| Calendar of Important Dates |
Corporations with an October year end, claiming the small business deduction must pay the balance of tax owing by the end of January.
Corporations with a November year end, not claiming the small business deduction must pay the balance of tax owing by the end of January.
Spousal Loan Interest - pay by January 29, 2017
St. Valentine's Day - Tuesday, February 14, 2017
Family Day - Monday, February 20, 2017
Next Issue - February 13, 2017
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ALERT FOR ONTARIO CORPORATIONS!
Onerous record keeping starting in December...
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Effective December 10, 2016, each new Ontario corporation will be required to maintain a record of ownership assets of land in Ontario. The records must comply with the following requirements;
- identify the property
- show the dates of acquisition and disposal
- have supporting deeds/transfers including municipal address
- PIN number
- legal description
- roll number
Existing corporations will have two years to comply with the new rules.
Consult with your real estate advisor to insure how to achieve compliance with the above.
See more information here.
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SCHOOL SUPPLY TAX CREDIT
Teachers take note...
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The
Eligible Educator School Supply Tax Credit, worth 15% on up to $1,000 of eligible supply expenses, has now become law. To mark the occasion, CRA has published a Question and Answer providing commentary on this new refundable tax credit available in 2016 and subsequent years. The credit is also referred to as the Teacher and Early Childhood Educator School Supply Tax Credit.
Who Qualifies?
The new tax credit can only be claimed by an eligible teacher or early childhood educator employed at an elementary or secondary school or a regulated child care facility. The employee must either:
- hold a teacher's certificate that is valid in the province or territory in which they are employed (eligible teacher); or
- hold a certificate or diploma in early childhood education that is recognized in the province or territory in which the individual is employed (eligible early childhood educator).
What Expenditures Qualify?
An eligible supply expense is an amount paid in the year for supplies used or consumed in the school or regulated child care facility in the performance of the taxpayer's employment. Supplies include:
- consumable goods such as construction paper, flashcards, items for science experiments, art supplies, and stationary items; and
- durable goods limited to games, puzzles, books, containers and educational support software. Computers, tablets and rugs (for kids to sit on) are provided as examples of expenses which are not eligible.
The expense must not be reimbursable, nor subject to an allowance or other form of assistance. As well, the credit cannot be claimed for an expense which is deducted by any person for the year. The credit is available for the year in which it was purchased rather than when it was used.
Documentation Requirements
CRA may ask taxpayers to provide certification from their employer attesting to the eligible supplies expense. The certification should be a statement signed by the individual's employer that attests that the supplies were used for the purpose of teaching or facilitating students' learning, directly consumed in an appropriate facility in the performance of the individual's employment duties, and amounts paid were not reimbursable or otherwise deducted in income calculation. Employers providing this certification should not also provide a T2200, Declaration of Conditions of Employment, in relation to those supplies.
Taxpayers should request the certification from their employer in a timely manner and keep it in their files, along with their receipts for the supplies.
Action Item: Eligible Teachers and Educators - Keep receipts from the purchase of eligible supplies in the year.
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FILING T4'S
Proper procedure saves time...
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The deadline for filing T4/T5 forms is the end of February 2017. Proper precautions will avoid costly penalties, interest and wasted time. Foremost among them is to insure that your remittances to Canada Revenue Agency for employee deduction is in agreement with the T4 Summary. Short payments cost penalty and interest, over payments cost time in explaining to CRA.
Now that the final payroll for 2016 has been issued, compute the amount owing to CRA and compare with what has been remitted and
adjust the next payment to compensate for any difference.
Don't forget to include automobile costs paid by your company which could be a taxable benefit.
Next, efile the forms - don't paper file. Efiled forms have the assurance of being on time and mathematically accurate.
Action Item: We can assist you in ensuring accuracy and timely filing!
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HOLIDAY PAY
What to pay...
