May 2025 Poll

Does the Liberal promise expected soon to cut the lowest personal income tax rate by 1% to 14%,  go far enough to help Canadians impacted by high costs?

A seamless way to produce T4 slips online and electronically file the T4 summary is now available to small employers who have 6 or fewer T4 slips to file for 2010. If this speaks to you, check out T4 Web Forms on the CRA website. It is a quick and accurate way to complete your T4 filing for 2010. Those who qualify, based on last year's T4 filing pattern, should have received a Web access code in the mail by now. If you don't have the code, it can be retrieved online or by calling the CRA e-services Helpdesk for business at 1-877-322-7849. If you think you should qualify (i.e. you are a new employer with 6 or fewer employees), you should contact this number to become registered. Have your Business Number ready. Once logged in to T4 Web Forms, the process to generate T4s and the T4 summary is easy to follow. Enter the total income and deduction data for each employee and the documents will be generated. When you enter the 2010 remittance total (found on the January, 2011 Statement of Account after Amount Paid for 2010), the T4 summary will automatically calculate amounts owing or an overpayment. Once you have printed the T4s and the T4 summary, click to submit the record and you have completed the filing requirements for 2010! ADDITIONAL EDUCATIONAL RESOURCES: Tax Preparation for Proprietorships; Advanced Payroll for Professional Bookkeepers

On February 17, 2011, the Vanier Institute of the Family released its 12th report on Canadian family finances. Entitled The Current State of Canadian Family Finances 2010 Report, this document declares that "for far too many, there is too little income, too much spending, too little saving and too much debt.î Leading tax and financial advisors will want to discuss this issue during tax season, in order to find proactive ways to increase after-tax income which can contribute to debt reduction. According to the report, average family debt has surpassed $100,000 and the debt-to-income ration is 150%. This means that for every $100 received in after-tax income, a Canadian household, on average, owes $150.00. In comparison, average family debt in 1990 was $58,600 and the debt-to-income ratio was 93%. When you factor in inflation, the Report calculates that this is a 78% increase in household debt since 1990. And despite new investment vehicles like the TFSA, savings rates have declined during the past two decades. In 1990, the average Canadian family was able to save $8000 annually, a savings rate of 13%. This has dropped to $2500 in 2010, a savings rate of 4.2%. Advisors should be discussing how this trend can be reversed. A possible culprit is demographicsóboomers are using the savings they created in the last decade to fund retirement or support children and parents. However, for others, savings room may possibly be eaten up for a number of other reasons, for example, overpaid taxes and too much consumer debt. The former issue can be addressed with proper tax planning; the later with a disciplined plan to replace bad debt (consumer goods) with good debt (asset-backed).ADDITIONAL EDUCATIONAL RESOURCES: Tax-Efficient Retirement Income Planning, Introduction to Personal Tax Preparation.

If you are looking for relevant financial reading, make sure that you make time for Canadians and Their Money: Building a brighter financial future. This is the report of the Task Force on Financial Literacy, which was commissioned by Canadian Finance Minister James Flaherty in June, 2009. The Minister appointed 13 members to the Task Force from leaders in business, education, academia and community development, including Evelyn Jacks, President of the Knowledge Bureau. Consultations with Canadians from coast to coast led to the report; a comprehensive strategy for the improvement of financial literacy in Canada, released to the public by the Finance Minister last week. The report defines financial literacy as "having the knowledge, skills and confidence to make responsible financial decisionsî. It states five priorities as pillars of the strategy: 1. Shared Responsibility 2. Leadership and Collaboration 3. Lifelong Learning 4. Delivery and Promotion 5. Accountability From those priorities stem thirty recommendations for action to enable a sustainable National Strategy for financial literacy. To begin the Task Force recommended that a national leader be appointed by the Finance Minister to work with an advisory council in carrying out the recommendations of the Task Force. A single source national website for financial literacy was also recommended as a portal to accumulate unbiased information for Canadians to access accurate, trustworthy information. This includes educational resources, self-assessment tools and financial calculators. The financial services were particularly targeted for improvement in their communications with Canadians. Although there is a lot of information out there for consumers, the report maintains that "Ö much of this material is complex and is not presented in simple, accessible language. In our judgment, financial services providers have a responsibility to ensure that their informational materials are developed, written and designed to be readily understood. Transparency is key. It is vital that institutions have well-trained front-line and advisory staff that can provide accurate information and helpful guidance to customers.î Financial education for youth is also emphasized in the recommendations. The Financial Planning Standards Council, one of the presenters to the Task Force, is quoted: "Young people must develop a positive relationship with money and learn that their relationship with money is a life skill and as important as their relationship with language, reading or arithmetic. They need to learn that money is actually a tool to help them achieve what they want in life.î The Task Force recommends that financial literacy be deemed an "essential skillî by the government. It should be incorporated into the student loans process and programs for aboriginal youth. According to input from Credit Counselling Services of Atlantic Canada: "Financial education needs to be a mandatory part of the school curriculum. These programs should be consistent in content and progression across Canada. This is not for most people a skill they're born with. It's a learned skill, and the earlier you start that education, the sooner you begin building the foundationÖ.î The Task Force recommends that the government establish a new award for financial literacy education within the Prime Minister's Awards for Teaching Excellence. The need for lifelong learning is underscored in the report as well. According to the report, Canadians need to have financial education opportunities at all stages of life, revolving around times when financial decisions must be made. Businesses, institutions and governments must identify and respond to "teachable momentsî as they occur. Further, the public has the right to sound, unbiased assistance with money matters. As public consultation participant Doreen E. Malone CA writes, "Probably one of the most essential pieces of financial knowledge Canadians should have is knowing when to seek outside help in making financial decisions and how to evaluate the quality of that advice.î Amongst some of the other recommendations: Canada must participate in international projects such as the OECD Program for International Student Assessment in order to learn, as the Task Force did, from a deeper pool of financial literacy experience and outcomes. We must support volunteer organizations and groups that assist immigrants. First Nations facilitators should be trained to bring financial literacy to their communities. Government and employers must work harder to promote, explain and facilitate participation by Canadians in savings and income programs for which they are eligible. The report concludes by outlining the need for measurement, evaluation and accountability as the recommendations of the Task Force are implemented. Government, employers and financial institutions and professionals must take financial literacy seriously and must be able to demonstrate a firm commitment to Canadians. Read the report ñ read every page of it. What can we, as industry professionals, do to incorporate financial literacy into our practices? The Task Force has thrown down the gauntlet ñ let's run with it. ADDITIONAL EDUCATIONAL RESOURCE: Master Financial Advisor Designation

