Time’s Up: CRA’s 100 Day Mandate for Improvement

After years of frustration on the part of tax professionals and taxpayers alike, the Finance Minister ordered the Canada Revenue Agency to clean up its act in 100 days. Specifically, the improvement plan was to run from September 2 through December 11. Finance Minister and Minister of National Revenue, Francoise-Phillippe Champagne instructed CRA to fix “unacceptable wait times and service delays.” Time’s up this week and CRA has released an update on progress. What gets measured, gets done. Let’s see what CRA’s metrics show. 

On July 1st, 2010, the Province of Nova Scotia raised the Harmonized Sales Tax rate from 13% to 15%. Included in the 2010 provincial budget were measures to offset this increase for low-income taxpayers. The Nova Scotia Affordable Living Tax Credit is a refundable tax credit paid quarterly, and the Poverty Reduction Credit is a quarterly payment to those receiving Social Assistance through the Income Assistance Program. The Province of Nova Scotia also made a very important commitment to low-income seniors in the 2010 budget. Anyone receiving the Guaranteed Income Supplement would no longer have to pay provincial income tax! In Nova Scotia the basic personal amount is $8231 and the age amount is $4019 for a total of $12,250. When the low-income tax credit is factored in, a single senior in Nova Scotia will pay provincial tax when taxable income (line 260) exceeds approx. $13,955. Subtracting the maximum OAS payment for 2010 ($6222) from this amount results in an income of $7733 for GIS purposes (assuming that it is not employment income). The cut-off for GIS for single, widowed or divorced pensioners for the current quarter is $15,888, so there are lots of senior GIS recipients in Nova Scotia paying provincial tax. This measure to eliminate provincial tax for GIS recipients is not currently administered by CRA. This means that, for the 2010 income tax filing, the province will rebate seniors the full amount of the net provincial tax paid. There is no application form as eligibility will be determined by information from the tax return. Rebate cheques will be mailed during the summer and fall of 2010, so Nova Scotia seniors are encouraged to file on time to avoid delay. ADDITIONAL EDUCATIONAL RESOURCES: Advanced Tax Preparation and Research

GST/HST Netfile is available to GST/HST registrants everywhere except Quebec. This allows GST/HST returns to be completed online and filed electronically. Using the four digit access code supplied by CRA, GST/HST Netfile can be accessed through My Business Account or here. Misplaced access codes or information for new businesses may be found by calling 1-877-322-7849. CRA has produced a video that guides business owners through the GST/HST Netfile process. Filers are shown how to access the site then are guided through the entire process. This video incorporates the new HST tax in Ontario and British Columbia and the HST increase in Nova Scotia. Form GST284, Application for GST/HST Public Service Bodies' Rebate and Self-Government Refund may be filed with the GST/HST return and instructions are included in the video. ADDITIONAL EDUCATIONAL RESOURCES:   Tax Preparation for Proprietorships, EverGreen Explanatory Notes    

CRA administers the Scientific Research and Experimental Development (SR&ED) Tax Incentive Program for participating provinces. This program encourages innovation in business by means of refunds and tax credits for research and development work conducted in Canada. A summary of provincial SR&ED tax credits has recently been posted on the CRA website. Businesses of all sizes may qualify for these incentives. Eligible projects may include experimental development to create new products or technologies or improve existing ones, and basic or applied research. Work that supports these endeavors qualifies as well. Free public information sessions are being conducted across Canada. You can consult CRA for registration details and general information on the SR&ED Tax Incentive Program. ADDITIONAL EDUCATIONAL RESOURCES:EverGreen Explanatory Notes

Only 5% of the new jobs created since mid 2009 went to young workers, according to The Vanier Institute of the Family. Its 12th report on the financial health of the Canadian family, The Current State of Canadian Family Finances 2010 Report warns that the group most keenly affected by under-employment in Canada is youth in the 15-24 age range and as a result "this will force more students to increase their already high debt loads and put more pressure on families for financial support.î How can financial advisors help at tax time? Financial professionals can provide education to young people on how to save money on their taxes with an RRSP and then tap into the savings tax free under the Lifelong Learning Plan. Parents can be educated on tax preferred savings and investment vehicles such as RESPs and TFSAs to begin saving for younger children. Preparing taxes as a family, rather than individual tax filing, can also help. This will ensure that transferrable provisions like the tuition, education and textbook credit are maximized. Because thirty seems to be the new twenty, advisors need to be prepared to help families deal with longer periods of support for young adults in the post-recession world. This must be factored into the tax and financial planning exercise. ADDITIONAL EDUCATIONAL RESOURCES: EverGreen Explanatory Notes Introduction to Personal Tax Preparation Services

CRA has just released an updated version of RC4466 Tax-Free Savings Account (TFSA), Guide for Individuals.  It includes an important section on rules established on October 17, 2009 to prevent abuse of TFSAs, as well as proposed changes regarding the successor holder of the TFSA. This designation is available in provinces that recognize beneficiary designations for TFSAs. Currently, all provinces but Quebec allow this. There was some confusion about the re-contribution rules when TFSAs were first introduced. Many taxpayers were assessed penalties for over-contributions last year because they understood that amounts withdrawn can be put back into their TFSA accounts. This is true, but not until the next calendar tax year. The TFSA Guide explains it this way: "You cannot contribute more than your TFSA contribution room in a given year, even if you make withdrawals from the account during the year. Withdrawals from the account in the year will be added to your contribution room in the following year. If you over-contribute in the year, you will be subject to a tax equal to 1% of the highest excess TFSA amount in the month, for each month you are in an excess contribution position.î As contribution limits grow, TFSA accounts will become increasingly important savings and investment vehicles for all eligible Canadians. Make sure that you know the rules so your clients will benefit from your expertise! ADDITIONAL EDUCATIONAL RESOURCES: Advanced Tax Preparation and Research, EverGreen Explanatory Notes, Knowledge Bureau's Annual Line-by-Line Tax Update Workbook

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