Confirmed:  The CCR for Small Business is Tax Free

Ottawa has confirmed that the CCR for Small Business received by eligible Canadian-controlled private corporations (CCPCs) will be tax free for the 2019-20 to 2023-24 fuel charge years, as will the final payment for the 2024-2025 fuel charge year.  Draft legislation was released on June 30, 2025 with this announcement; and will be introduced for law making in Parliament this Fall.   Some of the more significant details are discussed below.

An experienced advisor in the industry seemed to hit it on the head last week, when he declared May first as the start of the next phase of tax season ó adjustment and audit season! When it comes to taxes, it's not only about getting those returns filed on time, but most importantly, it's about storage and retrieval! The "ff-season"is fraught with the potential for tax audit activity by CRA and the need to adjust returns for omissions, missed slips, and of course, the inevitable errors made during the rush! What should you do if you missed an important provision or document? Most advisors will tell their clients to come back and see them immediately upon discovery They will also cover an important technique in avoiding expensive gross negligence or tax evasion penalties: voluntary compliance (you tell CRA about errors or omissions before they tell you, on that off chance that you overstated deductions or credits, or understated income.) The following filing milestones should also be noted to answer these and other questions about tax compliance responsibilities all year long: Adjusting a return to correct an error or omission: 10 years following the end of the relevant taxation year. Appeals with the Tax Court: No later than 90 days from the date of mailing of a Notice of Reassessment or confirmation of an assessment No earlier than 90 days following the date of mailing of a Notice of Objection, if CRA has not responded to the Objection Collection of taxes owing: Generally, 10 years from the date of assessment. A collection action cannot generally be undertaken until 90 days after the relate Notice of Assessment or Reassessment has been mailed Where a Notice of Objection has been filed, or an appeal has been made to the Tax Court, collection of the tax debt will be suspended until the dispute is finalized Filing Deadlines: Final Returns of Deceased Taxpayers: Where the individual dies before October, April 30 or June 15 (the normal filing deadlines Where the individual dies after September, 6 months following death To defer payment of income tax by making up to 10 equal consecutive annual payments: first instalment must be paid on or before the day on which payment of tax was otherwise payable. Filing Deadlines: Trust Returns March 31 for inter vivos trusts No later than 12 months following death for testamentary trusts, and annually thereafter Filing Deadlines: Corporations: 6 months following the end of the taxation year Instalment Payments: Corporations: On or before the last day of each month Objection to a Notice of Assessment or Reassessment: Generally, 90 days from the date of mailing of the Notice Individuals and testamentary trusts can file within one year of the due date of the related return Record retention, Individuals: Generally, six years from the end of related taxation year. Record retention, Corporations: Permanent corporate records must be retained for two years following dissolution Registered investments: Manage registered investment accounts around these milestones: Contributions, RRSP: During the calendar year or within 60 days of the year end Deduction, Refund of Unused RRSP Contributions: Form T746, with tax return filed for the year in which amounts were withdrawn. Penalty for Excess Contributions: For 2007contributions, Form T1-OVP by by March 31, 2008. Refunds from the CRA: Generally, three years from the end of the related taxation year. However, individuals and testamentary trusts can apply for refunds for up to ten years following the end of the related taxation year. Where the application for a refund reflects a loss carryback, the application period is generally extended to six years, and to seven years for corporations that are not Canadian controlled private corporations Refunds, Overdeducted CPP or EI Premiums: File separate from PD24 for each worker with T4 information return within the following time limits: CPP Contributions: no later than 4 years from end of year in which overpayment occurred EI Premiums: no later than 3 years from end of year in which overpayment occurred For more information on tax planning provisions and compliance requirements subscribe to The Knowledge Bureau's online tax reference for taxpayers, financial advisors and their clients: EverGreen Explanatory Notes. Next time: Low hanging Fruit: Let Carry-Over Provisions Ripen for Tax Season 2008  

17% of family units held equity in a business.1 By the year 2013, 41% of business owners in Canada are expected to exit their businesses2. Over 60% of entrepreneurs age 55 to 64 have yet to discuss their plans with their families. The primary reason for this: They think it's too early! These statistics are important because transitions of businesses are typically not successful. In fact, 72% of family assets will be gone within the first and 90% within the 2nd generation3, the reasons for such a significant track record of failure in successful transfers amounts to lack of trust, lack of communication and unprepared heirs. Lack of or out of date succession planning is another major factor. Addressing and working to avoid such business succession failures is an important component of wealth management for the Canadian economy. For this reason we are pleased to present Succeeding in Business Succession, a series of five "Did You Know" information segments featuring instruction from financial advisor Douglas Nelson, author of Advising Family Business, a certificate course from The Knowledge Bureau. This new course has be chosen for students in the Retirement Income Specialist program leading to the MFA Designation, for its importance in helping advisors understand the important issues business owners face in transitioning the firm or farm to a new generation. So, what keeps business owners from planning? Check it out in Breaking Tax and Investment News and knowledgebureau.com. NEXT TIME: Working in or on your business? 1 Statistics Canada 20072 CFIB Survey 20073 William Group Survey and Preparing Heirs 2003

