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?

As most countries are struggling with deficits and debt, governments are putting increasing emphasis on identifying strategies that put their tax revenues at risk.  Canada is revising its "early disclosure rules" to make the taxpayer, promoter and advisor jointly and severally liable for penalties for non-disclosure.  Under the old rules only the promoter was at risk of penalties. This initiative is in support of a new global initiative entitled Tackling Aggressive Tax Planning Through Improved Transparency and Disclosure, wherein the Organization for Economic Co-operation and Development (OECD) reviews efforts in several countries to discover and discourage aggressive tax practices, such as charitable donation schemes. Systems of mandatory disclosure are compared in the report for countries including Canada, Ireland, Portugal, the U.K. and the U.S. These initiatives will assist tax authorities in targeting aggressive schemes in a timely manner. In Canada, the Province of Quebec has already implemented mandatory early disclosure rules. The 2010 Federal Budget contained proposals defining a "reportable transactionî as an avoidance transaction that exhibits at least two of the following three hallmarks: A tax advisor and/or promoter is entitled to fees tied to the tax benefit. The tax advisor and/or promoter requests "confidential protectionî i.e. the taxpayer is restricted as to whom he can provide details of the tax benefit. The taxpayer obtains contractual protection i.e. insurance against failure of the transaction, expenses incurred and/or return of costs. These measures will apply to transactions after 2010. Disclosure is required by the filing deadline for the tax year to which the tax benefit applies. Tax payers and their advisors should research any tax strategy considered that may fit the definition of "avoidance transactionî, to see if it is subject to the early disclosure rules. ADDITIONAL EDUCATIONAL RESOURCE: MASTER Your Taxes ñ How to maximize your after-tax returns

On January 25, 2011, the International Monetary Fund released its World Economic Outlook Update. This document provides an interesting insight into the global financial recovery which Distinguished Advisors may wish to share with their clients in making investment decisions this RRSP season.  Describing progress as a "two-speed recoveryî, the IMF explains that growth is slow in the developed world because of high unemployment, and concerns in Europe. In emerging markets and developing countries growth is robust to the point of overheating in some areas, and inflation is a concern. Although the global recovery is expected to continue, the instability of the U.S. housing market and rising commodity prices pose some downside risk. Going forward, governments and households in advanced economies have to reduce debt and balance budgets while keeping reform of financial systems front and center.   The IMF growth forecast has been marked down for Canada in this report.  Two factors flagged in the negative are  high household debt levels, and on the external environment, risks particular to the U.S. economy.  The risk specific to our neighbor to the south were summarized as follows:   "The absence of a credible, medium-term fiscal strategy would eventually drive up U.S. interest rates, which could prove disruptive for global financial markets and for the world economy.  It is thus even more critical that policies be put in place to bring debt down over the medium term.  Such measures could include entitlement reforms, caps on discretionary spending, reforms of the tax system to boost fiscal revenue, and the establishment or strengthening of fiscal institutions."   ADDITIONAL EDUCATIONAL RESOURCE:  Distinguished Advisor Conference 2011.  The theme is Recovery.  Lowest tuition fees achieved with registration by February 15, 2011.

Tax slips for Old Age Security (OAS) and Canada Pension Plan (CPP) were mailed in January and were available online as of February 1, 2011. Pensioners can register for online access through My Service Canada Account after applying for and receiving a Government of Canada Access Key. Canada Pension Plan Statements of Benefits and details of Employment Insurance claims and tax slips can be found as well. Please click here for more information.   ADDITIONAL EDUCATIONAL RESOURCE: Now is the time to discuss RRSP and TFSA opportunities for seniors and prepare to reduce March 15 instalment payments where incomes have fluctuated. For wealth of information on tax planning for seniors, Essential Tax Facts 2011 by Evelyn Jacks is a "must have" reference.    

As of January 1, 2011, the federal general corporate income tax rate is 16.5%, down from 18%. The rate will be further reduced to 15% on January 1, 2012. The rate for qualifying small business income remains at 11% (since 2008) and the limit remains at $500,000 (since 2006 when it increased from $300,000 to $400,000). The government is hopeful that these changes will stimulate jobs and economic growth in Canada.

CRA has released an updated RC2, The Business Number and your Canada Revenue Agency Program Accounts. For new businesses it is an excellent primer on your reporting and remittance obligations to the government. Sections on GST/HST and payroll will be especially helpful. Links are included to provincial programs, such as Worker's Compensation in Nova Scotia and the Ontario Workplace Safety and Insurance Board. These are harmonized with the federal BN and can be accessed seamlessly through Business Registration Online or through provincial websites.   Business owners should have a copy of Make Sure it's Deductible - Fourth Edition available at all times!

CRA has released bulletin RC4054 which provides an update of the ceiling amounts it will allow for rents and utilities benefits calculated for those living in Prescribed Zones for the purposes of the Northern Residents Deductions. For prescribed zones without a developed rental market, the ceiling amounts reflect increased in the Consumer Price Index. For 2011, for common shelter, the amount is $173 a month, same as last year. For apartments or duplex, the amount has increased to $467 a month for rent only, $227 per month, utilities only and $694 for rent and utilities. For a house or trailer, the 2011 amounts are $781 per month, rent only, $345 per month, utilities only and $1126 for both. ADDITIONAL EDUCATIONAL RESOURCES: DFA-Tax Services Specialist Designation courses.