The CRA has released a form to enable the special relief provision for employees who have or will dispose of securities for which a stock option benefit has been deferred: Form RC310 Election for Special Relief for Tax Deferral Election on Employee Security Options. This form can be used for security options exercised before 4 PM on March 4, 2010, as the deferral option is no longer available for security options exercised after that date and time. It allows taxpayers to elect a special tax that is equal to the proceeds of the disposition of the securities in lieu of the tax payable on the security option benefit, if this is to the taxpayer's advantage. The due date for the election is the 2010 filing due date for securities sold prior to 2010 and the filing due date for the year of sale for securities sold after 2009. This election is only available for securities that are redeemed before 2015. This special relief will be most beneficial for employees who sold their securities during the economic downturn of 2008 and 2009 at significant losses. It is important that the form be completed carefully to determine if the special tax is less than the tax owing on the security option benefit. CRA notes on the form that if capital losses triggered by disposing of the securities in previous years have been applied already, the election may not be of benefit to the employee. CRA will determine if this is the case and will not process elections that are not to the employee's advantage. ADDITIONAL EDUCATIONAL RESOURCE: Advanced Tax Preparation and Research, Distinguished Advisor Workshop Journal

Canada has a watchdog whose job it is to keep Canada Revenue Agency accountable to the taxpayers it serves. Mr. J. Paul Dubé was appointed as Canada's first Taxpayers' Ombudsman in February, 2008. His role is to investigate complaints from those who feel that their treatment by CRA has been unfair. As well, he works to ameliorate service to taxpayers by identifying areas that need improvement. The Taxpayers' Ombudsman advises the Minister of National Revenue about issues related to service at the CRA.  He also enforces the Taxpayers Bill of Rights. Since his initial appointment Mr. Dubé has prepared several special reports which have been tabled in Parliament. On February 9, 2011, it was announced that Mr. Dubé had been reappointed to the position for a five-year term. ADDITIONAL EDUCATIONAL RESOURCE: Essential Tax Facts: 2011 Edition by Evelyn Jacks

There has been some question as to what constitutes a financial service and what ancillary or supporting activities are subject to GST/HST. Financial services are listed in subsection 123(1) of the Excise Tax Act and are exempt from GST/HST. Activities that support the delivery of a financial service, such as management, administration and promotion, are excluded from the definition of financial services and are, therefore, taxable.  Bill C-9, the Jobs and Economic Growth Act, attempted to refine the definition of these activities and there has been further discussion since it was introduced on March 29, 2010. Bulletin B-105, released on February 9, 2011, attempts to clarify this through eighteen examples taken from a cross section of the industry. Highlighted in Bulletin B-105 are three activities that are not financial services: asset management services, credit management services and preparatory services. The question of a group of services, some of which are taxable and some of which are tax exempt, is also discussed. The distinction between single supply and multiple supply must be made, and the reader is referred to GST/HST Policy Statement P-077R2 Single and Multiple Supplies. The term "arranging forî in the context of financial activities is also discussed; this refers to services provided by intermediaries. Several of the examples in B-105 will resonate with readers of the Knowledge Bureau Report. Example 3 refers to a full service broker; his activities are considered to be "arranging for a financial serviceî and, therefore, within the definition of "financial serviceî and tax exempt. Example 4 refers to a mutual fund salesperson in receipt of sales and trailing commission for sales and ongoing client service. He is considered a "financial intermediaryî and his activities too fall within the definition of "arranging for a financial serviceî. Although there is no example for a fee-for-service financial planner, the list of exclusions in the Excise Tax Act includes "the service of providing adviceî so one would assume that this service is GST/HST taxable. It is always a good idea to enlist the advice of an accountant to make sure that any business activities undertaken comply with current tax legislation. ADDITIONAL EDUCATIONAL RESOURCE: Master Your Money Management, Basic Bookkeeping, Advanced Bookkeeping and EverGreen Explanatory Notes