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Tax changes to expect when you’re expecting
2016 Tax Tips for 2015 Filing Year
From Proprietorship to Corporation - When is the Best Time to Incorporate?
Tax Specialists Brief your Clients About CRA Fraud And E-Mail Scams
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2016 Tax Tips for 2015 Filing Year

2016 Tax Tips for 2015 Filing Year


2016 Tax Tips for 2015 Filing Year- www.aliko-aapayrollservices.com/blog


Did you know that last tax filing season, the average tax refund was just under $1,800, or about $150 a month? That’s a lot of money to give to the government on an interest-free basis. Yet that’s what almost 17 million tax filers did and CRA paid back approximately $30 Billion dollars. Astute tax filers will want to get that money back working for their own futures quickly this year. If that includes you, do file your tax return early and accurately. But make sure you have all your documentation, first.
Make a point of acquiring and reviewing tax software if you are NETFILING this year. If you hire a pro, make an appointment as soon as possible to determine what is needed to meet new tax filing rules and discuss what has changed in your personal affairs. Births, deaths, marriages, divorces, new jobs and job terminations – all can impact the tax return.

From Proprietorship to Corporation - When is the Best Time to Incorporate?


From Proprietorship to Corporation - When is the Best Time to Incorporate?- www.aliko-aapayrollservices.com/blog
From Proprietorship to Corporation - When is the Best Time to Incorporate?



The  dog days of summer are a great time for the Tax Specialist to review 2014 returns for Proprietors and Partnerships to determine whether it is time for some of these taxpayers to consider incorporating their business and removing their business from their personal tax return. But when is the best time to incorporate?
 
The answer to this question varies depending on the needs of the financial needs of the individual taxpayer, the vision for their business and their ability to take their business to its next level of growth; however, a few basic questions will help determine if you should be approaching your client with the suggestion, from a tax savings point of view:
1. Is the taxpayer currently paying a higher effective income tax rate than the corporate tax rate for the province of residence?
The current federal tax rate for a Canadian Controlled Private Corporation is 11% on the first $500,000 of net income. Provincially, rates vary by province from a low of 0% in Manitoba to 4.5% in Ontario and PEI. To put this in perspective, a net corporate income of ~$34,000 in Ontario attracts about a 15.5% effective tax rate. If this corporate tax rate is lower than the proprietor’s personal income tax rate, it may be time to look at incorporating.
2. Is the taxpayer earning more money in the proprietorship than is required to meet their personal and household needs?
A corporation’s lower income tax rate is only effective if the earned income remains within the corporation. If the proprietorship is earning $100K and the taxpayer needs $100K, it is unlikely that a corporation is beneficial for tax purposes.
3. Is there a liability or asset protection benefit to incorporation?
Even if there is no tax benefit to incorporating, there may be a benefit from a liability or asset protection viewpoint. A corporation is a separate legal entity; therefore, the individual cannot be held personally liable for debts incurred within the corporation. This protection can go a long way to protecting family wealth in the event of a business mishap.
 
4. Is there currently income-splitting potential within the proprietorship?
In most cases the answer to this is no. However, within a corporate structure different classes of shares can be issued, opening up various dividend options. This will then allow income sprinkling among family members to take full advantage of individual graduated rates, exemptions and deductions.
5. Is your client financially disciplined enough to manage a fiscal year-end?
One of the underlying advantages to operating through a corporate structure is the ability to establish a non-calendar fiscal year. This opens up income deferral options, allowing the taxpayer to retain more wealth longer by utilizing ITA S. 78(4).
 
Example – S. 78(4)
  • Acme Corporation has a fiscal year-end of July 30th and elects to declare a bonus payable of $30,000. The bonus is expensed on the corporate tax return as of July 30, 2015.
  • The bonus is then paid to the individual on January 3rd, 2016 – within the 179 day requirement of S. 78(4).
  • The bonus is reported on the T4 slip for 2016 and reported on the personal tax return filed April 30, 2017, resulting in a 21-month deferral of personal income taxes.The move from proprietorship to corporation may hold many benefits for the individual taxpayer and at the same time opens up many tax planning and wealth retention opportunities for the individual and their Tax Specialist to explore as the business continues to grow.

Selling the US Vacation Property



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Selling the US Vacation Property


With real estate prices soaring in the US and the Canadian dollar falling in value against the greenback, Canadians who invested in a vacation property in the US may be tempted to sell their US cottage and purchase a Canadian cottage instead. 
 
But it’s important to understand the tax consequences on both sides of the border before they do.
Here’s an example to illustrate:   Sarah and George purchased a home in Phoenix in 2011 for $190,000US ($191,000CAN), including costs. Today, the home is worth $290,000US (about $358,000CAN). This represents an accrued gain of $167,000CAN (a $100,000 US gain in the States). The value of the couple’s home in Canada, meanwhile,  has increased only $20,000 over the same time period. What are the tax consequences if the couple sells the US property and uses the proceeds to purchase a cottage closer to home?
The disposition of the US property will create a taxable capital gain to be reported on a US return ($100,000 US). In Canada, the capital gain could be minimized by designating the US property as the couple’s principal residence for all but one year from 2011 to 2015. However, the elimination of the capital gains tax on the Canadian return comes at a price. If the gain is taxable in Canada, the US taxes paid could be claimed as a foreign tax credit.
But if the gain is tax-free in Canada, the foreign tax credit cannot be claimed. At the same time, claiming the US property as a principal residence means the gain on their Canadian home becomes taxable.
Since the US tax cannot be eliminated, the only way to ensure that the same gain is not taxed in both jurisdictions is to make sure that at least $100,000US of the capital gain is taxed in Canada in the year of sale. That’s about $123,000CAN, depending on the exchange rate at the time of the sale.
 
With a $167,000CAN gain, 26% of the gain could be exempted and the couple could still claim the foreign tax credit. By choosing to designate the US property as their principal residence for one year, 33% ([1+1]/6) of the gain would be exempt in Canada, limiting the foreign tax credit claim.
By choosing not to designate the US property as their principal residence, 1/6 of the gain would be exempt, allowing the full foreign tax credit.
Of course, in this or any other case, the actual amount of taxes payable in the US and Canada would have to be determined to ensure that choosing not to claim the principal residence exemption for any of the years owned results in the lowest overall taxes payable.
This type of transaction, therefore, should be reviewed well in advance by a Tax Services Specialist  to get the best tax results over time for the sale or deemed disposition of both residences.
 
 
 
 

Five Steps To Calculating 2015 TFSA Contribution Room

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Five Steps To Calculating 2015 TFSA Contribution Room



A new version of form RC343 has been released by the CRA to calculate TFSA contribution room for 2015, taking into account the new 2015 contribution limit of $10,000.
 
The new form is available here.  Here’s how the calculations work:
1. Start with your TFSA contribution room as of January 1, 2014
2. Subtract any TFSA contributions made in 2014
3. Add any TFSA withdrawals made in 2014
4. Add $10,000 (your new  TFSA contribution limit for 2015)
5. If you’ve already made TFSA contributions for 2015, subtract those
Here’s an example:
Joni had  TFSA contribution room of $12,000 as of January 1, 2014, including the $5,500 of new contribution room for 2014. She made a $10,000 TFSA contribution in 2014 and withdrew $15,000 that same year. She has not made any contributions in 2015 yet.  Following the steps outlined above, her 2015 TFSA contribution room is:
1. $12,000
2. - $10,000
3. + $15,000
4. + $10,000
5. - $0
Total: $27,000
 
Beware of TFSA Traps:  The biggest trap, other than holding non-registered investments outside a TFSA when there is contribution room available, is recontributing to the TFSA in the same year as the withdrawal is made. Withdrawals do increase TFSA contribution room, but not until the beginning of the following year.
In the example above, after her $10,000 contribution, Joni’s TFSA contribution room for 2014 was reduced to $2,000. Her $15,000 withdrawal did not open up contribution room until January 1, 2015. If Joni had re-deposited the $15,000 in 2014, she would have had a $13,000 excess contribution. All excess contributions are subject to a 1% penalty tax for each month they remain in the TFSA.
For these reasons, it’s important for wealth advisors to encourage their clients to seek their assistance or consult with  A Tax Services Specialist  before withdrawing money or recontributing it to a TFSA.
 
