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.

In a previous edition of Breaking Tax and Investment News, we wrote about the tax advantages offered by the various provincial governments and how they rank, per the Alberta budget papers. Depending on your province of residence at December 31, 2009 and your income level, you could be paying a difference of anywhere from $4,400 to $9,800 in provincial taxes based on where you live. Here is a review of taxes you would be paying in the various provinces at income levels of $30,000, $75,000 and $125,000 with two children: Employment Income - $30,000 - One Income - Two Children Provincial Rank ProvincialIncome Tax ProvincialSales Tax Health CarePremium PayrollTax FuelTax Total 1. Quebec (4447) 1157 - 630 456 (2204) 2. Saskatchewan (3060) 596 - - 450 (2014) 3. Alberta (1301) - - - 270 (1031) 4. Ontario (423) 871 225 279 441 1393 5. BC 480 497 - - 435 1412 6. Manitoba 267 885 - 221 345 1718 7. NB 456 1196 - - 321 1973 8. NS 861 1124 - - 465 2450 9. PE 1066 1287 - - 435 2788 10. NL 1004 1202 - 173 495 2874 A lower income taxpayer living in Quebec would pay just over $5,000 less in provincial tax than if they lived in Newfoundland. Employment Income - $75,000 - Two Incomes - Two Children Provincial Rank ProvincialIncome Tax ProvincialSales Tax Health CarePremium PayrollTax FuelTax Total 1. Alberta 2,679 - - - 405 3,084 2. Saskatchewan 2,675 913 - - 675 4,263 3. BC 2,107 1,289 972 - 653 5,021 4. Ontario 2,480 1,643 563 698 662 6,046 5. NB 4,364 1,971 - - 482 6,817 6. Manitoba 4,520 1,446 - 554 518 7,038 7. Quebec 2,596 2,216 - 1,575 684 7,071 8. NS 4,522 1,869 - - 698 7,089 9. NL 3,889 2,032 - 433 743 7,097 10. PE 4,724 2,146 - - 653 7,523 A middle income family living in Alberta would pay approximately $4,400 less in provincial tax than if they lived in Prince Edward Island. Employment Income - $125,000 - Two Incomes - Two Children Provincial Rank ProvincialIncome Tax ProvincialSales Tax Health CarePremium PayrollTax FuelTax Total 1. Alberta 6,895 - - - 405 7,300 2. BC 5,209 1,980 972 - 653 8,814 3. Saskatchewan 7,834 1,364 - - 675 9,873 4. Ontario 6,196 2,498 788 1,163 662 11,307 5. NB 10,015 2,958 - - 482 13,455 6. NL 9,120 3,057 - 721 743 13,641 7. Manitoba 10,027 2,176 - 923 518 13,644 8. NS 10,725 2,788 - - 698 14,211 9. PE 10,331 3,230 - - 653 14,214 10. Quebec 10,628 3,191 - 2,625 684 17,128 A higher income family living in Alberta would pay $9,800 less in provincial tax than if they lived in Quebec. Therefore, depending on your family profile and income level, a careful review if you are contemplating a move in 2009 could make it very worthwhile from a tax standpoint.

