Canadian Bookkeeping Resource

Latest CRA News
Small Business Information

Use this search feature to quickly find the information you're looking for.

Custom Search

The Department of Finance, along with the B.C. government, released "the proposed transitional rules [that] specify how and when the BC component of the HST would cease to apply to transactions that straddle that date".

April 1, 2013 is the "that date" ... the date B.C. returns back to the old archaic system of double taxation and tax cascading. Is it a coincidence it is the same day as April Fool's Day?

Here is the link to the transitional rules announced so far:

Transitional Rules Relating to the Elimination of the HST in British Columbia.

BC Government's announcement can be found here:

Transition Measures Support New-home Buyers, Builders.

KPMG's NewsFlash is also excellent:

B.C. Announces HST-PST Transitional Measures.

For background information, click here.

The Finance Minister released the automobile deduction limits and taxable benefit rates for 2012. I have updated my tables accordingly.

See company vehicle rates.

For the third year in a row, CRA will be sending out informational letters to help taxpayers understand their obligations. this campaign will begin in early 2012.

CRA says there are types of letters that will be going out. "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."

CRA wants "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".

CRA has updated their website. 2012 TD1 forms are now available at http://www.cra-arc.gc.ca/formspubs/frms/td1-eng.html .

The latest TD1 form should be used by bookkeepers for all new employees or revisions to existing employees. It is also a good idea to update the TD1 each January for existing employees.

CRA website (www.cra-arc.gc.ca/payroll) will have the newest online version of the 2012 Payroll Deductions Online Calculator available on Decemer 15, 2011. The rates are effective January 1, 2012 and will now be laid out in a pay period format.

The manual payroll deduction tables (T4032) and the supplementary tables (T4008), effective January 1, 2012 will also be available for downloading in pdf format on December 15, 2011.

CRA was going to discontinue the paper version of the Payroll Deductions Tables in 2012. However, you can still obtain a paper copy by calling 1-800-959-2221 at the end of December. Call this number if you would prefer a CD version as well. Downloading a pdf copy of the tables to your computer makes for easy use and access.

The 2012 CPP and EI rates were released earlier in November. I've listed the information on "The Rates" pages.

I know this is not CRA news but while we are on the topic of 2012 payroll tax tables ... QuickBooks® payroll tax tables for 2012 are normally released about mid December as well.

CRA has released the 2012 indexation adjustment for personal income tax and benefit amounts in a fact sheet. The chart reflects an indexation increase of 2.8% for 2012 and compares the indexed amounts to the 2011 tax year.

CRA is hosting a free webinar on the changes to the rules for deducting CPP (Canada Pension Plan) contributions effective January 2012.

When: December 7, 2011

Where to Register: www.cra-arc.gc.ca> Information About> Events and Seminars >Free Webinar> Canada Pension Plan changes: January 2012

What You'll Learn: How the changes affect 60 to 70 years olds that are working AND receiving a CPP retirement pension affect you as an employer or an employee ... and how to stop and start paying CPP contributions.

You can find the CPP rule changes at http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/clcltng/cpp-rpc/cppchng-eng.html?=eml20111129 .

The Final T4127-JAN payroll deduction formulas was released December 19, 2011.

T4127-JAN Draft payroll deduction formulas for computer programs effective January 1, 2012 have been released by CRA. The payroll tables have not been released yet. The publication includes 2012 federal tax rates, income thresholds, and personal amounts in addition to 2012 EI and CPP amounts.

T4127-JUL Payroll Deductions Formulas for Computer Programs - 94th Edition effective July 1, 2011 is also available on the CRA website.

On November 7, 2011, the Finance Minister announced 2012 EI premiums will only rise by 5 cents to 1.83% due to the global economic slowdown. They had been expected to rise by 10 cents as announced on September 30, 2010.

An 16 week extension to the Work-Sharing Program was also announced.

2012 EI maximum insurable earnings have NOT been released yet ... but I am expecting they will be released by the third week in November as they were last year.

2012 CPP Rates were released on November 1.

BACKGROUND

In 2009, EI premiums were frozen as part of Canada's Economic Action Plan. The plan called for the premiums for 2011 and beyond to be set on a break-even basis.