 
 
 
 

Everything You Need to Know About RRIFs

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Everything You Need to Know About RRIFs
Written by Jim Yih
 
Most Canadians choose a Registered Retirement Income Fund (RRIF) as their retirement income option. A RRIF is a comfortable transition because of its similarity to an RRSP. A RRIF provides a high level of control over the investments in your retirement plan, the advantage of tax-free growth of assets within the plan, as well as maximum flexibility in establishing an income stream. RRIFs come in a number of shapes and sizes.
The first decision is income
The first thing you will need to determine is how much income you need or want. This decision will have the greatest impact on the longevity of your money. If you spend too much too fast, you will run out of money. Even if you don’t need or want the extra income, you have the minimum income rules to contend with.
You can tailor your income to your needs, subject to minimums imposed by the federal government. If you need steady monthly, quarterly, or annual income, it’s available. If you require a large lump sum for a major purchase, travel, or some other purpose, that’s available too.
RRIF withdrawal rules
This table outlines the minimum withdrawals on RRIFs established after 1992, as set by the government. Before age 71, the minimum percentage payout is worked out in the following way: 1÷(90 – your current age).  RRIF minimums were once again changed in 2015
So if you’re 65, your minimum withdrawal would be 1÷(90-65)=4%. With a $100,000 RRIF, that amounts to $4,000. Once you reach age 69, the following schedule applies:
Age
2015 and later
1992 to 2015
Pre 1992
65
4.00%
4.00%
4.00%
66
4.17%
4.17%
4.17%
67
4.35%
4.35%
4.35%
68
4.55%
4.55%
4.55%
69
4.76%
4.76%
4.76%
70
5.00%
5.00%
5.00%
71
5.28%
7.38%
5.26%
72
5.40%
7.48%
5.56%
73
5.53%
7.59%
5.88%
74
5.67%
7.71%
6.25%
75
5.82%
7.85%
6.67%
76
5.98%
7.99%
7.14%
77
6.17%
8.15%
7.69%
78
6.36%
8.33%
8.33%
79
6.58%
8.53%
8.53%
80
6.82%
8.75%
8.75%
81
7.08%
8.99%
8.99%
82
7.38%
9.27%
9.27%
83
7.71%
9.58%
9.58%
84
8.08%
9.93%
9.93%
85
8.51%
10.33%
10.33%
86
8.99%
10.79%
10.79%
87
9.55%
11.33%
11.33%
88
10.21%
11.96%
11.96%
89
10.99%
12.71%
12.71%
90
11.92%
13.62%
13.62%
91
13.06%
14.73%
14.73%
92
14.49%
16.12%
16.12%
93
16.34%
17.92%
17.92%
94
18.79%
20.00%
20.00%
95+
20.00%
20.00%
20.00%
The second decision is what to invest in
Financial institutions offer plans that can hold Guaranteed Investment Certificates (GICs), mutual funds, cash, or other financial instruments. Alternatively, you can establish a self-directed RRIF to include a combination of individual securities in your plan, such as stocks, bonds or Treasury bills (in addition to the investments mentioned above).
RRIFs offer investment flexibility. You can hold the same investments that are eligible for an RRSP. Shares of Canadian corporations, corporate and government bonds, Canada Savings Bonds, Treasury bills, mortgages, GICs, term deposits, covered call options, warrants, rights, and mutual funds that invest in eligible securities are all qualifying investments. You can also hold a limited percentage of your RRIF in foreign investments. Just like an RRSP, a RRIF lets you retain control over your investments, rather than handing over your money to a third party.
The longevity of your RRIF is simply based on how much money you make in investment return and how much you take out for income. It does not take a lot of mathematical know how to figure out that if you earn more money than you withdraw in income, the RRIF will grow.
For example, if you invest in a GIC RRIF at 6% and you take out the minimum (4.76%) at age 69, your RRIF should grow by 1.24%. At age 72 given the same investment return, the minimum is now 7.48%. This means your RRIF will deplete in value by 1.48% (7.48%-6.00%).
What will happen to your RRIF when you die?
You can leave your remaining RRIF assets to your heirs upon your death by designating the proper beneficiary. Not all other retirement income options provide for this. Naturally, your desire to provide an estate for your spouse, beneficiaries or charities may have an impact on how you set up your RRIF. While this may or may not be an issue, income and investments should remain the priorities.
RRIFs are flexible
One of the benefits of the RRIF is the flexibility you have in dictating income. These are some common types of RRIFs.
  • Minimum income RRIF – This RRIF provides the minimum level of income. Typically, people who choose the minimum income RRIF are those who do not need the money and want to defer taxable income for as long as possible. Remember, if this is the case, you can base the RRIF on the age of your younger spouse.Furthermore, remember the RRIF minimum income is based on the value of the RRIF on December 31 of the previous year. Sometimes this can make income planning difficult because you really don’t know what your income will be until the last minute.
  • Capital preservation RRIF – Preserving capital and paying out a fixed level of income are the goals of this RRIF type. In this case, you will withdraw your investment returns each year (subject to minimums). If you are using mutual funds, you might elect a reasonable target return like 8%, for example, with the hopes and intentions of earning 8% to maintain the capital.
  • Level income RRIF – If you want to provide income for a specific period of time such as to age 90, this RRIF would be the right choice. In this instance, you would determine the amount of income you could derive so that the entire asset would be depleted by the time you reach 90 years of age. You can use age or time frame.Have as many RRIFs as you wantYou can have as many RRIFs as you want. You can have one that pays a level income for the next 5 years to bridge income until government benefits. You can have another that is a capital preservation RRIF for a more stable long term level of income.Generally, many people consider consolidating into one RRIF. With a single RRIF, you can easily manage your investments and you’ll only have to worry about one minimum withdrawal. Several RRIFs require more time and energy, and you’ll have to arrange to withdraw at least the minimum from each one.Withholding tax detailsRRIF income is subject to government withholding tax rates. Just like your employer withholds taxes and remits them directly to the government, your RRIF administrator is required to do the same. Minimum income RRIFs are not subject to withholding tax, but you can request any level of withholding tax desired. In all other circumstances, there is a 10% withholding rate on withdrawals less than $5000, 20% on withdrawals between $5000 and $15,000 and 30% tax on withdrawals over $15,000.As you can see, there are a lot of issues to deal with when it comes to planning your RRIF income. Take the time to plan wisely.

Scenario 3: Retired Couple with RRIFs


Scenario 3:  Retired Couple with RRIFs-www.aliko-aapayrollservices.com/blog

Scenario 3:  Retired Couple with RRIFs

BY: Karen Milner

Brian and Patricia retired a few years ago.  Brian is 74 and Patricia is 72.  The couple live in Halifax, NS and have RRIF balances of $300,000 and $400,000 respectively.

 

Will Brian and Patricia be better off in 2015 than in 2014?

This couple derived no benefit from the Family Tax Cuts announced in October 2014.

The reduction in RRIF minimum withdrawals will affect both Brian and Patricia.  Under the old rules, Brian was required to withdraw at least $23,130 from his RRIF.  Under the new rules, he is only required to withdraw $17,010.  If he has already withdrawn more than $17,010, he will be able to redeposit the excess (to a maximum of $6,120).

Under the old rules, Patricia was required to withdraw at least $29,920 from her RRIF.  Under the new rules she is only required to withdraw $21,600.  If she has already withdrawn more than $21,600, she can put back up to $8,320.

By withdrawing less, both Brian and Patricia can reduce their tax bill for 2015.  In addition, Patricia’s age amount could be increased by the reduced withdrawal (depending on how much other income she has).

This couple may well be able to benefit from the Home Accessibility Tax Credit if they need to make renovations to their home to make it more accessible.  Under this new program, 15% percent of the first $10,000 renovation costs could be eligible for a non-refundable tax credit.

