Padgett Business Services » CRA

We’re Moving

Angela — Tue, 10 Jan 2012 20:54:56 +0000

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

“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 B

Kanata, Ontario

K2M 0B2

For more information please contact via email

Padgett Nominated for Professional Services Business of the Year

Angela — Tue, 10 Jan 2012 15:46:11 +0000

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.

“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 . 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

Angela — Mon, 09 Jan 2012 20:57:33 +0000

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 visit the CRA website to view their T2200 helpful information kit.

Remitting GST/HST on Taxable Benefits

Angela — Mon, 09 Jan 2012 20:53:34 +0000

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

Angela — Mon, 09 Jan 2012 18:47:16 +0000

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.

2012 Sales Tax Rates in Canadian Provinces and Territories

Angela — Thu, 22 Dec 2011 21:20:56 +0000

The following table shows the general rates of provincial sales taxes or HST for most purchases, and provides links to the provincial (or federal) web sites regarding provincial retail sales taxes.

Prov/ Terr	2012 Rate		Provincial Web Sites
Prov/ Terr	GST/HST	PST	Provincial Web Sites
BC	12% HST	n/a⁽³⁾	BC Consumer Taxes PST in BC and BC HST BC Harmonized Sales Tax
AB	5% GST	n/a
SK	5% GST	5%	Saskatchewan Provincial Sales Tax
MB	5% GST	7%	Manitoba Retail Sales Tax
ON	13% HST	n/a⁽⁴⁾	Ontario Retail Sales Tax Ontario HST Ontario What is the HST?
QC	5% GST	9.5%⁽¹⁾	Québec QST and GST – for businesses Québec QST and GST – for individuals
NL	13% HST	n/a
NS	15% HST	n/a
NB	13% HST	n/a
PE	5% GST	10%⁽²⁾	Prince Edward Island Revenue Tax
NT	5% GST	n/a
NU	5% GST	n/a
YT	5% GST	n/a

(1) The sales tax is applied to the total of the selling price plus the GST. The 9.5% QST rate is effective January 1, 2012.
(2) The sales tax in PE is applied to the total of the selling price plus the GST.
(3) BC still has some sales taxes, such as the tax on designated property (vehicles, boats and aircraft). See the link above to BC Consumer Taxes for more information. The HST in BC was overturned by a referendum, so BC will return to a PST plus GST system some time in 2013.
(4) Ontario still has retail sales tax on insurance and on private sales of used motor vehicles. See the link to Ontario Retail Sales Tax for more information.

Businesses which sell taxable goods and/or services in each province are required to register as a vendor to collect the provincial retail sales tax where applicable.

Get Out of Debt Now!

Angela — Thu, 22 Dec 2011 19:54:49 +0000

Most developed countries in the world are increasing their spending and debt. Most governments will not stop their excessive spending until they are forced to do so. This happens because they cannot sell their debt (e.g., Canada Savings Bonds, Government of Canada bonds, provincial government bonds, crown corporation bonds, t-bills) without paying substantially higher interest rates. Once they are required to pay higher interest rates they can no longer afford the interest on the debt. Therefore, they will have to slash spending, raise taxes, or both.

Western Europe, Japan, United States and Canada are in imminent danger of having to pay higher interest rates on their debt. This will start a downward spiral of their economies, which will lead to a recession. Some people think parts of these economies have been in a recession since 2008. A recession is falling Gross Domestic Product (GDP) and higher unemployment. Governments usually try to counteract this by increasing spending and lowering short term interest rates. Unfortunately (or fortunately), the governments will not be able to increase spending because of the debt, and interest rates can’t really go much lower. Canada and the rest of the developed countries are going down the same road as Greece, Ireland, and Portugal. See our article on Debt in Selected Countries.

Recessions are a normal part of the business cycle, but if we go into a recession now because of sovereign debt, it may be long and nasty. You can’t really tell when a recession begins or ends until probably five years after it’s over. We entered a recession in 2008, but at this point we can’t really tell if the recession ended in 2010, or if it is a double-dip recession that we are still in.

What can you do?

The most important thing you can do is reduce your debt, especially debt on which the interest is not tax-deductible. You can also lobby your governments (federal, provincial and local) to eliminate the deficit, reduce debt, and become better managers of your money. You can do this by contacting your Member of Parliament (MP), provincial and local government representatives. For a limited time, you can provide input to the Federal government through the online pre-budget consultations. You could also sign petitions that are on the Canadian Taxpayers Federation website.

Rollover of RRSP, RRIF or RPP to RDSP

Angela — Thu, 22 Dec 2011 19:37:42 +0000

Budget 2010 proposed to allow a tax-deferred rollover of a deceased individual’s RRSP/RRIF or RPP proceeds to the Registered Disability Savings Plan (RDSP) of a financially dependent infirm child or grandchild. This is effective for deaths occurring on or after March 4, 2010. The actual transfer to the RDSP, however, cannot be made until after June 2011. Previously, the proceeds could only be received on a tax-deferred basis by a financially dependent infirm child or grandchild under 18 years of age by a transfer to the RRSP, RRIF or eligible annuity of the child or grandchild.

The Sustaining Canada’s Economic Recovery Act, Bill C-47, was introduced in the House of Commons on September 30, 2010, including the legislation for the rollover to RDSPs, and received Royal Assent (became law) on December 15, 2010.

Who is eligible?

