commerce will be holding its People’s Choice Awards on February 23rd, 2012 at the Brookstreet Hotel.

For those interested, you can place your votes through the Kanata Chamber of Commerce website at www.kanatachamber.com . Voting will remain open until February 3, 2012.

Since 1966, Padgett has provided financial reporting and tax consulting services to independent business owners throughout North America. Padgett has been ranked as a #1 small business accounting firm by Entrepreneur, Success, and Income Opportunities magazines, as well as being ranked in Accounting Today’s Top 100. The local operation is part of a network of over 400 independently owned and operated Padgett offices throughout North America.

Form T2200 – Declaration of Conditions of Employment

January 9, 2012 By Leave a Comment

Canada Revenue Agency (CRA) expects employers to complete Form T2200 for employees that have reasonable grounds to make expense claims against employment income. If there is some doubt, CRA will provide interpretive assistance.

 

For more information about the T2200 visit the CRA website.

Remitting GST/HST on Taxable Benefits

January 9, 2012 By Leave a Comment

Did you know that GST/HST must be remitted on a taxable benefit unless the benefit is tax exempt or zero-rated, for example the benefit on low-interest loans? An example of a tax benefit that is not exempt includes the automobile standby charge and operating expense benefit. GST/HST must be remitted on shareholder benefits if they fall into Subsection 15(1) and are not tax zero-rated or tax exempt.

Automobile operating expense benefit

If your employee ordinarily worked in, or the location to which he or she ordinarily reported to, is located in a p a r t i c i p a t i n g province (British C o l u m b i a , New Brunswick, Newfoundland and Labrador, Nova Scotia, or Ontario), you are considered to have collected an amount equal to a percentage of the value of the benefit for GST/HST purposes, based on one of the following rates:

  • 5% for British Columbia;
  • 11% for Nova Scotia;
  • 9% for New Brunswick, Newfoundland and Labrador;
  • 9% for Ontario, or 6% if the registrant is a large business for the purpose of the recapture of input tax credits for the provincial part of the HST.

If your employee ordinarily worked in, or he or she ordinarily reported to, a location in a non-participating province or territory (the rest of Canada), you are considered to have collected 3% of the value of the benefit for GST/HST purposes as calculated above.

Other Than Automobile Operating Expense Benefits

If the last establishment where your employee ordinarily worked, or to which he or she ordinarily reported in the year, is located in a participating province (British Columbia, New Brunswick, Newfoundland and Labrador, Nova Scotia, or Ontario), you are considered to have collected the GST/HST as a percentage of the value of the benefit as follows:

  • 11/111 for British Columbia;
  • 14/114 for Nova Scotia;
  • 12/112 for Ontario, or 4/104 for benefits relating to a motor vehicle that is subject to the recapture of the input tax credits for the provincial part of the HST, if the registrant is a large business;
  • 12/112 for all other participating provinces.

If the last establishment where your employee ordinarily worked or to which he or she ordinarily reported in the year is located in a non-participating province or territory (the rest of Canada), you are considered to have collected 4/104 of the value of the benefit for GST/HST purposes as calculated above.

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.

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