If either Brian or Patricia has foreign assets with a value between $100,000 and $250,000, they’ll be happy to learn that the sometimes onerous rules for reporting such assets will be simplified for 2015.

This couple may also be able to take advantage of the new rules exempting capital gains on small business corporation shares or real estate investments if a portion of the proceeds is donated to charity.  If they are selling a family farm, they will be happy to know that the capital gains exemption on farm property has been increased to $1,000,000, exempting up to $500,000 taxable capital gains from tax.

The increase in TFSA contribution limits may allow for more flexibility in retirement as any minimum RRIF withdrawals that are not needed to fund lifestyle, can still be sheltered from tax (after the tax is paid on withdrawal).

 

 

The Power of the TFSA

The Power of the TFSA -www.aliko-aapayrollservices.com
 
 
The Power of the TFSA
 
 
As the calendar year changed on January 1, so did the Tax Free Savings Account (TFSA) contribution room available to all adult residents of Canada. 
Although indexing did not increase the earned contribution room, everyone can now contribute at least $5,500 more to their TFSAs.  Those who made withdrawals in 2013 can now put back the money withdrawn in addition to the extra $5,500.  For those who have never made a TFSA contribution, the accumulated TFSA room is now $36,500 (less if they are between 19 and 24).
Through the power of tax-free compounding the TFSA can yield spectacular results, especially for those who are young enough for compounding to do its magic.
If you’ve put the maximum into your TFSA at the beginning of each year and it earned 5% income in each year, your current balance (after your last deposit) will be over $40,800.  See the table below.
YearContributionInterest EarnedEnding Balance2009$5,000$250.00$5,250.002010$5,000$262.50$10,512.502011$5,000$525.63$16,038.132012$5,000$801.91$21,840.032013$5,500$1,092.00$28,432.032014$5,500$1421.60$35,353.632015$5,500$1767.68$42,621.32
 
For the younger generation, consider the potential for a tax-free retirement.  Making the maximum contribution each year starting at age 19 would yield a nest egg of about $900,000 at age 60 (assuming 5% annual return, 2% inflation, no change in maximum contribution levels and no withdrawals).  Even in today’s dollars, that’s $400,000 in spending power.  For a couple that’s $1.8 million dollars.  Even assuming an extended 40-year retirement, that’s an indexed tax-free pension of over $74,000 a year ($33,000 in current dollars).
 
 
 

TFSA Withdrawals


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TFSA Withdrawals


Here is the basic information regarding withdrawals from a tax-free savings account:

Withdrawals will create additional contribution room equal to the amount of the withdrawal, for deposits in future years (not in the year of the withdrawal).

Income earned in  and withdrawals from a TFSA will not affect eligibility for federal income-tested benefits and credits such as

guaranteed income supplement (GIS)

old age security (OAS)

age exemption tax credit

Any fees paid related to the TFSA will not be tax-deductible.

In kind withdrawals can be made, with the investments being transferred to a non-registered account, or as a contribution to an RRSP, subject to available RRSP contribution room.  When in kind withdrawals are made, the value of the transaction will be the current market value of the investment.  This will be the contribution amount if the investment is transferred to an RRSP.  If the investment is transferred to a non-registered account, the current market value at time of withdrawal will be the cost basis for the non-registered investment.  Any subsequent capital gain or loss when the investment is sold will use this value as the cost basis.
If the maximum has been contributed to a TFSA, and then a withdrawal is made, no further amount can be contributed (without penalty) until the following year.  On January 1st of the following year, the withdrawal amount from the previous year will be used to increase your regular annual contribution room.
 
 


Family Tax Cuts Could Fatten December Coffers

Family Tax Cuts Could Fatten December Coffers -www.aliko-aapayrollservices.com
 
 
 
Family Tax Cuts Could Fatten December Coffers
 
It’s always a good idea to re-evaluate the requirement to make the December 15 quarterly tax instalment payment (December 31 in the case of farmers) but this year end it’s even more important because the introduction of the Family Tax Credit for 2014, which has the potential to reduce family taxes by up to $2000.
Who has to pay taxes by instalment?  Those taxpayers whose net taxes owing is more than $3000 in 2014 and in either 2013 or 2012.  Net taxes owing include personal income taxes plus CPP and EI premiums owing on self employment.
What’s different this year is that couples with children at home (under age 18) where one spouse is in a higher tax bracket than the other are likely to benefit from the Family Tax Cut of up to $2,000.  The credit will be calculated on new form Schedule 1-A.
 
 
 

LEGISLATIVE UPDATES

LEGISLATIVE UPDATES - www.aliko-aapayrollservices.com
 
 
 
 
LEGISLATIVE UPDATES
 
 
 