An eligible individual:

is a child or grandchild of a

deceased RRSP or RRIF annuitant, or

deceased RPP member

was financially dependent on the deceased, at the time of the deceased’s death, by reason of infirmity of the dependent.

What proceeds are eligible?

Eligible proceeds means any of

	a refund of premiums from an RRSP
	an eligible amount paid from a RRIF, or
	a lump sump payment (other than from actuarial surplus) from an RPP

that is received by an eligible individual as a result of the death, after March 3, 2010, of a parent or grandparent of the eligible individual.

Specified RDSP payment

A specified RDSP payment:

is an amount paid after June 2011 to an RDSP under which an eligible individual is the beneficiary

must be designated as a specified RDSP payment by the eligible individual

will be included in the income of the recipient on withdrawal from the RDSP

complies with the following RDSP contribution conditions:

contributions may not be made to the RDSP in any year in which the beneficiary is not eligible for the disability amount tax credit, or after the death of the beneficiary

contributions may not be made if the beneficiary is not a resident of Canada

contributions may not be made after the end of the year in which the beneficiary turns 59

contributions must not exceed the lifetime maximum of $200,000

the holder of the plan must provide written consent for the contribution

Transitional eligible proceeds

Where the death of the RRSP or RRIF annuitant or RPP member occurred after 2007 and before 2011, transitional rules apply that recognize that individual estate plans may not have been amended to reflect the new rules.

Transitional eligible proceeds include an amount received as a result of the death after 2007 and before 2011 that is:

	any of a refund of premiums from an RRSP, an eligible amount paid from a RRIF or a lump sum payment (other than an amount of actuarial surplus) from an RPP; or
	any amount that had been rolled-over under s. 60(l) of the Income Tax Act to the taxpayer’s RRSP or RRIF (i.e., the taxpayer claimed a 60(l) deduction for the amount), and which is subsequently withdrawn from the RRSP or RRIF in order to make a “specified RDSP payment”.

These transitional rules apply where the deceased individual may have provided a bequest directly to the eligible individual, to the spouse or common-law partner of the deceased, or to another beneficiary. These rules allow this beneficiary to contribute to the RDSP of an eligible individual. If the bequest had been included in the income of a taxpayer, for instance the recipient or the deceased, then a deduction will be allowed for the contribution of the transitional eligible proceeds to the RDSP. Where the death occurred after 2007 and before 2011, the contribution to the RDSP must be made before 2012.

Letter Campaign Initiative

Angela — Thu, 22 Dec 2011 19:08:58 +0000

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.

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.

Alternative minimum tax on Canadian dividends

Angela — Thu, 22 Dec 2011 18:45:59 +0000

Dividends eligible for the enhanced dividend tax credit

In the following table, the Federal column for eligible dividends shows the amount of actual dividends that can be earned before federal tax or federal AMT kicks in, if there is no income other than the dividends. The provincial columns show the amount of actual dividends that can be earned in each province before any regular provincial income tax (net of any low income tax reduction) is payable. However, if this amount exceeds the amount of dividends in the Federal column, AMT will be payable for all provinces except Québec, which does not base its AMT on the federal AMT. The provincial columns also show the total amount of regular federal income tax, plus federal and provincial AMT payable at the indicated amount of dividends, for 2012 and 2011.

In 2012, because of the higher federal marginal tax rate for eligible dividends than 2011, regular federal taxes start to be payable when actual eligible dividends reach the amount of $47,892. AMT starts when the dividends reach $56,097, and at this point there is $791 of federal tax payable. The federal AMT is applicable for dividends above this amount, until the amount of the dividends reaches $101,970, when the regular federal tax exceeds the minimum amount.

In 2011, federal AMT starts at $50,530 of actual eligible dividends, and is phased out at $212,563, when the regular federal tax exceeds the minimum amount.

Both tables are based on income tax rates as known on December 16, 2011.

2012	Federal	AB	BC(1)	MB	NB	NL	NS	NT	NU	ON(2)	PE	QC(3)	SK	YT
Actual eligible dividends	$47,892	n/a	$111,982	$52,683	144,046	86,285	30,514	224,017	93,990	56,088	44,700	33,901	88,588	n/a
Total fed. taxes + prov. AMT	0		9,604	462	15,789	5,460	0	31,218	6,594	790	0	0	5,801
Provincial AMT as % of Federal AMT (4)		35%	33.7%	50%	57%	51.3%	57.5%	45%	45%	33.67%	57.5%	n/a	50%	44%

2011	Federal	AB	BC(1)	MB	NB	NL	NS	NT	NU	ON(2)	PE	QC(3)	SK	YT
Actual eligible dividends	$50,530	n/a	$120,448	$51,263	137,134	81,917	29,864	213,958	95,416	51,800	43,749	32,313	84,326	n/a
Total fed. taxes + prov. AMT	0		10,766	166	13,203	5,464	0	26,231	7,410	256	0	0	5,824
Provincial AMT as % of Federal AMT (4)		35%	33.7%	50%	57%	51.3%	57.5%	45%	45%	33.67%	57.5%	n/a	50%	44%

(1) BC excludes Medical Services Plan Premiums
(2) ON excludes Ontario Health Premium
(3) QC excludes contribution to the health services fund, health contribution, and prescription drug insurance plan premiums.
(4) The BC, NL and ON AMT rates are calculated as lowest provincial tax rate / lowest federal tax rate.