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About Us
INDUSTRY EDITION
September 3, 2008
www.knowledgebureau.com
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| Quote of the Week "A goal without a plan is just a wish." A. de Saint-Exupery
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BREAKING NEWS |
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► Fourth Quarter Interest Rates |
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► Cottage Country Dilemma: How To Pass It On - Conflict Free |
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► Education & Textbook Credits Available for Full and Part Time Students |
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► Recovering Missed Tax Deductions and Credits Help Cash-Strapped Parents |
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► ROE's and Summer Students - What You Need to Know |
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| YOUR NEWS |
| ► Poll Question: Yes or No - Should the Federal government increase the child fitness tax credit and should the provinces match the credit? |
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| Fourth Quarter Interest Rates |
The Canada Revenue Agency has announced the prescribed annual interest rates that will apply to any amounts owed to the CRA and to any amounts the CRA owes to individuals and corporations. These rates are calculated quarterly in accordance with applicable legislation and will be in effect from October 1, 2008, to December 31, 2008.
Income tax
- The interest rate charged on overdue taxes, Canada Pension Plan contributions, and Employment Insurance Premiums will be 7%.
- The interest rate paid on overpayments will be 5%.
- The interest rate used to calculate taxable benefits for employees and shareholders from interest-free and low-interest loans will be 3%.
Each of these rates remains unchanged from the previous quarter.
Other taxes
The interest rate on overdue and overpaid remittances for the following taxes will be:
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Tax and Duty |
Overdue remittances |
Overpaid remittances |
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GST |
7% |
5% |
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HST |
7% |
5% |
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Air Travellers Security Charge |
7% |
5% |
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Excise Tax (non GST) |
7% |
5% |
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Excise Duty (except Brewer Licensees) |
7% |
5% |
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Excise Duty (Brewer Licensees) |
5% |
N/A |
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Softwood Lumber Products Export Charge |
7% |
5% |
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| Cottage Country Dilemma: How To Pass It On - Conflict Free |
NEWS RELEASE August 28, 2008
COTTAGE COUNTRY DILEMMA: HOW TO PASS IT ON--CONFLICT FREE
Winnipeg, Manitoba. The days are getting shorter, the nights longer, and the questions more frequent: when should we start talking about passing on the family cottage? Filled with childhood memories and intergenerational labor, for many families this is a bigger dilemma than meets the eye.
Renowned Winnipeg-based national financial educators and authors, John Poyser and Evelyn Jacks have teamed with The Winnipeg Free Press to present the first-ever strategic planning workshop for cottage owners, entitled "Pass It On!", at The Winnipeg Convention Centre, Saturday October 18 from 8:00 AM TO 12:30 PM .
"Cottage Owners flounder when it comes to succession planning" says lawyer John Poyser of the Wealth Management Group at Inkster, Christie Hughes. "This half day workshop will cover everything you need to know and provide answers to cottage owners in need of concrete direction, including a Cottage Succession Planning Guide to discuss with family as well as legal and financial advisors."
Evelyn Jacks, best-selling tax author and President of The Knowledge Bureau, agrees. "There are significant personal tax issues to be considered, and we are pleased to partner with John's firm and The Winnipeg Free Press to provide this unique educational seminar".
"This workshop is a natural fit for The Winnipeg Free Press with many of our faithful readers now in the position to concern themselves with succession planning." says Marnie Strath, Marketing Director of The Winnipeg Free Press.
Pass It On! will answer difficult, yet common questions in an informational and entertaining session. The audience will consider:
- Should the cottage be in joint names?
- Should we give it to the kids now? Or leave it to the kids in the will?
- Who will pay for the new roof?
- How can we make sure each child is treated equally?
- How do we deal with this as a blended family?
- Adult kids living common law—is your cottage at risk?
- What if I have a cottage in one province and a house in another?
- How do we deal with the one child who lives in Britain or Vancouver?
- What should we do when one of my children wants cash?
The workshop is advantageously priced to encourage family participation. Brunch is included.
For more information contact: The Knowledge Bureau online at knowledgebureau.com or call 1-207-953-4769.
Click here to register now.
For interviews with John Poyser and Evelyn Jacks please contact Marion Trapp at the number above.
ABOUT INKSTER, CHRISTIE, HUGHES
The Wealth Group of Inkster, Christie, Hughes, LLP is a boutique practice group focusing on succession issues, including cottage succession.
ABOUT THE KNOWLEDGE BUREAU
The Knowledge Bureau is a leading educational publisher and national post-secondary educational institute specializing in certificate and designation courses for financial advisors and their clients.