 
FEDERAL UPDATES
GOVERNMENT OF CANADA OVERHAULS TEMPORARY FOREIGN WORKER PROGRAM
On June 20, 2014, the Honourable Jason Kenney, Minister of Employment and Social Development (ESDC), and Chris Alexander, Minister of Citizenship and Immigration, announced a comprehensive overhaul of the Temporary Foreign Worker Program (TFWP) and the creation of new International Mobility Programs (IMPs).
The new IMPs will incorporate those streams in which foreign nationals are not subject to a Labour Market Impact Assessment (LMIA), and whose primary objective is to advance Canada’s broad economic and cultural national interest, rather than filling particular jobs. The LMIA is a labor market verification process whereby ESDC assesses an offer of employment to ensure that the employment of a foreign worker will not have a negative impact on the Canadian labor market. Employers will be required to provide a variety of information about the position for which they want to hire a foreign worker, including the number of Canadians who applied for the position, the number of Canadians who were interviewed, and detailed explanations for why the Canadian workers considered were not hired.
The goal is to ensure the TFWP is only used as intended, as a last and limited resort to fill acute, temporary labour shortages when qualified Canadians are not available.
If you currently participate in the TFWP, or are intending to, find out more detailed information in the official federal government news release and Background Documents.
NEW EMPLOYMENT RULES FOR INTERNATIONAL STUDENTS STUDYING IN CANADA IN EFFECT AS OF JUNE 1, 2014
On June 1, 2014, amendments to the Immigration and Refugee Protection Regulations (Regulation) modifying working rights for foreign nationals, under the International Student Program (ISP), came into force.
Effective June 1, 2014, permits for off-campus work will no longer be required, nor will international students be expected to study full-time for a period of six months prior to seeking such employment.
The new rules governing off-campus work require that international students hold a valid study permit similarly to before, but moving forward, these study permits will not be obtained as easily as in the past. Previously, study permits were issued to students attending any type of educational institution, whether or not accredited or regulated. Such permits will now only be issued to students enrolled at a “designated learning” institution.
Consult the Government of Canada’s website for additional details.
Provincial/territorial updates
At the time of this release, all provincial and territorial jurisdictions have tabled their budgets. The CPA has prepared a Budget Report for each jurisdiction, all of which are available at the CPA’s website. This section of the CPA website is updated with new budget information as it becomes available.
NOVA SCOTIA
NEW NOVA SCOTIA HOLIDAY TO BE KNOWN AS HERITAGE DAY
The Nova Scotia government recently announced that the new statutory holiday to be celebrated on the 3rd Monday of February every year will be known as Heritage Day.
The first Heritage Day celebration will take place on Monday February 16, 2015.
Nova Scotia now joins the jurisdictions of Alberta, British Columbia, Manitoba, Ontario, Prince Edward Island and Saskatchewan, to celebrate a holiday in the month of February.
Access the official News Release for additional information.
ONTARIO
ONTARIO GOVERNMENT PASSES PROVINCIAL BUDGET BILL ON JULY 24 2014
The Ontario Government gave Royal Assent to Bill 14, Building Opportunity and Securing Our Future Act (Budget Measures), 2014which puts into effect the provisions presented on July 14, 2014.
Some of the payroll related measures included:
§  Retroactive tax rate changes for individuals whose incomes are in excess of $150,000
§  The introduction of an Ontario Retirement Pension Plan (ORPP) that would come into effect in 2017
§  The introduction of Pooled Registered Pension Plans (PRPP)
§  The proposal to amend Ontario’s Insurance Act which would require benefits from a long-term disability (LTD) plan to be insured
The Budget also discusses initiatives in other areas that may affect payroll including job training, hiring employees with disabilities and public sector pension plans.
For additional information, consult the CPA’s Ontario Budget Report. The CPA has also prepared a document with the top questions and answers regarding the retroactive tax rate changes.
The Canada Revenue Agency (CRA) has published an updated edition of the T4127, Payroll Deductions Formulas for Computer Programs to enable employers to implement the revised rates in their system effective September 1, 2014.
The September 2014 version of the Payroll Deductions Online Calculator (PDOC) that includes the Ontario tax changes is now available.
The CPA has forwarded a Legislative Briefing: Ontario Personal Tax Changes to its members.
ONTARIO GOVERNMENT PASSES LEGISLATION TO INTRODUCE THREE NEW LEAVES
On April 29, 2014, Bill 21, the Employment Standards Amendments Act (Leaves to Help Families), 2014, passed its third reading with all-party support in the Ontario legislature. The legislation has received Royal Assent and will come into effect on October 29, 2014.
The new legislative measures build on the existing
Family Medical Leave by creating three new job-protected leaves:
§  Family Caregiver Leave: up to eight weeks of unpaid, job-protected leave for employees to provide care or support to a family member with a serious medical condition.
§  Critically Ill Child Care Leave: up to 37 weeks of unpaid, job-protected leave to provide care to a critically ill child.
§  Crime-Related Child Death or Disappearance Leave: up to 52 weeks of unpaid, job-protected leave for parents of a missing child and up to 104 weeks of unpaid, job-protected leave for parents of a child who has died as a result of a crime.
A doctor’s note would be required to qualify for Family Caregiver Leave and Critically Ill Child Care Leave.
Access more information at the websites below:
ONTARIO INTRODUCES EMPLOYMENT LEGISLATION IMPACTING SEVERAL AREAS
On July 16, 2014, the Ontario government introduced Bill 18 Stronger Workplaces for a Stronger Economy Act, 2014. The legislation, if passed will impact several areas within the various labor and employment laws.
Some of the proposed changes include:
§  The elimination of the $10,000 cap on the recovery of unpaid wages by employees through the Ministry of Labour claim process under the Employment Standards Act, 2000.
§  Increasing the limitation period to two years for employees to recover unpaid wages through the Ministry of Labour claim process under the Employment Standards Act, 2000. The current limitation period is six months or one year depending on the type of claim.
§  Requiring employers to provide each of their employees with a copy of the most recent poster (including translations) published by the Ministry of Labour that provides information about the Employment Standards Act, 2000.
§  Making temporary help agencies and their clients jointly and severally liable for unpaid regular wages and unpaid overtime pay.
§  Requiring the Workplace Safety and Insurance Board to assign workplace injury and accident costs to temporary help agency clients when an employee is injured while performing work for the agency’s client.
§  Expanding employment protections for foreign nationals who are in Ontario under an immigration or foreign temporary employee program. The protections include a prohibition on charging a recruiter fee or taking possession of the foreign national’s property, such as their passport or work permit.
§  Tying future minimum wage increases to the Consumer Price Index. The new minimum wage will be announced by April 1 of each year and will come into effect on October 1 of that same year.
Access Bill 18 Stronger Workplaces for a Stronger Economy Act, 2014 for additional details.
The CPA will continue to monitor the progress of these new legislative measures and advise employers accordingly.
NEW ONTARIO LAW EXTENDS PENSION DEATH BENEFITS TO COMMON LAW SPOUSES
With Ontario’s budget having received Royal Assent on July 24, 2014, certain amendments to the Pension Benefits Act (PBA), known as the Carrigan amendments, have become law.
Changes to Section 48 of the Pension Benefits Act modified within Bill 14, Building Opportunity and Securing Our Future Act (Budget Measures), 2014 clarify that in circumstances where a pension plan member is legally married to a spouse from whom they are separated, is living with a new spouse in a common law conjugal relationship, and dies prior to retirement, the common law spouse will be entitled to the pre-retirement death benefit.
Minimum wage update
The following table includes the minimum wages currently in effect in all jurisdictions as well as any rate changes announced at the time of writing.
JurisdictionRate/hourEffective dateFederal
(Canada Labour Code, Part III)
Aligned with provincial/territorial minimum wage in each jurisdictionDecember 1996Alberta§  General$9.95
$10.20
September 1, 2013
September 1, 2014
§  Liquor server$9.05
$9.20
September 1, 2011
September 1, 2014
British Columbia§  General§  Liquor servers$10.25
$9.00
 May 1, 2012
May 1, 2012
Manitoba$10.45
$10.70
October 1, 2013
October 1, 2014
New Brunswick*$10.00April 1, 2012Newfoundland and Labrador$10.00
$10.25
July 1, 2010
October 1, 2014
Northwest Territories$10.00April 1, 2011Nova Scotia§  Experienced workers§  Inexperienced workers$10.40
$9.90
 April 1, 2014
April 1, 2014
Nunavut$11.00January 1, 2011Ontario§  General §  Students under 18 working 28 hours/week or less§  Serving alcohol on licensed property  $11.00
$10.30
$9.55
 June 1, 2014
June 1, 2014
June 1, 2014
Prince Edward Island$10.20
$10.35
June 1, 2014
October 1, 2014
Quebec§  General§  Employees receiving tips$10.35
$8.90
 May 1, 2014
May 1, 2014
Saskatchewan$10.00
$10.20
December 1, 2012
October 1, 2014
Yukon $10.72April 1, 2014
An inexperienced employee is an employee who has not been employed by their current employer or other employers to do their current job for three calendar months.
Will increase each year based on the Consumer Price Index (CPI).
*There are special minimum wage rates for certain categories of employees in government construction work, and counsellors and program staff at residential summer camps.
NEW PCP CERTIFICATION EXPERIENCE REQUIREMENT
The Canadian Payroll Association (CPA) is implementing a one-year Payroll Experience (PE) requirement, effective January 1, 2015, for all Payroll Compliance Practitioner (PCP) candidates. This requirement will enhance the quality of PCP graduates and demonstrate to employers that a PCP certification holder has both the education and experience competencies required to keep organizations compliant.

Read more
As a payroll professional, keeping up with federal and provincial requirements is key. The following article by HRinfodesk concerns a case in Ontario. The conclusions from this case involve the legal implications of not including termination compensation provisions in employment contracts. This may have implications for employment contracts in other provinces.
Limiting termination compensation
By Adam Gorley, Editor, HRinfodesk, published by First Reference, August 2014

