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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.

RRSP Home Buyer’s Plan

March 20, 2012 By Leave a Comment

The Home Buyer’s Plan (HBP) allows you to borrow funds from your RRSP to buy or build a qualifying home, under the following conditions:

  • you or your spouse or common-law partner have not owned a home which you occupied as your principal residence during the four years preceding the withdrawal for the Home Buyer’s Plan, or
  • you are buying or building a home for a related disabled person.

The maximum amount that can be borrowed was increased to $25,000 by the Federal 2009 Budget, which also announced a new First-Time Home Buyers’ Tax Credit.

Government Provides New Tax Relief to Caregivers

March 20, 2012 By Leave a Comment

The Family Caregiver Tax Credit will provide new tax support for caregivers of infirm dependent family members. This 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. Canadians will be able to claim the credit on their tax returns for 2012 and beyond.

In addition to the Family Caregiver Tax Credit, Budget 2011 also announced the removal of the $10,000 limit on the amount of eligible expenses a taxpayer can claim under the Medical Expense Tax Credit in respect of a financially dependent relative.

These measures complement the significant action taken by the Government since 2006 to support persons with disabilities and their families. These include:

  • Helping parents and others to save to ensure the long-term financial security of a child with a severe disability through the introduction of the Registered Disability Savings Plan (RDSP), and providing up to $90,000 in direct support to each RDSP through grants and bonds.
  • Expanding eligibility for the Disability Tax Credit, enhancing the Child Disability Benefit, and increasing the maximum amount of the Refundable Medical Expense Supplement.
  • Including provisions to recognize the particular challenges of individuals eligible for the Disability Tax Credit in new tax measures, such as the Working Income Tax Benefit, the Children’s Fitness Tax Credit and the Children’s Arts Tax Credit.
  • Supporting accessible housing for individuals eligible for the Disability Tax Credit through a $5,000 increase to the Home Buyers’ Plan limit and the introduction of the First-Time Home Buyers’ Tax Credit, and providing $75 million over two years for the construction of housing units for persons with disabilities.
  • Creating the Enabling Accessibility Fund and providing $90 million over six years to support community-based projects across Canada that contribute to the capital costs of construction and renovations related to physical accessibility for persons with disabilities.

For more information on tax relief available to Canadian families, visit the website of Canada’s Economic Action Plan.

G-20 Finance Ministers Meet in Mexico

March 20, 2012 By Leave a Comment

The Group of Twenty (G-20) colleagues in Mexico City this weekend to take stock of progress being made on their shared commitment to strong, sustainable and balanced global growth. This will be the first meeting of Finance Ministers and Central Bank Governors under Mexico’s chairmanship of the G-20.

“Greater coordination by all G-20 economies continues to be important,” said Minister Flaherty. “G-20 countries must act swiftly on their commitments to address short-term vulnerabilities and strengthen medium-term foundations for growth, as Canada is already doing with our low-tax plan for jobs and growth.”

Canada is on track to meet its G-20 commitments, including its plan to return to fiscal balance while not raising taxes on Canadian families or businesses.

Ministers and Governors will discuss the implementation of the action plan agreed to by G-20 Leaders in Cannes last fall, which features commitments to meet fiscal consolidation targets and to move more rapidly toward market-determined exchange rates. In addition, they will discuss progress on a wide range of financial sector reforms.

The sovereign debt crisis in Europe will also be a key topic, with the G-20 continuing to encourage European policymakers to take the necessary actions to resolve the crisis.

For more information visit the Department of Finance website

Interest rates for the second calendar quarter

March 20, 2012 By Leave a Comment

Ottawa, Ontario, March 14, 2012… The Canada Revenue Agency (CRA) today announced the prescribed annual interest rates that will apply to any amounts owed to the CRA and to any amounts the CRA owes to individuals and corporations. These rates are calculated quarterly in accordance with applicable legislation and will be in effect from April 1, 2012 to June 30, 2012. The rates below remain unchanged.

Income tax

  • The interest rate charged on overdue taxes, Canada Pension Plan contributions, and Employment Insurance premiums will be 5%.
  • The interest rate to be paid on corporate taxpayer overpayments will be 1%.
  • The interest rate to be paid on non-corporate taxpayer overpayments will be 3%.
  • The interest rate used to calculate taxable benefits for employees and shareholders from interest-free and low-interest loans will be 1%.

Other taxes, duties, or charges

The interest rates on overdue and overpaid remittances are as follows:

Tax, duty, or other charges Overdue remittances Overpaid remittancesOverpaid remittances
Tax, duty, or other charges Overdue remittances Overpaid remittancesOverpaid remittances
Corporate taxpayers Non corporate taxpayers
Goods and Services Tax (GST)5% 1%3%
Harmonized Sales Tax (HST)5%1%3%
Air Travellers Security Charge5%1%3%
Excise Tax (non GST/HST)5%1%3%
Excise Duty (except brewer licensees)5%1%3%
Excise Duty (brewer licensees)3%N/AN/A
Softwood Lumber Products Export Charge5%1%3%

RESP Canada Learning Bond

March 7, 2012 By Leave a Comment

The Canada Learning Bond (CLB) is part of the Canadian RESP program. Actually the CLB is a grant. The big difference between this grant and the regular RESP grants is that no contribution is required. Once you qualify, you apply, and you can receive up to $2,000 deposited in your RESP account per child. The family net income must be below $42,707, in 2012 ($41,544 for 2011) An RESP account can be set up at a financial institution. This grant will provide more low income families the opportunity to get their children started in advancing their education. Go to www.canlearn.ca for more details.

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.

CRA revokes the registration as a charity

February 14, 2012 By Leave a Comment

The Canada Revenue Agency (CRA) will revoke the charitable registration of Escarpment Biosphere Foundation Inc., a Toronto area charity. The notice of revocation will be published in the Canada Gazette with an effective date of February 11, 2012.

On January 3, 2012, the CRA issued a notice of intention to revoke the charitable registration of Escarpment Biosphere Foundation Inc., in accordance with subsection 168(1) of the Income Tax Act. The letter stated, in part, that:

Our audit revealed that the Escarpment Biosphere Foundation Inc. (the Organization) received cash and pharmaceuticals with a purported value of over $407 million as a result of its participating in the Canadian Humanitarian Trust tax shelter gifting arrangement (Donation Program). It is our position the Organization failed to verify the value of the properties and to maintain direction and control over the distribution of the properties. Further, we believe the Organization agreed, for a fee of approximately $1 million, to lend legitimacy to the Donation Program by representing that it had received and distributed the properties in its own charitable programs. As such, it is our position the Organization failed to operate exclusively for charitable purposes by acting as a conduit for the Donation Program and redistributing 99% of the cash received to other parties in the Donation Program.

For More Information Visit the CRA Newsroom

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