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| Education & Textbook Credits Available for Full and Part Time Students |
Many frenzied parents find the "back to school" rush a financial burden. Besides clothing, school supplies, transit passes and books, there is tuition for university students, a rising cost across the country. Last week we covered the rules behind tax relief for tuition fees. This week, consider the monthly credits earned by post-secondary students, which will turn into cash at tax time for students or their supporting parents, grandparents or spouses. No receipts are necessary to benefit from this lucrative credit, but Form T2202A must be received from the university or designated educational institute.
Advisors and clients should check the points below for a better understanding of qualifying criteria.
EDUCATION AMOUNT
Full Time Students. The credit for full-time students is $400 per month. A full-time education amount may be claimed for each whole or part month in the year that the student was enrolled in a qualifying educational program at a designated educational institution and the student:
- was enrolled full time,
- was enrolled part time and qualified for the disability amount, or
- was enrolled part time because of a mental or physical impairment.
Qualifying educational programs (FULLTIME): a program that lasts at least 3 consecutive weeks and requires a minimum of 10 hours of instruction or work in the program each week (not including study time). Instruction or work includes lectures, practical training, and laboratory work. It also includes research time spent on a post-graduate thesis.
After 2003, a program taken by the student in connection with the student's employment duties, even if that student receives income from that employment, will however qualify, provided only that the employer does not reimburse the tuition cost. Prior to 2004, the opposite was the case: such programs did not qualify, whether the employer reimbursed the student or not.
Non-qualifying educational programs: Students who receive, from a person with whom he or she deals at arm's length, a grant, reimbursement, benefit, or allowance for that program do not qualify.
However, receipt of a scholarship, fellowship, bursary, or prize received, or any benefit received under the Canada Student Loans Act, Canada Student Financial Assistance Act, or the Act respecting financial assistance for education expenses of the Province of Quebec does not disqualify the education program.
Part Time Students. The credit is $120 per month. These may be claimed for each whole or part month in the year that the student was enrolled in a specified educational program at a designated educational institution. A specified educational program is a program that lasts at least 3 consecutive weeks and requires at least 12 hours of instruction each month.
NOTE: KNOWLEDGE BUREAU SELF STUDY COURSES QUALIFY!
Only one education amount may be claimed for each month — the full-time amount or the part-time amount.
Designated educational institutions include:
- Canadian universities, colleges, and other educational institutions providing courses at a post-secondary school level,
- Canadian educational institutions certified by the Minister of Human Resources Development as offering non-credit courses that develop or improve skills in an occupation,
- universities outside Canada where a Canadian student is enrolled in a course that lasts at least 13 consecutive weeks and leads to a degree, and
- universities, colleges, or other educational institutions in the United States that give courses at the post-secondary school level if the student is living in Canada (near the border) throughout the year and commutes to that institution.
Age limitation for education credit. Students who are under 16 at the end of the year, may claim the education amount only for courses taken at the post-secondary level.
Ineligible Amounts. Students may not claim the education amount if they:
- received a grant or were reimbursed for the cost of courses, other than by award money received,
- received a benefit as part of a program (such as free meals and lodging from a nursing school),
- received a salary or wages while taking a course related to their job, or
- received an allowance for a program such as a training allowance.
Join us in the coming weeks to hear about other FAMILY TAX PROVISIONS:
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| Recovering Missed Tax Deductions and Credits Help Cash-Strapped Parents |
Cash-strapped? The tax return is a great place to look for new cash. Many taxpayers miss lucrative deductions and credits each year and can file an adjustment to their returns to reap their just rewards. To do so complete Form T1ADJ.
One of the most commonly missed tax deductions is the GST Rebate, claimed by individual taxpayers on Form GST370. Tax advisors should ask new clients if they qualified for it in any of the past 10 years. If it was missed, the rebate is recoverable. Here are some quick tax facts about making a claim:
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Employees who claim employment expenses on Line 229 of their T1 return and are not in receipt of a reasonable allowance for those expenses may apply for a cash rebate of any GST or HST paid on these expenses on Line 457.
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Expenses eligible for the rebate include:
- office expenses,
- travel expenses,
- entertainment expenses,
- meals and lodging,
- motor vehicle expenses,
- leasing costs,
- parking cost;
- miscellaneous supplies (e.g. street maps, stamps, pens, pencils, and paper clips), and
- capital cost allowance on motor vehicles, aircraft, and musical instruments acquired after 1990
- tradesperson's tools
- apprentice vehicle mechanic's tools
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With the GST rate reduction as of January 1, 2008, the rebates are 5/105 and 13/113 for expenses on which GST and HST is paid.