In recent termination cases, Ontario's courts have often inferred missing termination notice or severance pay provisions into employment contracts, usually to employers' benefit. But in Paquette v. Quadraspec Inc., 2014 ONCS 2431 (available in French only), the Superior Court has released a decision that suggests a stricter approach. Justice Paul Kane found that where an employer has drafted an employment contract that doesn't comply with the Employment Standards Act (ESA)—either by omission or error—it is inappropriate to assume that the employer intended otherwise.
Facts of the case and decision
The employee, Alain Paquette, had worked for Quadraspec Inc. or its predecessors since 1983. In 1998, the employer made Paquette director general of the company's Oakville operations, under a new contract that was in effect until 2011, when he was terminated without cause or notice. Quadraspec paid Paquette six months of salary in lieu of notice, plus unpaid bonus amounts, in accordance with the contract. The contract expressly limited claims for other unpaid compensation such as benefits or severance to the notice period. Paquette complained that the termination clause of the employment contract was not valid since it prevented him from making claims for these unpaid amounts, contrary to the ESA.
It is well-established that an employer may not contract out of the minimum standards set in the Act, and by attempting to do so, that employer will nullify any offending contractual clause. On termination notice, the ESA states:
Requirements during notice period (section 60.1)
During a notice period, the employer:
(a) Shall not reduce the employee's wage rate or alter any other term or condition of employment;
(b) Shall in each week pay the employee the wages the employee is entitled to receive, which in no case shall be less than his or her regular wages for a regular work week; and
(c) Shall continue to make whatever benefit plan contributions would be required to be made in order to maintain the employee's benefits under the plan until the end of the notice period.
Pay instead of notice (section 61.1)
An employer may terminate the employment of an employee without notice or with less notice than is required if the employer:
(a) Pays to the employee termination pay in a lump sum equal to the amount the employee would have been entitled to receive under section 60 had notice been given in accordance with that section; and
(b) Continues to make whatever benefit plan contributions would be required to be made in order to maintain the benefits to which the employee would have been entitled had he or she continued to be employed during the period of notice that he or she would otherwise have been entitled to receive.
Quadraspec admitted that the clause excluded benefits to which Paquette was entitled, but argued that it understood it had an obligation to pay these benefits to Paquette regardless of the wording of the contract.
However, Justice Kane found that when drafting the contract, the employer intentionally chose a wording that violated the ESA, despite simple valid alternatives. Quadraspec clearly put substantial effort into the drafting of the detailed 15-page employment contract, and as a result, it didn't make sense for the court to infer terms into the ambiguous termination notice clause.
The court further noted that the offending clause looked like an attempt to avoid or limit the employer's obligation to maintain Paquette's benefits during the notice period, placing the onus (and expense) on the employee to challenge the ambiguous provision in court. Justice Kane stated, “Courts shouldn't be assisting employers with such a purpose.” As a result, the court found the termination clause was null and void.
Justice Kane made another important decision in the case. The ESA states that an employer must pay severance to employees of five years or more if its total payroll is greater than $2.5 million. Quadraspec argued that this clause applies only to payroll in Ontario. Since Quadraspec's main operations are in Quebec, and its Ontario payroll was not above the threshold, this interpretation would have meant the employer didn't have to pay severance to Paquette. The court disagreed. It is clear from the reading of the Employment Standards Act and various other relevant statutes that Ontario's legislature did not intend to limit the severance clause to employers' payroll in Ontario. There is simply no evidence that this was the intention.
The Act states:
Payroll (section 64.2)
An employer shall be considered to have a payroll of $2.5 million or more if:
(a) The total wages earned by all of the employer's employees in the four weeks that ended with the last day of the last pay period completed prior to the severance of an employee's employment, when multiplied by 13, was $2.5 million or more; or
(b) The total wages earned by all of the employer's employees in the last or second-last fiscal year of the employer prior to the severance of an employee's employment was $2.5 million or more.
Since Quadraspec's total payroll was more than $2.5 million, and Paquette had worked for the company for more than five years, the court found the employer did owe the employee severance.
This case serves as another clear reminder that it is crucial to draft compliant employment contracts.
Any questions or comments, please communicate with Yosie Saint-Cyr, Managing Editor, HRinfodesk.com at editor@hrinfodesk.com
This article is published on HRinfodesk---an online publication and database of payroll and employment law news, compliance and case commentaries for every jurisdiction in Canada, published by First Reference.
These articles are made available to give you general information and understanding of the law, not to provide legal advice about specific situations or problems. These articles also offer general comments on legal developments of concern to businesses. There is no lawyer-client relationship between you and the author or publisher. Every effort has been made to ensure the accuracy and timeliness of this information. These publications should NOT be relied upon as legal advice or opinions. The reader should always obtain legal advice from a qualified lawyer or other qualified professional, which will be responsive to the case or circumstance of the individual.
Please note that the content provided in this article or any content contained in or made available through any third party website linked to from this article and/or HRinfodesk, is provided “as is” without representations or warranties of any kind. All representations and warranties in respect of content or third party content, express or implied, including, without limitation any representations to warranties or conditions regarding accuracy, timeliness, completeness, non-infringement, merchantability or fitness for any particular purpose are hereby disclaimed.
 
 
 
 
 
 
 
 
 

Tax cheats beware: zapper use will not be tolerated

Tax cheats beware: zapper use will not be tolerated -www.alikoaapayrollservices.com
 
 
Tax cheats beware: zapper use will not be tolerated
 
 
 
 
Minister Findlay meets with local businesses to discuss new civil and criminal sanctions for possession or use of electronic suppression of sales software
August 13, 2014 - Saskatoon – Canada Revenue Agency
The Honourable Kerry-Lynne D. Findlay, P.C., Q.C., M.P., Minister of National Revenue, joined by Minister Lynne Yelich, Member of Parliament for Blackstrap, and Kelly Block, Member of Parliament for Saskatoon-Rosetown-Biggar, today took part in a roundtable discussion with business owners to discuss new sanctions introduced earlier this year to combat the use of electronic suppression of sales (ESS) software and its contribution to the underground economy.
  • Economic Action Plan (EAP) 2013 proposed new administrative monetary penalties and criminal offences under both the Excise Tax Act and Income Tax Act targeting those participating in the use, possession, sale or development of ESS software. Those EAP measures took effect on January 1, 2014.
  • Earlier this year, the Canada Revenue Agency (CRA) began an awareness campaign to ensure that businesses were aware of the new sanctions. The awareness activities will conclude this summer.
  • As of September 1, 2014, the CRA will begin to impose these new civil penalties and criminal sanctions for participating in the use, possession, sale or development of ESS software.
Quick facts
  • ESS software (commonly known as “zapper” software) selectively deletes or modifies sales transactions in point-of-sale systems, electronic cash registers and business accounting systems, leaving no record of the original transaction behind. The software allows businesses to underreport their revenue and avoid paying taxes.
  • Under the new measures, businesses that use, possess, or acquire ESS software will face a fine of $5,000 for the first infraction and $50,000 on any subsequent infraction. Anyone who participates in manufacturing, developing, selling, possessing for sale, offering for sale or otherwise making available ESS software will face a fine of $10,000 for the first infraction, and $100,000 on any subsequent infraction. They may also face criminal charges of up to $1 million in fines, up to a five year jail term, or both.
Quotes
“Our Government is serious about cracking down on tax cheats—including those who manufacture or use electronic suppression of sales software. We now have the tools to penalize these tax cheats with stronger civil and criminal consequences, including fines and even jail time. Participation in the underground economy hurts all Canadians.”
 
“The severity of these sanctions speaks to how serious a crime this is. We are committed to rooting out tax cheats and making sure they are punished accordingly. In keeping with our commitment to reducing red tape, we have enacted these measures without creating additional reporting requirements for compliant businesses.”
 
 

Canada Revenue Agency/Ontario Government Implement Personal Tax

wwwwCanada Revenue Agency/Ontario Government Implement Personal Tax
 
 
 
 
Canada Revenue Agency/Ontario Government Implement Personal Tax
Increases Retroactive to January 1, 2014 for Employees Earning over
$150,000
 
 
 