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It's a four-step process that requires user input for:
- Which Public Holiday is being paid
- Work Weeks preceding the holiday
- Gross wages for the work weeks preceding the holiday
- Vacation pay payable each week
The final step will calculate the total public holiday pay payable.
The calculator adds the total gross regular wages earned and the total vacation pay payable in the four weeks before the work week with the public holiday. It then divides that amount by 20. The result is the public holiday pay payable.
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CLAIMING FOREIGN TAX CREDITS
CRA makes changes...
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DOCUMENTS REQUIRED TO CLAIM A U.S. FOREIGN TAX CREDIT:
Prior to the summer of 2015, CRA often accepted copies of the U.S. tax returns, as support to claim a U.S. Foreign Tax Credit (FTC). The "Federal Account Transcript" was selected as alternative evidence the return provided to CRA was filed and assessed as filed.
Some practitioners report that obtaining "transcripts" from the Federal Government, and State Governments in particular, can be onerous, often requiring a request from the client rather than a representative.
Form T2209
Federal Foreign Tax Credits sets out the documents required to support foreign tax credit claims, including federal, state and municipal tax returns with all associated schedules and forms, a copy of the federal account transcript and an account statement or similar document from state and/or municipal tax authorities.
CRA recently changed its requirements, to accept proof of payments made or refunds received in lieu of a notice of assessment, transcript, statement or other documents from the applicable foreign tax authority (FTA), provided all of the following information is clearly indicated:
- that the payment was made to or received from the FTA;
- the amount of the payment or refund;
- the tax year to which the payment or refund relates; and
- the date of payment of receipt.
Action Item: Request these documents before a CRA pre- or post-assessing review letter is received to expedite the FTC Claim.
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GET ON BOARD WITH FRENCH
Grant for bilingual hires...
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Grant Supports French/English Market Development
The Young Canada Works in Both Official Languages Program
provides a wage subsidy of 50% (plus limited travel and accommodation financial support) towards hiring a university student for a summer work position that requires English and French communication skills.
Possible positions include but are not limited to document translation, offering bilingual support service and undertaking research in both official languages. Positions need to be 30-40 hours a week for six to sixteen weeks (workers with disabilities are eligible for part-time positions).
Eligible employers will be incorporated, in stable financial health, plus use French and English in the workplace. New employees must be full-time students between 16 and 30 years old returning to their studies in September 2017, who are Canadian citizens, permanent residents or have refugee status.
Deadline for applications is February 1, 2017.
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Recent CRA Decisions
There is no escape from tax...
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Employment income - Whether taxpayer engaged in insurable employment - Parties not dealing at arm's length - Whether working conditions would be similar for arm's length parties
The taxpayer was appealing the Minister's decision that she was not engaged in insurable employment. The taxpayer was hired as a
bookkeeper/office administrator for Boyal Drywall Services ("Payer"), a company owned 100% by her brother-in-law.
The intent of the parties was that she was to be an employee. The taxpayer was connected by marriage to the payer and as such they were not dealing at arm's length. Insurable employment does not include non-arm's length employment unless the Minister is satisfied, having regard to all the circumstances,
that parties dealing at arm's length, would have entered into substantially similar arrangements.
The taxpayer was paid $16 an hour and
paid for seventy hours a month, regardless of the hours she worked. The taxpayer testified she worked between two and three hours a day. She worked from home, mainly in the evenings. Although she was hired as a bookkeeper/office administrator,
she did not maintain the Payer's books.
Her duties consisted of checking emails and keeping track of the employee's hours. Her brother in law would inform her of the hours, she would record them and then verbally inform him of the hours on a bi-weekly or monthly basis.
At the same time she was performing services for the Payer, she was employed elsewhere, working six hours a day. Most of her pay from the Payer was given to her sister, to repay a loan.
It is hard to believe that parties dealing at arm's length would have entered into similar arrangements. The Minister acted reasonably in determining that the taxpayer was not engaged in insurable employment. The appeal was dismissed.
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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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| Life in the Tax Lane - January 2017 (Episode 20) |
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