Tax & Business News
Trips, tips and traps
October 2015
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Links For October
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Why didn't CBC air the Munk Debate?
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Latest info from StatsCan
Population estimate 35,851,774
CPI Annual Inflation 1.3%
Unemployment Rate 7.0%
GDP Monthly growth 0.3%
Forward this email to a friend!
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Greetings! |
If you think you know which party best represents your views, check out the quiz at ISideWith.com. By ticking the box next to the questions posed and indicating its relevant importance to you, your views are matched to the appropriate political parties stated positions. Here are the results from my responses:
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| Calendar of Important Dates |
 Corporations with a July year end, claiming the small business deduction must pay the balance of tax owing by the end of October.
Corporations with an August year end, not claiming the small business deduction must pay the balance of tax owing by the end of October.
Filing deadline for an April 30, 2015 year end is October 31, 2015
Thanksgiving Day - October 12
Next Issue - November 9, 2015
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CHARITIES CAUTIONED DURING ELECTION
CRA is vigilant...
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From CRA -
Important notice
Since we are in an election period, we remind registered charities that they are prohibited from devoting any of their resources to partisan political activities. A partisan political activity is one that involves the direct or indirect support of, or opposition to, any political party at any time, whether during an election period or not, or a candidate for public office. For more information, go to Advisory on partisan political activities.
As with most items related to tax, there is an abundance of reasonability tests and interpretations that are not crystal clear.
The CRA website has a self-assessment checklist;
If Our charity:
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explicitly communicates a call to political action (that is, encourages the public to contact an elected representative or public official to urge him or her to retain, oppose, or change the law, policy, or decision of any level of government in Canada or a foreign country);
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explicitly communicates to the public that the law, policy, or decision of any level of government in Canada or a foreign country should be retained, opposed, or changed;
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explicitly indicates in any of its materials (internal or external) that the intention of any of its activities is to incite, or organize to put pressure on, an elected representative or public official to retain, oppose, or change the law, policy, or decision of any level of government in Canada or a foreign country; or
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made a gift to another qualified donee to support the political activities of the recipient.
If any of the above statements are true, our charity is carrying on a political activity. The only exception might be if the activity in question is a representation made to an elected representative or public official (see Section 2).
These guidelines are pretty restrictive and may handcuff charities founded on moral issues and are precluded from advancing their position.
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YOUR CHEQUE ISN'T IN THE MAIL
Time to sign up...
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Effective April 1, 2016, CRA will no longer be sending out any "paper cheques" to payout refunds.
Now is the time to enroll in direct deposit. Note that CRA cannot withdraw funds, only deposit.
Checkout their video.
Here is the link to the enrolment form:
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FREEZE YOUR CREDIT?
No more identity theft...
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"If everybody's credit report was frozen by default except for when they needed to use it, there would be no such thing as identity theft. Think about that."
At a certain point in your life you have all the credit you need. At that point, consider "freezing" your credit by requesting it from Equifax or Transunion. This is the first step done if your wallet or identity has been stolen but it makes perfect sense to use this technique if you are not seeking additional credit.
Note that freezing is an option that is reversible if you will be looking for additional credit so there is no downside to doing this - it can be changed.
See here for the Equifax page and here for Transunion.
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EMPLOYEE BENEFITS
Tax implications...
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An employee is generally taxable on the value of a benefit of any kind whatsoever realized by virtue of their employment. However, some benefits that primarily benefit the employer, as well as certain other select cases, may be considered non-taxable to the employee.
The following is a list of some recent CRA discussions on different employment benefits
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Employee housing at a location distant from the employee's usual place of
residence results in a taxable benefit unless the work is at a remote location (CRA generally accepts a location at least 80 kilometers away from the nearest community with a population of at least 1,000 people) or at a temporary work location, regardless of whether it is impractical or impossible for the employee to return to their regular place of residence between shifts.
- Cell phone reimbursements for a reasonable basic plan required for employment purposes will not create a taxable benefit. However, any form of allowance would be taxable, so payments to employees must be made with regards to actual costs incurred in order to remain non-taxable. As well, any payment towards the cost of the cell phone itself would be taxable to the employee.
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Health programs reimbursing costs of physical activity will generally result in a taxable benefit unless the nature of the job carries unusual fitness requirements. CRA may also consider the benefit non-taxable where the employer provides fitness facilities for all employees or owns a membership which permits all employees to use a fitness facility.
- Uniforms are not a taxable benefit if they are either designed to protect the employee from on the job hazards (e.g. safety equipment) or are distinctive uniforms (e.g. clothing identifying the employer), but each component of the clothing must be considered separately. In one case reviewed, CRA indicated that specific footwear which did not meet either of the above criteria would result in a taxable benefit if paid for by the employer.
- Income maintenance insurance benefits would be tax-free where all premiums were paid by the employee.
Note that the taxability of employee benefits can be a grey area. There may be anomalies and exceptions even within the above examples.
Action Item: Consider reviewing employment compensation packages to ensure the most tax-efficient structures with no tax surprises for employees.
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FUNDING BULLETIN
You can apply, we can help...
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| Canada-Wide $12,000 Hiring Subsidy | | |
Funding for a Cleaner Environment
Through the Clean Tech Internship Program, businesses can receive 70% up to $12,000 in government funding to hire a STEM (science, technology, engineering, or mathematics) college or university graduate, who is 30 years old or younger. Eligible employers are private sector businesses with 500 or less employees, as well as provincial and municipal governments, aboriginal associations, non-government organizations (NGOs), post secondary institutions, government agencies, institutions, and Crown corporations. Employers must provide the intern 6 months of full time employment, measurable instruction, plus a new and meaningful position related to "clean technologies", e.g. those that help improve the environment. Government funding will be awarded against salaries and associated costs of hosting an intern.
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Recent CRA Decisions
There is no escape from tax...
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In a September 24, 2015 Technical Interpretation CRA noted that where a Corporation makes an addition or leasehold improvement to a building rented from a shareholder, and the improvement vests in the owner of the building (becomes owned by the shareholder), a benefit may be considered to have been conferred on the shareholder.
This means that the shareholder would have to pay tax on the value of the benefit.
CRA noted that if the shareholder reimburses the Corporation for the value of the improvements as they are completed each year, or at the end of the lease term, the benefit may be reduced or eliminated, depending on the particulars. The value of the benefit is roughly the present value of the amount by which the improvement increases the value of the building to the shareholder at the time the building reverts to the shareholder.
Action Items: Exercise caution when a corporation renovates or improving a building that is owned by its shareholder.
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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 - October 2015 |
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Howard Render, CPA*CA Render & Partners, LLP
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