Prior Filing GST Rebate Omissions
Taxpayers who have failed to claim the GST/HST rebate in prior years may file adjustments to recover this credit for the prior ten year period.
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| ROE's and Summer Students - What You Need to Know |
Employers - with so many summer students leaving their jobs to head back to school, it's time to brush up on the rules related to "interruption of earnings" or what is more commonly referred to as a "termination of employment".
A record of employment (ROE) form is required by the government once an employee has a break in employment. The government uses the information on the ROE to determine whether a person qualifies for EI benefits, the benefit rate and the duration of his or her claim.
An ROE must be issued by an employer even if the employee has no intention of filing a claim for EI benefits.
An interruption in earnings could be due to the employee's quitting or the employer terminating the employment, but only arises if it involves or is expected to involve 7 consecutive calendar days without work or insurable earnings from the employer.
An interruption of earnings also occurs where a salary falls below 60% of normal earnings due to illness, injury, quarantine, pregnancy, the need for a parent to care for either newly born or adopted children, or the need to provide care or support to a family member who is gravely ill with a significant risk of death.
Special rules apply to casual workers. When a part-time or casual worker has not worked for 30 days, is no longer on the employer's active employment list or the employee or the government requests an ROE form, a form must be completed by the payroll department.
FINAL PAY
Other than vacation pay and severance, an employee may be owed other amounts. The employee may earn incentive based bonuses through the course of employment. If an employee terminates, a prorated bonus amount may need to be calculated. If an employee terminates and does not work out the notice period, then pay in lieu of notice is paid if it is the employer's decision to not have the employee work out this time.
If the employee fails to complete the proper notice period, then the employer is not normally required to pay this amount to the employee.
These rules vary by province and therefore it is important to refer to provincial labour standards for the correct notice period rules.
An employee may owe amounts at the time of termination to the employer for a health plan, an RRSP plan or donation plan or any similar arrangement. These amounts must be deducted from the final pay.
A termination checklist is useful in helping the payroll department to determine that all payments and all deductions are captured for the final pay. It can also be used to ensure that all internal policies relating to a termination have been complied with.
When an employee is terminated a termination letter is usually prepared by the payroll or human resource department which outlines the reason for the termination, monies owing to the employee and continuation of any benefits or other coverage. The letter should also describe any non-competition agreement terms and any other actions required by both the employer and the employee.
An employee may or may not work their notice of termination period – the period from the announcement that employment is terminated until the last day of work.
As noted above, if an employee chooses not to work their notice period, the employer generally does not have to pay the employee for the notice period. On the other hand, if an employer chooses not to have the employee work out their notice period then the employer must pay the employee for this period. As mentioned earlier in the course, this payment is referred to as "pay in lieu of notice".
Notice period rules vary by province and can be found in provincial labour standards.
Educational Resources: Excerpted from Advanced Payroll for Professional Bookkeepers, one of the courses that comprise the Bookkeeping Services Specialist program.
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| Knowledge Bureau Poll |
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Current question Yes or No - Should the Federal government increase the child fitness tax credit and should the provinces match the credit?  
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Current poll results: Yes: 71% No: 29% Read what other readers have to say
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| Did You Know? Deduct Carrying Charges on CSB's |
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 Many Canadians purchase Canada Savings Bonds (CSB's) on a payroll deduction plan. In that case, be sure to claim the interest you pay in financing the purchase on line 221 of your tax return as a carrying charge.
Excerpted from Essential Tax Facts, 2008 Edition, by Evelyn Jacks. All rights reserved. |
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| Polling Results: CRA and Account Balances |
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Our question of the month poll in August brought out some very interesting comments from a variety of people. The question “Should CRA have the ability to move balances from income tax, source deduction or GST accounts held by a corporation when there are amounts owing in one of the accounts?” brought out an overwhelming response of NO – they should not have the ability to move balances as they see fit.
In many cases CRA will hold GST refunds back from a corporation if they feel an amount is outstanding on the corporate tax account or source deduction account. We have heard of a case in the corporate world where a GST refund totalling over $1,000,000 was applied to an outstanding corporate balance which had already been paid by the corporation. The $1,000,000 was in the CRA's hands for over six weeks while all of the accounts were settled – imagine having $1,000,000 pulled out of your cash flow forecast because CRA felt the need to hold your money!