By Robert Ironside On March 27, 2009 The Honorable Jim Flaherty released regulations designed to provide "temporary solvency funding relief for federally regulated defined benefit pension plans". The intent of the new regulations is to reduce the pension funding burden on organizations that are struggling during the current economic downturn. The announcement was significant for two reasons. First, because it provided some temporary relief to firms struggling with the worst economic downturn in decades and second, because of why the announcement was necessaryóspecifically, what that means for defined benefit pension plans in Canada. It is worth noting that the funding relief applies only to employees in federally regulated industries, which includes telecommunications, banking and interprovincial transportation. The Office of the Superintendent of Financial Institutions (OSFI) is responsible for the supervision of federally regulated pension plans. OSFI supervises some 1,350 pension plans or about 7% of all pension plans in Canada. Of the 1,350 pension plans supervised by OSFI, 446 are defined benefit pension plans1. However, this announcement begs a more important question: how long will any organization, other than government, be able to retain their defined benefit pension plans? Pension plans come in two primary variations, these being defined benefit and defined contribution. Defined benefit pension plans pay benefits based on some ratio that typically includes years of service and the average pay earned during the last few years of service. From the employee's perspective, defined benefit pension plans provide certainty of income during retirement (although not necessarily certainty of purchasing power, unless the pension income is also indexed to inflation). From the employer's perspective, however, defined benefit pension plans represent a significant risk, as they are responsible for maintaining the plan with a sufficient level of funding to meet the actuarially determined liabilities of the pension plan. Defined contribution pension plans allow the employee to contribute a usually fixed percentage of their income during their working lives, which may or may not be matched in some fashion by the employer. The real difference occurs at retirement. Whereas the defined benefit pension plan provides a relatively certain retirement income, based on the formula agreed to by both the employee and the employer, the defined contribution pension plan provides no such guarantee of retirement income. For those employees who are retiring today, during the depths of a major correction in equity markets, retirement looks significantly different than it did only a few months ago. Defined benefit pension plans present significant risk to the employer; defined contribution pension plans present significant risk to the employee. Who should bear this risk and how should the risk be managed? Based on the numbers, it would appear that employers have spoken and their answer is clear - most employers would prefer not to bear pension risk. Based on numbers provided by the Federal Department of Finance, there are slightly more than 19,000 pension plans in Canada. According to a study done by the Certified General Accountants Association of Canada in 2004 and updated in 2005, there are approximately 2,800 defined benefit pension plans in Canada. Stated differently, approximately 15% of all pension plans are defined benefit2. According to the CGA's 2005 update on the state of defined benefit pension plans in Canada, 59% of Canadian defined benefit pension plans were in deficit as of December 31, 2004. If indexation of benefits were to be included, 96% of plans were in deficit as of the same date. Why would any employer willingly undertake the risks attached to a defined benefit pension plan in an era of volatile stock markets coupled with continuous pressure from Bay Street to increase the firm's EPS and share price? In an earlier age, there was an implied social contract between employers and employees, wherein employees were loyal to their employers and employers in turn assumed a more patriarchal role towards their employees. That era ended as pressure on management to deliver continuous increases in share price ramped up. It is my contention that no private sector employer today would willingly undertake the risks associated with a defined benefit pension plan. Those plans that are in existence will be changed, as and when possible, to defined contribution pension plans. The result is a huge increase in risk exposure by individuals. It is also my belief that most individuals are neither capable nor desirous of assuming this increased level of risk exposure. There are only two potential solutions: One is for government to assume a larger role in protecting the pension income of all Canadians. The second is for the development of new technology around risk mitigation. While it is tempting to assume that government should provide cradle to grave security, the development of new and enhanced methods of risk mitigation probably holds the true key to certainty of pension income. Robert Ironside, ABD, Ph.D. is a faculty member of The Knowledge Bureau and Professor, Finance School of Business, Kwantlen Polytechnic University 1 Regulatory Impact Analysis Statement, Solvency Funding Relief Regulations 2009, Department of Finance, Canada, 2009-032 2 Addressing the Pensions Dilemma in Canada, 2004 & The State of Defined Benefit Pension Plans in Canada: An Update, 2005 both by the Certified General Accountants Association of Canada

Taxpayers who withdrew funds from their RRIFs in 2008 may recontribute 25% of their minimum amounts and earn a tax deduction on the 2008 tax return for doing so, but only if they make the recontribution by April 14. Financial advisors, tax advisors and their clients should take note of this opportunity this week.