 
Key Points
Increased taxes for employees earning more than $150,000 to be implemented through
higher payroll tax deductions from September to December and/or on 2014 tax returns
CRA publishes revised Ontario tax tables to implement retroactive Ontario tax increases
for employees earning over $150,000
CRA agrees to no penalty approach for employers
Discussion points for payroll staff and management: Who will be impacted and how?
Next Steps for Payroll Staff
Most employees earning over $150,000 will have a 3% or 6% increase in their Ontario taxes on
regular pay from September to December, 2014.
Background
Increased taxes for employees earning more than $150,000 to be implemented through higher
payroll tax deductions from September to December and/or on 2014 personal tax returns
On May 1, 2014 the Ontario government tabled a provincial budget that introduced higher personal
income tax rates for individuals earning over $150,000. These tax increases were to be retroactive to
January 1, 2014. This budget was defeated, triggering a provincial election. The current Liberal
government was elected with a majority on June 12, 2014 and re-introduced the budget which passed
July 24, 2014 with the same tax rate changes and retroactivity to January 1, 2014.
Current 2014 Ontario tax rates and
income thresholds
New 2014 Ontario tax rates and
income thresholds
Annual taxable income
($)
From – To
Provincial
tax rate (%)
Annual taxable income
($)
From – To
Provincial
tax rate (%)
0 to 40,120 5.05% 0 to 40,120 5.05%
40,120 to 80,242 9.15% 40,120 to 80,242 9.15%
80,242 to 514,090 11.16% 80,242 to 150,000 11.16%
514,090 and over 13.16% 150,000 to 220,000 12.16%
220,000 and over 13.16%
Prior to the Ontario Government’s July budget, the Canadian Payroll Association (CPA) had been
discussing various implementation scenarios for these proposed income tax rate and threshold
changes with the Canada Revenue Agency (CRA) and the Ontario Ministry of Finance.
2
Legislative Briefing: Ontario Personal Tax Changes
The purpose of our discussions was to advise government officials on the efficiency and compliance
implications for employers and payroll systems providers of mid-year changes and the complications
with retroactive adjustments in particular. While January 1 and July 1 income tax table updates are
expected and planned for, income tax changes at other dates require additional resources and
processes. Most government budgets are tabled in the spring, and the CRA and provinces have a tax
collection protocol that results in these changes being made using a July 1 tax table release. The
CPA has advocated strongly that these dates be honoured to provide employers, payroll service and
software providers, as well as governments, sufficient time to program payroll systems, then test and
implement changes to support compliance and efficiency. Because the Ontario budget was reintroduced
and passed on July 24, 2014, a July 1 income tax table change and resulting processes
are no longer possible.
The CPA made a number of suggestions to the CRA and the Ontario Ministry of Finance on how
employers could implement and comply with these unusual changes in an efficient and effective
manner while being fair to affected employees and protecting employers from compliance problems
and penalties. Suggestions included waiting to implement the tax rate changes until January 2015 or
enabling those affected to pay the retroactive amounts when filing their 2014 T1 personal tax return.
The Ontario government stood to forego $635 million in tax revenue by delaying the tax increases until
2015, and advised of the need to proceed with implementing the personal tax increases retroactive to
January 1, 2014. As a result, the CRA needed to determine how best to administer the rate increases
within the context of the Federal/Provincial Tax Collection Agreement that has been in place for
decades. The CRA has decided that it must apply the new tax rate by implementing a higher tax rate
in payroll deductions from September 1 to December 2014 to capture the amount of tax due from
January 1, 2014.
The majority of payroll service providers and software companies have a contractual obligation to use
the most current tax tables for their clients (employers) payroll processes.
Impact on Net Pay
CRA publishes revised tax tables to implement retroactive Ontario tax increases
The personal tax rate increases in the Ontario budget is 1% for earnings of $150,000 to $220,000
and 2% for $220,000 to $514,090. Because the tax increases are effective January 2014 but
implemented for only the last 4 months of 2014, the new CRA tax tables will result in these
employees having a 3% or 6% increase in their Ontario tax deduction on regular pay from
September to December, 2014. For employees who will reach this salary range between
September and December, the tax increase will not be retroactive.
The CPA is advising members and stakeholders that within this context, the CRA has agreed to some
of the CPA’s implementation suggestions and has posted the following on its website under “What’s
new for payroll”.
3
Legislative Briefing: Ontario Personal Tax Changes
Message on “What’s new for payroll” webpage
Payroll tables
The Canada Revenue Agency (CRA) will publish a September 1, 2014 version of the Ontario payroll tables
to incorporate proposed increases to personal income tax rates tabled in the Ontario budget on July 14,
2014. As the proposed changes are retroactive to January 1, 2014, the revised tables will reflect the
necessary prorated tax rates to allow employers to withhold the correct additional amounts from
employees between September and the final pay of 2014. The changes to the tables apply to employees
who earn more than $150,000 in 2014.
The September 1, 2014, version of Guide T4127, Payroll Deductions Formulas for Computer Programs is
now available on the CRA website.
The updated payroll deductions online calculator and the electronic version of the T4008 Payroll
Deductions Supplementary Tables and T4032 Payroll Deductions Tables for Ontario will be available on
our website by mid-August.
The paper and CD version of the T4032 will be available by the end of August.
Message on “T4127, Payroll Deductions Formulas for Computer Programs” webpage
Notice to the reader
The September 1, 2014, version of Guide T4127, Payroll Deductions Formulas for Computer Programs,
contains adjustments for proposed increases to personal income tax rates tabled in the Ontario budget on
July 14, 2014. The proposed changes are retroactive to January 1, 2014, and the revised tables reflect
prorated tax rates to allow employers to withhold the correct additional amounts from affected employees
between September and the final pay of 2014. The changes to the tables apply to employees who earn
more than $150,000 in 2014.
The CRA normally requires employers to withhold and remit income taxes in line with current rates, but
because of the complexities and timing of the Ontario budget measures it is recognized that these income
tax changes will be implemented on a best-effort basis where practical, in full appreciation of the different
payroll systems and administrative capacities of employers. Employers will not face penalties for failing to
withhold as a result of the Ontario budget measures introduced on July 14, 2014.
Employees whose employers are unable to change their payroll systems or processes on time can ask
their employers to increase withholdings from September to December 2014. This could reduce the
amount the employees owe when they file their 2014 income tax and benefit return.
Employers are encouraged to discuss these changes with affected employees.
4
Legislative Briefing: Ontario Personal Tax Changes
Implications/Points for Discussion between Payroll Staff and Management
Who will be impacted and how? Is the system change possible for September? What are the
next steps for payroll deductions?
The CPA’s advocacy goal is to increase the efficiency and effectiveness of payroll related legislation
and administration for all stakeholders - it does not advocate for higher or lower taxes. The majority of
payroll service and software providers have advised the CPA they will make the programming
changes required by September 1, 2014 to enable employers and Ontario employees affected to
comply with the higher tax rate.
The new tax table’s catch-up rate will deduct, in payroll processing, most of the additional tax liability
(approximately $485 million collectively) for those affected. A reduction in net pay ─ due to these
higher taxes ─ will reduce the possibility of a tax liability when the employee files their personal tax
return.
The CRA states, “Where employer payroll systems or processes are not changed, employees could
request employers to increase withholdings from September to December 2014 in an effort to reduce
an amount owing on filing of their 2014 tax return.” For these organizations, the CRA will enable
employees to request the additional taxes using Ontario TD1s effective from September to December
2014 and make any final payments owing on the T1 personal tax return.
This CRA/Ontario government approach will be efficient and effective for most stakeholders
(government, employers, payroll software companies, payroll service bureaus, outsourcing
organizations and employees) because:
 The personal tax rate changes only apply to fewer than 2% of Ontario employees but require
system-wide reprogramming for employers and the government.
 Payroll systems are based on the CRA’s T4127 guide that has one prescribed tax rate for each
specific income threshold, so there can be no variability among employees within each
organization.
 For employers/organizations with in-house or off-the-shelf systems, and/or other constraints,
they have the option to not change or use the revised tax rates, and continue with the existing
rates. High income earners should be encouraged to request additional income tax using an
Ontario TD1.
 Employers using manual tax tables or the CRA’s Payroll Deduction Online Calculator (PDOC)
will have access to the new versions by mid-August.
Employers should be ready for questions from Ontario employees earning over $150,000 as their pay
cheques for the months of September to December 2014 will be lower when payroll systems are
programmed with the new tax rates.
For your benefit as a member of the Canadian Payroll Association, we suggest you share this Ontario
tax rate briefing with senior management, and initiate a discussion about the impact on employees
earning over $150,000 to explain the situation and identify the implications for them as employees and
you as the person responsible for the organization’s payroll compliance with government regulations.
5
Legislative Briefing: Ontario Personal Tax Changes
Next Steps for Payroll Staff
Scenario 1: You have asked and received confirmation from your Payroll Service or Software
Provider (PSSP) or your Information Systems staff that your payroll system will be updated with the
revised Ontario income tax tables effective September 1, 2014.
Step 1: Notify senior management of the implication for Ontario employees who earn over $150,000 of
the increases to their personal income tax rates by providing a copy of this CPA briefing.
Step 2: Suggest to senior management that the organization provide a copy of this CPA briefing to all
Ontario employees earning over $150,000. A French copy of this briefing is available.
Step 3: Remind affected employees that the payroll system will only calculate additional taxes for their
employment income and that the Ontario personal tax increases also apply to other sources of income
such as investment and rental income. Offer those employees the opportunity to request additional taxes
from September to December 2014 using an Ontario TD1 (TD1ON) to reduce a potential tax liability on
their taxable income when they file their T1 personal income tax return. (Suggest a discussion with a
financial advisor or tax expert.)
Step 4: Process any requests for additional income tax and set a reminder to cease additional taxes for
the first pay period of 2015 (or set the amount back to the amount that the employee had prior to this
transitional increase).
Scenario 2: You have asked and received confirmation from your Payroll Service or Software
Provider (PSSP) or your Information Systems staff that your payroll system will NOT be updated with
the Ontario income tax tables effective September 1, 2014.
Step 1: Notify senior management of the impact on Ontario employees who earn over $150,000 of the
increases to their personal income tax rates by providing a copy of this CPA briefing.
Step 2: Suggest to senior management that the organization provide a copy of this CPA briefing to all
Ontario employees earning over $150,000. A French copy of this briefing is available.
Step 3: Advise affected employees that they will likely have a tax liability when they file their T1 personal
income tax return. Offer to calculate the additional taxes that would have been deducted each pay period
by using the September versions of either the CRA’s Payroll Deductions Online Calculator (PDOC) or the
T4032 Payroll Deductions Tables for Ontario based on your employee’s payroll frequency (monthly, semimonthly,
bi-weekly, weekly). Both of these CRA publications will be updated with the new Ontario rates
by mid-August.
Step 4: Offer affected employees an Ontario TD1 (TD1ON) to request additional income taxes from
September to December 2014 to reduce a potential tax liability on their taxable income when they file
their T1 personal income tax return. (Suggest a discussion with a financial advisor or tax expert to
discuss the additional impact of other sources of income such as investment and rental income.)
Step 5 (Optional): Ask employees who reject the offer of deducting additional taxes to complete a written
acknowledgement form that you notified them of the tax increases and that they did not authorize
additional taxes be deducted. (You may use the acknowledgement form provided at the back of this CPA
briefing.)
Step 6: Process any requests for additional income tax and set a reminder to cease additional taxes for
the first pay period of 2015 (or set the amount back to the amount that the employee had prior to this
transitional increase).
6
Legislative Briefing: Ontario Personal Tax Changes
Conclusion
The Canadian Payroll Association is fundamentally opposed to retroactive adjustments to payroll
requirements because these cause administrative, compliance and financial burdens on employers,
employees and government, and result in costs, confusion and frustration for everyone.
However, the CPA respects the decisions of the Ontario government and the CRA to enable
employers and employees to most efficiently and effectively comply with the tax changes by:
 revising the tax tables for payroll remittances so that the majority of the tax increase for those
affected will be implemented using the existing process, while
 being flexible and enabling employers to assess the implications on their systems and
implement the changes on a best efforts basis with no penalties for employers who do not
make the payroll system changes in the short time period now available.
7
Legislative Briefing: Ontario Personal Tax Changes
Appendix 1
Employee Acknowledgement Form
I, ___________________________, acknowledge receipt from my employer that the
(print name)
payroll system has not been updated with the Ontario personal income tax increases and that
I will be responsible for any personal income tax liability on my taxable income when I file my
personal income tax return.
____________________________ __________________________
(signature) (date)
8
Legislative Briefing: Ontario Personal Tax Changes
Appendix 2
Previous Experience
The CPA’s previous advocacy experience on a similar situation
This is not the first time that the CPA has advocated on behalf of employers with the CRA and a
provincial government when the latter legislated income tax changes after July 1. In 2001, the Ontario
government lowered income tax rates effective October 1 of that year. The CRA and Ontario Ministry
of Finance asked for the CPA’s input on how to implement the changes in an efficient manner. At the
time, the CPA got involved and pointed out that:
 The tax rate changes were relatively small.
 Employees would benefit from the decrease when filing their personal tax returns if their
employers’ payroll system had not changed.
 It would cost millions of dollars for employers to implement system changes for three months.
It was therefore agreed that the adjustment to payroll system changes would be made on a best
efforts basis. Most of the payroll service and software providers made the changes, while many
smaller employers or those with in-house systems did not make the changes but advised their
employees that they would receive the benefit when they filed their T1 (personal return).
The key differences between the previous Ontario tax adjustment in 2001 and the current situation
are:
 This is a tax increase on employees earnings more than $150,000, which represents fewer
than 2% of all employees, while in 2001 it was a small tax decrease for everyone i.e., across
all employment income thresholds.
 This adjustment is for a full year with 8 months’ retroactive and 4 months going forward
compared to a reduction for 3 months for the remainder of the year in 2001.
 The Ontario government just won an election on June 12 with a budget that included this
personal tax increase on income earners over $150,000 and which has been known since
May.
 The province of Ontario has a big deficit and is being encouraged by most stakeholders to
reduce it.
Financial planners, accountants and media stories have already advised the higher income earners
affected to seek advice from professional finance and tax planners to determine if, and how, to deal
with any personal tax liabilities.
 