The following are some of the responses received in response to the poll question:
Liz Swark - No
They should require the taxpayers or their representatives authorization to do so
No
The Taxpayer should have the ability to ask CRA to move balances from income tax, source deduction or GST accounts held by a corporation when there are amounts owing in one of the accounts? The CRA doesn't act fast enough to move the balances. The CRA doesn't keep a running balance of amounts due as it is. We had a client with a $11,000 credit for 2001 and owed money for 2002, 2003 & 2004. Instead of applying the credit as requested by CRA's Auditor as well as the Client, CRA kept charging interest on the outstanding amounts from the debit years.
No
No, this has happened to my sister's small business and in fact, she did not owe, it was CRA not recording a payment she had made. She has now paid twice and we have not been successful in getting CRA to refund the extra payment.
Geraldine Espley - No
Sounds good, in theory. However, given the CRA's track record of misallocating funds received, I think giving them the right to move funds from one account to another without the client's permission would lead to mayhem. I do believe that the CRA should have the right to withhold refunds while there are assessed balances owing on other accounts, but I do not believe they should be able to move credit balances around without express written permission from the taxpayer.
No
First of all it messes up the bookkeeping and ability to track where the money is going. Secondly, GST and payroll liabilities are funds held in trust but corporate taxes are not. Therefore, it is not right to be able to at least transfer balances between corporate taxes and GST or payroll liabilities.
Jo - No
Absolutely not, unless the taxpayer is notified of and approves the transfer. Any unilateral action by CRA will just totally mess up the bookkeeping and may well create deficiencies in the account from which the funds are transferred.
-Yes
If CRA has a pool of your money, paying basically no interest, why would any knowledgeable taxpayer pay 8% compounded interest on a legitimate outstanding balance in another CRA account? If the o/s balance is in dispute, an adjustment will be made, along with interest if your dispute is resolved in your favor. It will probably speed up the dispute process if other payments are not made because CRA has crippled the cash flow of a taxpayer. There would have to be allowances made in the legislation for these types of events happening.
Rachel Parlee - Yes
This would help to reduce debt for taxpayers who cannot budget their funds properly
Yes
Many times the business wants this, as this is usually involving struggling companies. It is easier for CRA to keep the funds, then to give it to them and have them send it back. Many times the money gets used on other expenses, and CRA gets forgotten, until it is too late.
No
Each account should be dealt with on its own merits.
Jim M Delisle - Yes
If money is owed to CRA by the corp, then they should recoup those funds, these funds are trust funds and they must be recouped from the same corporation, For accounting purpose, a journal entry is all that is needed. The lost of taxes by CRA, increases the burden on the rest of us.
Don Strang CA - No
A recent case that I was involved with, consisted of denying the refund of in excess of $2,000 from a GST rebate, because there was a pending legal case involving the definition of an 'employee' or a 'contractor', which had already been settled in civil court. I believe the status of each account with CRA should be evaluated on its own merits, and settled that way only.
No
It's arbitrary and complicated.
The Editors thank you sincerely for participating. | |
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| OUR NEWS |
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| Featured Course: Help for Today's Investor: Lower Risk and Higher Returns |
It's been tough in the marketplace. . .time to shore up skills and conversations with clients on the relationship between risk and return. . .and we have just the course for you!
"I love how this course brought a richer understanding of market terms and theory. . .then to top it off, the tools we need to continue what we have learned to enrich our profession and benefit our clients. A much needed course for all financial advisors in today's market." Barry Adams, Saint John, NB
Check it out. . .
The Content: Financial Literacy: The Relationship Between Risk and Return
The Authors: Robert Ironside and Doug Nelson
Register for It. . .Click Here
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| Featured Speaker: Paul DeSousa |
DAC 2008 — TRANSITIONING: THE PATH TO RECIPROCITY
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PORTFOLIO CONSTRUCTION: Hedging Against Inflation. Are advisors adequately projecting income and capital needs for a retirement funding period that could feature double digit inflation? What is real inflation? How has inflation measurement changed over time? In this session you will learn how inflation is a threat from many fronts—increases in money supply, real estate pricing, cost of oil—and what advisors need to do to protect their retiring clients from a significant loss of purchasing power. |
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Take three days to think strategically about your business. Focus on enhancing your skills as the quarterback in managing your clients' wealth.
DAC 2007 attendees speak out
DAC 2007 sold out well in advance. Check out the 2007 photo gallery!
Register today!
Check out the full Agenda
Things to See and Do in Fabulous Monterey
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| Knowledge Bureau in the News: The Week of September 7th |
 Jim Gray, a Knowledge Bureau faculty member and one of the presenters at this year's DAC, has written a story on "Marks of a Leader - Cultivating Relationships" which appeared in the Globe and Mail on September 4th. To read the column, click here.
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Set Yourself Apart from YOUR Competition in 2008 |
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