Alan Rowell, DFA from The Accounting Place in Stoney Creek Ontario writes: In the Ontario Economic Outlook release last November, the Ontario government raised the maximum investment in LSIF's to $7,500, creating a maximum credit of $1,125. CRA is not processing returns with this credit. CRA is processing at the "old" $750 maximum credit stating: "The legislation authorizing an increase to the maximum allowable tax credit is not yet law. If your return is affected by this legislation, we will review it for a possible adjustment to reflect the new maximum amount once the legislation has been enacted by the Government of Ontario" Although this announcement has been implemented in some tax preparation software, the printed forms distributed by the CRA do not reflect this announcement.

Tax filing deadlines compel most ó but not all ó of Canada's 23 million tax filers to arrange their affairs and reconcile last year's taxes by April 30. There are however, many late filers. Last week's Breaking Tax and Investment News covered the penalties associated with non-compliance in depth. Failure to file will also cost you potentially large sums when you miss important planning opportunities. For example, tax form T1032 Joint Election to Split Pension Income must be filed by your tax filing due date (which for most people is April 30). This is a very lucrative income splitting opportunity for those receiving qualifying pension income and it would be a shame to miss the extra tax refunds due to tardy tax filing habit. Those advisors in the tax and financial services industry should be sure to call all clients who have not yet filed a return by April 30 to maximize availability of this type of provision and of course avoid late filing penalties. CRA should continue to be on the radar screen, however, even after this week's April 30 tax filing deadline. Please be sure to diarize milestones that maximize your rights under the Income Tax Act: KNOWLEDGE BUREAU CHECKLIST: INCOME TAX DEADLINE MAXIMIZER WITHIN THE TAX FILING YEAR ENDING APRIL 30 April 30 Tax Filing Deadline: Personal Tax Returns May 1 Interest accrues daily on overdue taxes owing June 15 CRA owes interest to tax filers on late processed refunds (in fact, the agency has an obligation to process refunds within 45 days of receipt of the return after April 30) Tax Filing Deadline: Proprietorship Returns Quarterly Instalment Payment Due July 1 New Benefit Year: Child Tax Benefit, GST Credit, Old Age Security (file 2007 tax return to determine benefit levels) August 31 Working Income Tax Benefit Advance Payment Application for 2008 September 15 Quarterly Instalment Payment Due December 15 Quarterly Instalment Payment Due December 31 Annual Instalment Due for Farmers, Fishers January 16 Request to Defer Tax on $100,000 of Securities Options January 30 Requirement to pay interest on inter-spousal loans February 28 T4 Slip Completion and Distribution March 15 Quarterly Tax Instalment due March 31 T3 Slip Completion and Distribution Interest Penalty Due on RRSP Excess Contributions For more information on tax planning provisions and compliance requirements subscribe to The Knowledge Bureau's online tax reference for taxpayers, financial advisors and their clients: EverGreen Explanatory Notes. To increase your knowledge and train new staff ready to help your expanding practice in tax season 2008, enrol in tax courses within the Tax Services Specialist program from The Knowledge Bureau. Next time: Just How Long do you Have to Keep Those Tax Receipts in your Closet?

Andrew Brash Update Andrew Brash, Knowledge Bureau Faculty member is exactly where he has trained to be. Andrew and his team continue to acclimatize to the altitude and prepare for the climb ahead. The pace climbers move from base camp can impact their entire climb. Rushing the assent leaves your body without the stamina to handle the climb. Stalling too long puts a climber at risk of missing a weather window. "Ah, Everest base camp. Some have called it a circus, a zoo, a repository for misfits, mutants and just plain strange people (ourselves obviously being no exception). It also happens to be a place where it is possible to experience warm hospitality and friendship." We will continue featuring an ongoing update on his climb to the summit as part of Breaking Tax and Investment News or you can track his progress by visiting his website http://www.andrewbrash.com/ for live updates from the expedition. Stay tuned for updates! To book Andrew as a keynote speaker for your next conference or educational event contact The Knowledge Bureau, 1-866-953-4769.