 
 
 
 
 
 
 
 
 
 
 
 
w

Three keys to Developing Financial Accountability

 
www.aliko-aapayrollservices.com
Three keys to Developing Financial Accountability -www.aliko-aapayrollservices.com/blog
 
Three keys to Developing Financial Accountability
Written by Sarah Milton
 
 
“Surround yourself with those who are on the same mission as you.” – Unknown
I believe that accountability is a critical factor in successful goal setting and that this is especially true when it comes to financial goals. A couple of months ago, I was asked to write a testimonial for a man who has helped me a great deal over the past 18 months with my personal goals and it forced me to think about what specifically it is about him and his approach that has had such a strong impact on my success. What I realized is that it wasn’t so much his natural coaching ability or his compassion that made him successful as a coach, it was the fact that he led by example and he never let me off the hook when it came to doing what needed to be done in order to reach my goals. He wouldn’t let me set the bar lower than it needed to be and he held me accountable for taking the steps necessary to reach my goals. Knowing that failure (and laziness) was not an option forced me to step up even when I was fearful or unmotivated.
Surround yourself with the right people
When it comes to managing money and building wealth, being held accountable dramatically increases our chances of success. I’ve written before about the theory that we are the sum of the people we spend the most time with.
If you spend most of your time with people who will allow you to make excuses when you get off track and who will lead you into temptation with their own spending habits it makes sense that it’s going to be much harder to achieve your goals. Conversely, if you’re surrounded by people who are committed to achieving their own goals and who won’t hesitate to let you know what they think when you don’t do what you need to in order to succeed you are more likely to be successful.
As I was writing my testimonial it occurred to me that a good accountability partner has three main characteristics:
They Don’t Let You Off the Hook
As I thought about my mentor and then back to high school and university I realized that the teachers who had impacted me the most (in a positive way!), and in whose classes I had made the most progress, all shared common traits. Each one of them was strict but fair and each one of them was known for not being willing to extend deadlines on homework or essays under any circumstances. Many students disliked them because they were so strict but I found that I thrived in their classes because I was too afraid of the consequences to risk not doing what I was required to in order to do well! An accountability partner needs to be strong enough to call you out when you’re doing less than you’re capable of and they need to be able to do it in a way that’s not confrontational or demoralizing. Putting someone down by pointing out their flaws and non-successes is not the same as holding them accountable to a standard that they’ve set for themselves. An accountability partner is someone who gives you feedback in order to build you up, not tear you down.
They Walk the Walk
If you’re relying on someone to hold you accountable for your goals then it’s important that you can see and respect the effort that they dedicate to achieving their own. Our goal group meetings are focused on the progress and challenges of the individual members and the leader’s role is to facilitate the discussion and solicit feedback rather than share his own goals. However, just knowing that he is working on his own goals and seeing his progress inspires us to dig deeper and keep working on ours. An accountability partner functions like a pacesetter, they set a standard that encourages you to push a little harder in order to keep up and their progress motivates you to keep moving towards your goal. This is especially important when it comes to financial goals because in trying to eliminate debt, manage your money more effectively and build wealth you’re aspiring to achieve goals that are in direct opposition to the materialistic, debt-laden norm of our consumer driven society. Working to achieve your goal alongside someone who is on the same path makes it a lot easier to stay motivated when it feels as though you’re paddling upstream..
They Celebrate Successes
An accountability partner should be genuinely happy for you when you reach a goal and not threatened at all by your success. They should also remind you to celebrate every step of the way. Sometimes we get so caught up in focusing on how far we still have to go to reach our goal that we need reminding of how far we’ve already come. Celebrating success with an accountability partner is powerful because their unique understanding of your journey gives them a totally different appreciation of how significant each step really is.
As human beings we have an innate need to be seen; to be recognized and validated for our progress and accomplishments. When you’re working to achieve a goal, you tend to be driven by something that is personal to you and that motivator is not always understood or supported by those around you. Having an accountability partner is more than just having someone on your side who understands your journey. It’s about having someone in your corner who believes in and supports your reason for starting that journey in the first place, who will remind you of it when you get off track and who will hold you accountable for finishing what you set out to achieve.
 