The Finance Minister announced on September 30, 2010 that it still supported the principle that the EI system should break even over time ... but at a slower rate. This means there will need to be modest increases over a number of years to repay the deficit built up in 2009 and 2010.

To continue to support the current economic recovery, 2011 EI premiums only rose by 5 cents (.05%) instead of 15 cents (.15%) ... to 1.78% from the current 1.73%.

Subsequent years were expected to increase by 10 cents (.10%) per year.

For more information, go to Department of Finance>Publications and reports> Backgrounder on EI Rate Increase Limit and Department of Finance>News> Harper Government Takes Action to Support Jobs and Growth.

On October 7, CRA updated publication RC4120 - Employer's Guide - Filing the T4 Slip and Summary. Under the what's new section you'll find information about:

• CCP reform for working beneficiaries come into effect on January 1, 2012.
• Pensionable earnings in box 26 must now be completed on all T4 slips.
• EI insurable earnings in box 24 must now be completed on all T4 slips.
• Report exempt payments to volunteer firefighters using code 87 in the "Other Information" of the T4 slip.
• You can begin to electronically file original and amended information returns usiing Web Forms.

Yesterday, CRA announced all the new tax slips that can be electronically filed using CRA's Web Forms starting in January 2012. Each submission can include up to 50 slips.

They are T3, T4, T4A, T4A-NR, T4E, T4RIF, T4RSP, T5, T5007, T5008, T5018, and NR4.

CRA points out the benefits of filing electronically using Web Forms in their new release dated October 21. 2011. They are:

1. file original, additional, amended, and cancelled slips directly from the CRA Web site;2. create an electronic information return;3. validate data in real time, with prompts to correct errors before filing your slips;4. calculate the totals for the summary;5. print slips for recipients; and6. securely submit encrypted returns over the Internet.

Back in June, I briefly mentioned the hiring credit for small business.

CRA has an information page on the subject. It can be found at About CRA> Federal Government Budgets> 2011.

Basically, "the HCSB is a one-time credit of up to $1,000 based on the increase in an employer's employment insurance (EI) premiums paid for 2011 over those paid for 2010."

You qualify if your 2010 EI premiums were $10,000 or less and you experienced an increase in premiums in 2011.

August 1, 2009 (Updated July 23, 2011)

Update July 23, 2011 - The Tax Guy wrote a blog on March 30, 2011 ... sorry I'm a bit behind on my reading ... about Selling on eBay Can Be Taxing.

He discusses what personal use property is and why eBay Power Sellers and Frequent Sellers are condisered a business.

You can find his entire blog at blog.resources.ca> archive> By month> March 2011.

Original Posting August 1, 2009

CRA sent a reminder out on July 30, 2009 that Canadian electronic income is treated the same way as traditional commerce income. Both are taxable.

You still have time to amend 2008 personal tax returns, if this income was omitted. If a CRA audit uncovers the unreported income, penalties will occur along with the possibility of prosecution.

eBay sellers were used as an example. CRA has a list of all eBay sellers due to a recent Federal Court of Canada decision. Beginning late this summer, this information will be used to determine if they properly reported their income on their personal tax returns.

Under the Voluntary Disclosures Program, penalties and prosecution will not be applied it the taxpayer takes the initiative to correct returns already filed.

eBay sellers can learn about what business deductions they are eligible for in "The Tax" section.

Read more here on unreported income and which tax form to use to file your amendment with CRA.

You may also be interested in reading information about GST/HST and Electronic Commerce.

May 26, 2009 updated to July 16, 2011

The Canadian Bookkeeper's CRA News
Changes Announced For CPP
It May Affect Your Plans For Early Retirement

July 2011 Update

CRA has started reminding bookkeepers and small business owners with employees that "starting January 1, 2012, employers may have to deduct CPP contributions from the pensionable earnings they pay an employee who is at least 60 years of age but under 70, even if the employee is receiving a CPP or QPP retirement pension."

You can find CRA's page at Businesses> Payroll> Calculating deductions> CPP> Changes to the rules for deducting Canada Pension (CPP) contributions.

Service Canada also has information on their site at www.servicecanada.gc.ca>request a Service Canada Publication> Changes to the Canada Pension Plan.