With the release of the Alberta Budget, Canadians may be interested to take a good close look at the tax advantages offered by our various provincial governments and how they rate with each other, as per the Alberta Budget Papers. There are a variety of tax perks 　 for various income and family profiles, depending on your province of residence ó all very worthwhile reviewing if you are thinking of a move in 2009. Remember it is your province of residence as at December 31, 2009 which determines your provincial taxation for the whole year. Below, The Knowledge Bureau offers its Top Marks for Inter-Provincial Personal Tax Havens for 2009: TAX FREE ZONES: TAXATION OF NON-DISCRETIONARY INCOME. When it comes to tax free zones, Alberta wins for both couples and singles. With a personal amount of $16,775 and an identical spouse amount, the first $33,550 of taxable income earned by a working couple in Alberta is free of provincial tax. To be meaningful from an equity point of view, the cost of living for each province (in both urban and rural areas) requires assessment. The desired result is that income below the poverty line not be taxed as all earnings are required for food, clothing and shelter; and there is likely no non-discretionary income. Provincial refundable tax credits may make up the difference, however, to stimulate both spending and saving, having more after tax dollars at hand throughout the year is a more immediate way to stimulate both. Provincial Rank Personal Amount Spousal Amount Couples Tax Free Zone 1. Alberta $16,775 $16,775 $33,550 2. Sask. $13,269 $13,269 $26,538 3. Quebec $10,455 $10,455 $20,910 4. BC $9,373 $8,026 $17,399 5. Ontario $8,881 $7,541 $16,422 6. Manitoba $8,134 $8,134 $16,268 7. New Brunswick $8,605 $7,307 $15,912 8. Nova Scotia $7,981 $6,778 $14,459 9. PEI $7,708 $6,546 $14,254 10. NL $7,778 $6,356 $14,134 FEDERAL $10,320 $10,320 $20,640 LOWEST INDIVIDUAL TAX RATES. If you are low income earner, it pays to live in BC; next to Quebec, (which features an abatement of 16.5% of basic federal tax in lieu of federal cash transfers), it is low income earners in Saskatchewan that pay the highest taxes and high income earners in Nova Scotia that pay the most. Provincial Rank Tax Rate: Low income Bracket Tax Rate: Highest income bracket Top combined federal and provincial rate 1. BC 5.06% AB 10% AB 39% 2. ON 6.05% ON 11.16% & Surtax BC 43.70% 3. NL 7.70% BC 14.70% SK 44% 4. NS 8.79% SK 15% NL 44.5% 5. NB 9.65% NL 15.50% NB 46% 6. PEI 9.80% PEI 16.70% & Surtax MB 46.40% 7. AB 10.0% NB 17.0% ON 46.41% 8. MB 10.8% MB 17.4% PEI 47.37% 9. SK 11% NS 17.5% & Surtax PQ 48.22% 10. PQ 16% PQ 24% NS 48.25% LOWEST COMBINED FEDERAL/PROVINCE TAX RATES: The winner is Alberta at 39% and the Loser is Nova Scotia at 48.25%. Next time: Comparing Interprovincial Tax and Health Care Insurance Premiums and the Inter-Provincial Business Tax Environment

With new forms appearing on the CRA website weekly, sometime even daily, it requires a fair amount of due diligence to stay current with all of the updated forms and guides. Recently, the CRA released an updated Form T3SCH5 which incorporates Form T657, Calculation of Capital Gains Deduction.  This updated version of Schedule 5 of the T3 Trust Return has had extensive modifications made to it, and requests more detailed information regarding the capital gains deduction and in what period the gains occurred. The T3 Schedule 5 is used to calculate the capital gains deduction for a spousal or common law partner's trust for the tax year in which the beneficiary spouse (or common-law partner) died. The updated form includes the calculation in the year of death for the unused lifetime capital gains deduction limits. The completed schedule must be filed with the trust's return. To view the new form, click here.

The 2009 Alberta budget was tabled on April 7, 2009. The budget was, for the most part, a spending budget running a deficit of $4.7 Billion with deficits expected for the next two budgets. Alberta Seniors' BenefitThe Alberta Senior's Benefit which is paid to low-income seniors will increase by 11.9% for 2009 to a maximum of $40 per month for singles and $60 per month for couples. Assured Income for the Severely Handicapped (AISH)The budget announced an increase of $100 in the maximum monthly benefit to AISH recipients. No other new personal or corporate income tax changes were announced. Liquor and TobaccoTobacco taxes were increased by $3 per carton effective midnight April 7. Effective immediately the liquor markup goes up by $1.30 for a dozen beer from a major brewer, by at least 75 cents for a 750 millilitre bottle of wine and by $2.85 for a 750 millilitre bottle of most spirits.