With the April 30 filing deadline just around the corner, now is a good time to review two essential questions with taxpayers: Is the taxpayer aware of the penalties and offences for non-compliance with CRA? Has the taxpayer reported all income and deducted/claimed only legitimate amounts during form filing? It's important to stay on the right side of CRA, as the agency is empowered to impose a variety of punishments on taxpayers who fail to comply with the Income Tax Act. And of course, it's important to note at the outset that, under S. 18(1)(t) fines for charges levied under the Income Tax Act are not deductible. Here's what taxpayers and their advisors need to know: Layers of Penalties Exist. Penalties are charged under S. 162 and 163 prior to the commencement of criminal prosecution proceedings, which are undertaken in cases where a taxpayer has intentionally participated in tax evasion. In such cases, the consequences of successful prosecution are covered under the charging sections of the Income Tax Act in S. 238 and 239, Offences and Punishment. If a taxpayer is convicted of an offence under S. 238, the penalties under S. 162 and 163 may not be subsequently applied. However, if the penalties were assessed before the complaint gave rise to a conviction, both penalties and offences may be charged. It is therefore common practice for CRA to issue a reassessment notice with penalty charges assessed under S. 163 prior to prosecution proceedings.  Cost of Penalties. Common administrative penalties levied by CRA for non-compliance, excerpted from The Knowledge Bureau's EverGreen Explanatory Notes include the following: Failure to file a return on time ñ 5% of unpaid taxes plus 1% per month up to a maximum of 12 months from filing due date, which is June 15 for unincorporated small businesses Subsequent failure to file on time within a 3-year period ó 10% of unpaid taxes plus 2% per month to a maximum of 20 months from filing due date Failure to provide information on a required form ó $100 for each failure Failure to provide Social Insurance Number - $100 for each failure unless the number is applied for within 15 days of the request Failure to make partnership information return ó For each such failure, the greater of $100 and the product obtained when $25 is multiplied by the number of days, not exceeding 100 during which the failure continues.  Repeated failure to file partnership information return ó For each such failure, the greater of $100 for each member of the partnership for each month or part month not exceeding 24 months during which the failure continues.  Failure to provide information with regard to a foreign-held property ó $500 per month for a maximum of 24 months; $1,000 a month for a maximum of 24 months if there is a failure to respond to a demand to file plus an additional penalty of 5% of the value of the property transferred or loaned to a foreign trust or the cost of the foreign property where failure to file exceeds 24 months Gross negligence: false statement or omission of information in the return - 50% of tax on understated income with a minimum $100 penalty. This penalty will also apply to a false statement relating to the GSTC. False statements or omissions with regard to foreign properties ó 5% of the fair market value of contributions made to the property, minimum of $24,000 (Note: the burden of proof for establishing facts leading to penalties is on the Minister) Effect of carryback of losses ó Deemed not deductible to reduce penalties under S. 163(2.1) S. 163(4) Late or insufficient instalments ó 50% of interest payable exceeding $1,000 or 25% of interest payable if no instalments were made, whichever is greater. Misrepresentation by a Third Party: penalty for tax planning arrangements or valuation activities ó the greater of $1,000 and the total of gross entitlements from the plan or in all other cases, $1,000 Third party Participation in make of false statements ó greater of $1,000 and the lesser of the penalty to which the taxpayer is liable to under S. 163(2) and the total of $100,000 plus the person's gross compensation Failure to deduct or remit source deductions ó 10% of amount not withheld, or remitted Second such failure in same year ó 20% of amount not withheld or remitted if this was done knowingly or through gross negligence. Cost of Offences and Additional Punishment. Convictions under S. 238 and 239 result from criminal prosecution. The taxpayer must be found guilty beyond a reasonable doubt in order to be charged with these consequences. The taxpayer's advisors can also be found guilty and charged under these sections. Here are some of the consequences: Failure to make or file a return as required ó A fine of not less than $1,000 and not more than $25,000 or both fine and imprisonment for a term not exceeding 12 months. Tax Evasion including making of false, deceptive statements, in a return, certificate, statement or answer, destroying, altering, mutilating, books or records, assenting to false or deceptive entries, or otherwise willfully evading tax or conspiring to commit tax evasion with any person ó A fine of not less than 50% and not more than 200% of the amount of tax sought to be evaded or both the fine and imprisonment of not more than 2 years.  Tax Evasion, but relating to the claiming or refunds or credits - A fine of not less than 50% and not more than 200% of the amount of tax sought to be evaded or both the fine and imprisonment of not more than 2 years.  Prosecution on indictment: any person charged with an offence under 239(1) or 239(1.1) may be prosecuted at the election of the Attorney General of Canada to a further penalty ó in addition to any other penalty. ó A fine of not less than 100% and not more than 200% of the amount of tax sought to be evaded or credits sought to be obtained. Providing incorrect tax shelter number to another person - A fine of not less than 100% and not more than 200% of the cost of that other person's interest in the tax shelter . Contravening an order not to communicate confidential information by government official ó A fine of not more than $5,000 or imprisonment of up to 12 months or both. Communication of taxpayer's SIN ó A fine of not more than $5,000 or imprisonment of up to 12 months or both. Remember, it is every taxpayer's legal right and duty to arrange financial affairs within the framework of the law to pay the least amount of taxes possible. But if your intent is to defraud, or if you are negligent, there can be a very steep price to pay. Click on these links now for more information on the Knowledge Bureau's Tax Services Specialist programs or EverGreen Explanatory Notes.