Employees between 65-70 of age who are already receiving CPP benefits must file an election (Form CPT30 Election to Stop Contributing to the Canada Pension Plan, or Revocation of a Prior Election) with CRA if they do NOT want to continue making contributions.

Employees between 65-70 years old who have filed elections can revoke them ... but the revocation doesn't come into effect until the following calendar year.

October 2010 Update

On December 15, 2009 proposed changes to the CPP plan became law through Bill C-51. Changes will be phased in over a five year period with some of the changes taking effect beginning in 2011.

If you have been thinking about applying to start your CPP pension early, you may want to bring yourself up-to-date on the changes to help you determine if you should be doing applying before December 21, 2010. Here is a useful reference to help you understand the changes:

The Advisor published by RBC Wealth Management Services wrote an article on March 25, 2010 that can be found by googling " RBC Wealth Management Services" + "March 25, 2010" + New Changes for CPP Pensioners Coming. It downloads as a pdf documents.

Another interesting article is interviews with actuarials by Jonathon Chevreau at the National Post. You can find it at Financial Post> Jonathan Chevreau Wealthy Boomer> May 28, 2009> Hello Freedom 70.

Of interest to bookkeepers is to note that in this article, Tom Walker, CFP and semi-retired actuary says,

"The current pension benefits of those (e.g. me!) who have already started to collect an early CPP pension will not be affected. However if a person who retired early prior to the proposed changes is working after the changes are implemented, he or she will be required to contribute prior to age 65 and will have the option to contribute after age 65. The additional contributions will result in additional benefits which are not currently available."

May 26, 2009 Posting On Proposed Changes

Bookkeepers and small business owners may be interested to know that changes announced earlier this week will likely push out any plans you had for early retirement ... but will give more flexibility to baby boomers whose retirement savings took a dive over the past months.

The proposed changes that will start as of 2012 have been summarized very nicely by the Canadian Capitalist. Here they are in less elegant prose:

• Beginning in 2012, you will no longer be required to stop working or reduce earnings to begin receiving CPP benefits. This is to assist us to "phase into retirement."
• If you opt for early retirement at age 60, expect a 36% (0.6% per month) reduction rather than the current 30% (0.5% per month). The early retirement reductions will be phased in over five years beginning in 2012.

  You will be rewarded if you delay taking benefits until age 70 - 42% (0.7% per month) increase rather than the current 30% (0.5% per month). The delaying retirement increases will be phased in over a three year period beginning in 2011.

  It is thought this will encourage us to use CPP as a savings vehicle.

• If you opt for early retirement and are still working, it will now be mandatory to continue contributing to CPP even while taking CPP benefits ... if you are between 60 and 65 years of age.

  Additional contributions are optional for those between 65 and 70.

  All additional contributions will result in increased retirement benefits.

• Eight years will be dropped instead of the current 7 years when determining the low or nil earning years that can be excluded ... which should benefit early retirees and those who have encountered erratic work opportunities.

You can find the Department of Finance Canada Information Paper Proposed Changes to the Canada Pension Plan on their website fin.gc.ca under Publications and reports.

Updated November 2010 - HRSDC has updated their information at www.hrsdc.gc.ca> Topics> Canada Pension Plan> Changes to the Canada Pension Plan (CPP) ... it's a link under Our Programs.

October 1, 2009 addendum

Taxtips.ca October newsletter made a good point I missed. The proposed changes will not affect people already receiving CPP or if they start to collect it before 2012.

June 25, 2011

I reported in the June 15, 2011 isssue of The Bookkeeper's Notes ... with the Conservatives elected with a majority, their budget was reintroduced and the next phase of Canada's Economic Action Plan was announced.

It includes a temporary hiring credit for small businesses (See ... About CRA> Federal Government Budgets> 2011> Hiring Credit for Small Business) and extending the accelerated capital cost allowance rate for investment in manufacturing or processing machinery and equipment for two years. The accelerated CCA was first introduced in the 2008 budget.

I didn't mention in the newsletter that CRA will be reviewing the graduated penalty structure for information returns. (See ... About CRA> Federal Government Budgets> 2011> Filing Penalty - Information Returns).

