Tax & Business News
Trips, tips and traps
July 2016
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Links For July
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Latest info from StatsCan
Pop. estimate
36,155,487
CPI Annual Inflation
1
.5%
Unemployment Rate
7
.1%
GDP Monthly growth
0.8%
Forward this email to a friend!
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New laws expected next year will fulfill another Liberal election promise - to legalize marijuana in Canada. Not soon enough for the NDP. In typical politicaleeze, Mulclair states "There are thousands and thousands of mostly young people who will have criminal records for the rest of their lives because (Prime Minister) Justin Trudeau did not respect his promise to legalize marijuana as soon as he took office,"
Maybe had these mostly young people not broken the law they wouldn't have had criminal records either.
So, is legalizing pot a good idea? The thought of more stoned drivers on the road is not appealing but perhaps the onset of electric self-driving cars will curb the risk as they head to the 7-Eleven for snacks.
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Permanent Links
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PAYROLL
TAXES
CALCULATORS
MISCELLANEOUS
SENIOR'S CORNER
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| Calendar of Important Dates |
 Corporations with an April year end, claiming the small business deduction must pay the balance of tax owing by the end of July.
Corporations with a May year end, not claiming the small business deduction must pay the balance of tax owing by the end of July.
Filing deadline for a July 31, 2016 year end is July 31
, 2016
August 1,2016 - Lord Simcoe Day
Next Issue - August 15, 2016
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COLLECT EI WHILE NOT GETTING PAID?
Not getting paid not the same as not working...
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After leaving a job, an individual may incorporate a business, or invest more time in one that they already operate. The individual may then decide to leave all the money in the corporation, taking no wages. Or, perhaps, the business is unable to pay a salary as it is not making sufficient revenues.
Since the individual does not receive any personal wages, they may be motivated to apply for EI unemployment benefits. It sounds simple right?
Wrong.
In a February 6, 2016 Federal Court Judicial Review, it was noted that whether one is employed or not, is a matter of work performed rather than the wages received. In this case, the individual was working, however, did not receive any personal income. Therefore, the individual was not considered unemployed and was ineligible for EI benefits.
The Court went on to note that the right to receive income from a business is sufficient to establish employment, even if income is not actually received.
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PUBLIC HOLIDAYS
CFIB tries to explain...
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There are
nine Public Holidays in Ontario. A Public Holiday is defined as
days that most employees are entitled to have off work with pay under the Employment Standards Act (ESA)" Most employees doesn't mean all employees and a list of exemptions can be found here.
The nine days are listed here:
- New Year's Day
- Family Day (third Monday in February)
- Good Friday
- Victoria Day (Monday before May 25)
- Canada Day (July 1)
- Labour Day (first Monday in September)
- Thanksgiving Day (second Monday in October)
- Christmas Day (December 25)
- Boxing Day (December 26).
An employee not working on a Public Holiday is entitled to compensation (public holiday pay) and those working on a Public Holiday get public holiday pay plus a premium.
Who Qualifies?
Entitlement to public holidays begins as soon as an employee starts working.
However, employees who fail, without reasonable cause, to work all their last regularly scheduled day of work before the public holiday or all their first scheduled day of work after the public holiday are not entitled to public holiday pay. (Note: This does not mean simply the last calendar day before the public holiday and the first calendar day after the public holiday - it means the last scheduled day of work before the public holiday and the first scheduled day of work after the public holiday.)
How to Calculate Public Holiday Pay
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TAX INSTALMENTS
Who pays, when and why...
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Generally speaking, any company or individual who has tax owing in excess of withheld amounts is required to pay instalments. Instalments provide indemnity from non-deductible interest charges.
Corporations and individuals do not have to pay instalments on taxes payable of $3,000 or less.
Not paying the appropriate instalments in a timely fashion results in Instalment Interest and Instalment Penalty.
Instalment interest
You will be charged interest if all of the following conditions apply:
- CRA sends you an instalment reminder in 2016 that shows an amount to pay
- you must pay by instalment in 2016
- you did not make instalment payments, or you made payments that were late or you paid less than what you had to pay
We charge instalment interest on all late or insufficient instalment payments. Instalment interest is compounded daily at the prescribed interest rate, which can change every three months. To get the current interest rate, see
Prescribed interest rates.
Instalment penalty
You may have to pay a penalty if your instalment payments are late or less than the required amount. CRA will apply this penalty only if your instalment interest charges
for 2016 are more than
$1,000.
To calculate the penalty, we determine which of the following amounts is higher:
- $1,000
or
- 25% of the instalment interest that you would have had to pay if you had not made instalment payments for 2016
Then, CRA subtracts the higher amount from your actual instalment interest charges
for 2016. Finally, we divide the difference by two and the result is your penalty.
Confused?
Current tax software is accurate in computing the tax instalments required for the coming tax year. Seek advice from your professional if in doubt.
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BILINGUAL?
Not in Québec...
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Visitors to Revenu Québec hoping for clarity, find this:
Visitors to the equivalent Ontario website, have options:
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Recent CRA Decisions
There is no escape from tax...
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CORPORATE PRESIDENT COLLECTS EI!
Employment insurance - Whether employee was engaged in insurable employment - Employee was president of company - Whether arm's length parties would have some conditions
- The taxpayer was appealing the Minister's decision that she was not engaged in insurable employment. The taxpayer was the
president of the company she worked for which was a
family-owned and run business owned by the taxpayer, her spouse and daughter.
The company ran a landscaping business which operated from April to October or December each year. The taxpayer was employed from April 28, 2014 through October 17, 2014. There were five or six arm's length employees who worked for the company as well.
Insurable employment does not include employment if the employer and employee are not dealing at arm's length unless the Minister is satisfied that arm's length parties would enter into the same arrangements.
The taxpayer spent two thirds of her time doing promotional work for the company and the rest of the time on site, being responsible for finishing up jobs and doing the clean-up after jobs were finished. The work on-site that she did was previously done by arm's length employees. Her first month of work she worked mostly afternoons and evenings as she was winding down a tanning salon that she had owned.
The Minister assumed this accommodation was made as she was a non-arm's length employee but an arm's length employee could also be granted such flexibility. She was paid at the same rate as the other employees and took one week unpaid vacation which is reasonable in seasonable employment. She deferred her vacation pay in 2014 which is not generally done in arm's length dealings but that by itself is not enough to conclude that such arrangements could not be done in arm's length situations. In light of the evidence before the Minister and supplemented at court,
it was not reasonable for the Minister to conclude that arm's length parties would not have entered into a substantially similar contract of employment. The Minister was ordered to vary his decision to reflect that the taxpayer was engaged in insurable employment. The appeal was allowed.
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| Disclaimer |
 The preceding information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions in a commentary such as this, a further review should be done. Every effort has been made to ensure the accuracy of the information contained in this commentary. However, because of the nature of the subject, no person or firm involved in the distribution or preparation of this commentary accepts any liability for its contents or use.
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NEW NEWS
All you need to know...
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Watch this 10-minute rapid-fire discussion of select recent developments in the wonderful world of Canadian tax by the
Video Tax News Team.
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| Life in the Tax Lane - July 2016 |
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Sincerely,
Howard Render, CPA*CA
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