 
 
 
 
 
 
 
 
 
 
 

2014 tax season: 12 tips to get the biggest refund

2014 tax season: 12 tips to get the biggest refund -www.aliko-aapayrollservices.com/blog
 
 
2014 tax season: 12 tips to get the biggest refund
 
 
 
 
1. Claim medical expenses
This is my personal favorite, only because everyone has a question about their medical expenses. People miss claiming common expenses like Blue Cross, and fees paid to medical practitioners like speech-language pathologists, occupational therapists and acupuncturists. Ambulance fees are expensive and claimable; so is the cost of tutoring services for the learning disabled. You can also claim the lesser of $5,000 and 20 per cent of the costs of a van adapted to transport the wheelchair bound and moving expenses incurred to a more suitable dwelling to a maximum of $2,000. When in doubt, check it out.
2. Moving expenses
If you have moved at least 40 kilometers closer to a new work location, you can claim the costs of selling your home, including real estate commissions and penalties for paying off a mortgage. Even the costs of a vacant old residence, to a maximum of $5,000 is allowed. The costs of moving to the new location and temporary living accommodations for up to 15 days can be claimed too. But, as this is often a five-figure number, expect to be audited.
3. Maximize babysitting deductions
Claiming the child-care deduction can be complicated. Should it be the higher or lower earner who claims it? It depends, actually. Usually it’s the lower earner, but if there is a separation during the year, or the lower earner is going to school, or hospitalized, it’s possible the higher earner may make the claim. The maximum dollar amounts claimable have not changed this year, still $4,000, $7,000 or $10,000, which depend on the child’s age and health. Claim the lesser of what was actually spent, your earned income (sorry, EI benefits won’t qualify) and the weekly and monthly dollar limits specific to higher earners and students. Keep receipts handy, too, in case of audit.
4. Don’t miss employment deductions
If you get a T4 slip and are required to pay out-of-pocket expenses as part of your employment contract, a deduction may be possible on your tax return. Here’s the catch: you must be required to pay your own expenses under your contract of employment and the employer must certify this on Form T2200 Declaration of Conditions of Employment. Lots of taxpayers forget to claim back the GST/HST paid on tax deductible amounts using the GST/HST 370 Form. Expenses can include accounting and legal fees, motor vehicle expenses, travel costs, parking, supplies used up directly in your work, office rent or certain home office expenses as well as amounts paid to an assistant, which could be a family member.
5. Your principal residence is tax exempt
The increase in value of a property designated as a principal residence is tax exempt. It’s easy to qualify your properties if you own more than one —just live in each for a couple of days each year. You can have more than one residence that qualifies, but only one can be designated as your principal residence for any given year. The choice of which is made on t2091 when you dispose of a residence. But if you’ve been flipping residences for profit, you could be assessed as being in the business of buying and selling homes. Be ready to defend this by showing your intention in acquiring the properties and the circumstances around the reasons for the dispositions.
6. Disabled? Use your RRSP Home Buyer’s Plan
The Home Buyers’ Plan is an RRSP feature that allows first time home buyers to withdraw up to $25,000 from their RRSP tax-free, for the purpose of buying or building a home. Note that you qualify as a first time home owner if you move to accommodate a disabled person. The withdrawals may be a single amount or the taxpayer may make a series of withdrawals throughout the year as long as the total does not exceed the $25,000 maximum.
7. Minimize tax on severance
If you’ve lost your job, your severance package can help but it can also put you into a high tax bracket because it’s usually paid in a lump sum. One way to reduce your taxes is to maximize your RRSP contribution room. Another is to write off your legal fees if you fought a wrongful dismissal. In some disputes, you qualify for lump sum averaging to reduce taxes. Better yet, ask the HR department to annualize the bonus to average down taxes payable for the period. Best to see your tax advisor first, to ensure you keep as much as possible, after-tax.
8. Control credit crunches: write off interest
Is your investment portfolio still in the red zone? You can still write off the interest on your full investment loan, even if your portfolio has diminished in value, providing there was a reasonable expectation of income from property: interest and dividends for example. Also, be sure to take advantage of capital losses to reduce capital gains of the current year. Unabsorbed losses may be carried back or forward to offset capital gains in the carry-over year. Don’t cash in RRSPs if you can help it—this will cause a tax problem next year.

9. Optimize pension income splitting
If you received a pension from your company plan or started periodic withdrawals from your RRSP or RRIF this year, you may elect to transfer up to 50 per cent of your pension benefits to your spouse. This can be very lucrative. Those receiving periodic pension benefits from employer-sponsored plans can take advantage of pension income splitting at any age; if periodic income comes from RRSPs, RRIFs or other annuities, you’ll have to wait to age 65 to income split.
10. Reduce tax installment payments
Take control of the first dollar you earn—keep more by paying only the correct amount of tax throughout the year. If you pay income taxes by making quarterly payments, review your payment requirements. If your income has dropped since you last filed a tax return, you can reduce your payments. Simply write a letter to let CRA know you will estimate installments payable on current year. This is a much better way to manage your cash flow and stay invested during market turmoil.
 
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11. Claim the new tax credits for children’s activities
There are new amounts to be claimed on the tax return for enrolling your children in the arts or sports activities. You can claim public transit charges for them to get there too. Because the Children’s Arts Amount is new, you’ll need to remind yourself to dig out the receipts.
12. Adult artists and writers can claim deductions, too.
Employed artists and musicians can claim expenses for composing dramas, musicals or literary works, performing and creating works of art. Expenses can include things like ballet shows, art supplies, computer supplies and home office costs. The maximum claim is 20 per cent of net income or $1,000. Musicians can also make claims for the maintenance, rental, insurance and capital cost allowance for musical instruments.
 

Changing your tax return once you have already filed itIncome Tax Act S. 142(4.2)

Changing your tax return once you have already filed itIncome Tax Act S. 142(4.2)-www.aliko-aapayrollservices.com/blog
 
 
Changing your tax return once you have already filed itIncome Tax Act S. 142(4.2)
 
 
 
 
 
 
 
 
www.aliko-aapayrollservices.com/blog
 
If you have filed your return and then determine that you need to make a change, either because you have received another T-slip, or because you didn't claim an expense and later learned it was deductible, you can request an adjustment to your tax return.If you've just discovered that pension splitting with your spouse would save you some tax, this is also a good reason to adjust your prior return.  However, make sure that combined taxes payable are reduced by doing this, and keep in mind that the taxes payable of one spouse will probably increase, resulting in interest on the tax amount payable.The time limit for filing adjustments to your tax returns by mail is ten (10) years.  An adjustment request may be made in 2013 for the 2003 or subsequent taxation years.You can request the changeonline for your most recent return, or your returns for the previous two tax years, orby mail, for tax returns for the past ten years.Requesting a change onlineRequesting a change online is very simple, and is done by logging into your account at the CRA My Account page.  A separate request has to be filed for each tax year.You can also use the online request if you forgot to apply for the GST/HST tax credit when you filed your tax return.Requesting a change by mailYou can obtain a form T1Adj from the CRA web site, complete it and mail it in, along with documents supporting your change request.See also the CRA web page How to change your return.