CRA website (www.cra-arc.gc.ca/payroll) has the online 2011 Payroll Deductions Online Calculator available which contain changes for Manitoba, New Brunswick, Nova Scotia, and Saskatchewan. The rates are effective July 1, 2011.

The manual payroll deduction tables (T4032) used for common pay periods and the supplementary tables (T4008) used for unusual pay periods, effective July 1, 2011 ... and January 1, 2011 for all other provinces and territories are also available.

The CRA has created a page on their website on tips to help protect yourself from anyone obtaining your tax information fraudulently. I think it can be applied to protecting all your financial information and identity documents.

Here are their suggestions with a few of my own embellishments:

• Choose your bookkeeper, accountant or tax preparer carefully.
• Keep your information up-to-date. Notify CRA when you change your address.
• Don't put personal information in emails. Sending an email on the internet is like putting a postcard in a Canada Post mailbox. Anyone who knows how can read it. It's much better to send sensitive and confidential information ... including your personal information ... by encrypted email.
• This one is pretty basic ... don't share your passwords or access codes or user IDs.
• Secure your documents that have your name and SIN. Shred documents with your personal identification on them ... especially those unrequested pre-approved credit card applications. If you have your business information on a computer, password the information. If you have a home office, keep you financial documents like bank and credit card statements in a locked filing cabinet.
• Don't let your bookkeeper open your bank and credit card statements ... or have blank cheques. You should be doing that.
• Remove your SIN card from your purse or wallet. It will prevent its theft in the event you lose your wallet or purse ... and don't release your SIN on applications unless you are completing financial information for a bank, brokerage house or your employer. They need it to issue tax slips. I'd question why anyone requires this information nowadays. Same goes for your birth date. Before just handing it over, find out why they want it.
• Don't let your mail pile up while you are away. It could be stolen, giving thieves access to your personal information. Have a family member or trusted neighbour pick it up ... or pay to have Canada Post hold it until you return.

In the Winter 2011 edition of the Excise and GST/HST News publication, CRA has announced it will be discontinuing combined audits.

They will also be changing their approach to GST/HST pre-assessments.

The changes are being made to enhance its focus on GST/HST compliance and will take place over a number of years. The first changes have already been implemented by through a restructuring of the organization ... which has lead to the discontinuing combined audits as mentioned.

The initial focus will be on:

• RITC of energy and telecommunications;
• housing rebates; and
• transitional rebates.

Deloitte's Weekly Tax Highlights newsletter points out that this will lead to additional compliance costs to businesses.

I would like it if the CRA GST/HST return split the sales amount reporting into three (or four) categories ... GST, HST, and zero rated ... instead of one lump sum number.

On CRA's website under What's new for payroll?, subcontractor reporting is being referred to as fees for services.

Box 048 was added to the newly designed T4A slip as the place to report subcontractor payments. It is interesting to note the following comment:

"Until such time as the CRA undertakes a review for the purposes of clarifying the types of fees for services that are to be reported on the T4A slip, taxpayers will not be penalized for failing to complete Box 048."

So stayed tuned on this one. You can find what information I've gathered so far on how CRA is auditing this area.

September 15, 2010

The Knowledge Bureau's weekly newsletter released today had a reminder.

Applications for the extended EI benefits for long service employees who had accessed EI on limited basis in the past ended officially on September 11, 2010.

The extended benefits began October 25, 2009. They offered an extra five weeks of regular employment insurance benefits and up to 20 weeks of additional benefits. The benefits don't end until August 2011 for those who applied before September 11 or are currently receiving them.

An additional reminder to bookkeepers and employers that the two year freeze on EI premiums comes to an on December 31, 2010 ... so adjust your budgets accordingly.

If you have a Tax Free Savings Account (TFSA), be sure you understand your contribution room.

TFSAs allow Canadian residents to contribute $5,000 annually (plus indexation) where the investment income or capital gains earned are not subject to income tax ... if you stay away from prohibited investments or excess contributions.

Investment income or capital gains earned in the TFSA do not affect your contribution room.

2009 was the first year for this type of tax savings vehicle ... and there was some misunderstanding by some taxpayers of the rules pertaining to unused contribution room.

The general rule for TFSA withdrawals is you can withdraw any amount at any time with no tax consequences ... which then creates contribution room. However ...

withdrawals made during the year may NOT be added back (deposited to the account) until the following year.

The annual contribution room of $5,000 is created by filing a tax return, for those age 18 or older. There is no maximum age limit for TFSAs.

Read more about TFSA proposed revisions and excess contributions here.

July 21, 2010 Addendum ... TFSA Non-Arm's Length Loans

The Knowledge Bureau free weekly newsletter reminds us that a non-arm's length loan made to allow another person to make TFSA contribution is not allowed. The rules deem it to NOT be a TFSA.

The newsletter also pointed out that any interest paid on borrowed money for a TFSA contribution (or RRSP contribution), is NOT deductible.

2010 T1 Personal Tax Credits Return Form are now available on the CRA website. The form must be completed by employees and returned to you. You should retain the completed forms on file. You do not send a copy to CRA.

A new form is not required every year ... only if there is a change to the employee's personal tax credit amounts.

You can find the forms for all provinces and territories on the CRA website at Businesses>Payroll>Calculating deductions>Form TD1, Personal Tax Credits Return .

Two changes were made to the EI regulations back in March, 2009 that affect users who file ROEs (record of employment) electronically using ROE Web. The changes do NOT apply to employers still filing paper ROEs.

1. If you submit an ROE electronically, you are no longer required to print paper copies for employees or Service Canada. Employees can go to My Account to view or print their ROE. You are asked however to supply a copy of the ROE as a courtesy if the employee asks for one.
2. You now have up to 5 days after the end of the pay period to issue an electronic ROE. Previously, the ROE had to be issued within 5 days of the employee's earnings interruption. This should reduce the number of amendments required and make the processing of EI claims more efficient for Service Canada.

You can find the Service Canada announcement at www.servicecanada.gc.ca under publications and reports>records of employment>Changes to Regulations Concerning Electronic ROEs or Pamphlet - Changes to Regulation 19.

December 2, 2009

On October 16, 2009 the Minister of Finance proposed technical changes to TFSAs due to recent tax planning schemes involving TFSAs.

It is proposed that these changes be effective October 17, 2009.

• Deliberate over contributions and prohibited investments will be subject to anti-avoidance rules.
• Non-qualified investments' income will be taxed at normal tax rates.
• Withdrawals of deliberate over contributions and other non-qualifying investments will not make additional TFSA contribution room.
• Income attributed to deliberate over contribution or prohibitive investments will be charged at 100% as per existing advantage rules.
• Asset transfer transactions (swaps) between TFSAs and other accounts will be prohibited.

You can find the announcement and more in depth information on the Department of Finance Canada website - www.fin.gc.ca. Look under news dated 2009-10-16.

Read more about TFSA contribution room and non-arm's length loans here.

July 21, 2010 Addendum ... TFSA Return

The Knowledge Bureau free weekly newsletter listed the forms and return that needs to be filed if you owe tax on a TFSA.

RC243 Tax-Free Savings Account (TFSA) Return 2009

RC243-SCH-A Schedule A - Excess TFSA Amounts

RC243-SCH-B Schedule B - Non-Resident Contributions to a Tax Free Savings Account (TFSA)

CRA has extended the deadline date from June 30, 2010 to August 3, 2010.

July 23, 2009

CRA announced today, that beginning in January 2010, mandatory e-filing is required for anyone who submits more than 50 information returns.

An information return are returns like T3 slips, T4 slips and T5 slips. You can find more information on the CRA website Mandatory Electronic Filing of Information Returns.

If you have less than 50 information returns, you can still file electronically. It is quick and easy to do ... and you get instant confirmation for your records that the returns have been received. I found it a lot more convenient and efficient than paper filing the returns.

July 2009

This is a reminder that any business computer purchased from January 28, 2009 to January 31, 2011, is eligible for a temporary 100% capital cost allowance (CCA) in Class 52.

This applies to computer hardware and system software but NOT operating software. The half year rule will not apply.

This tax relief was part of the 2009 Economic Action Plan to stimulate business investment.

If you are interested, there was an update on Canada's Economic Action Plan, released June 16, 2009.

The Canadian Tax - Links

Return to Top - CRA News

Return to "The Tax" Section

Return to Home Page - Knowledge is Money in Your Pocket

New! Comments