October 1 - Important Changes Coming to VDP

Effective October 1, 2025, important changes will be made to the Voluntary Disclosures Program (VDP) at the CRA in order to make it easier for taxpayers to correct unintentional filing errors or omissions. The details on how the changes will affect your clients are being discussed in the CE Summit held September 17 and this course is now available for online enrolment and CE accreditation, after the virtual event. Here are some highlights of the changes.

Budget 2007 introduced a tax incentive that provides a special deduction to corporations for approved medicines donated, for the purpose of international aid, to a registered charity that has received funding under a program of the Canadian International Development Agency, for gifts made on or after March 19, 2007. The corporations are eligible for a charitable donations deduction equal to the fair market value of the property gifted. In order to provide an incentive for corporations to participate in international programs for the distribution of medicines, Budget 2007 also proposed to allow corporations that make donations of medicines from their inventory to claim a special additional deduction equal to the lesser of 50 per cent of the amount, if any, by which the fair market value of the donated medicine exceeds its cost; and the cost of the donated medicine. This additional deduction was to be available only when the donee is a registered charity that has received a disbursement under a program of the Canadian International Development Agency, and the gift is made in respect of activities of the charity outside of Canada. Budget 2008 proposed to change the definition of an eligible charity for this purpose. An eligible charity will be a registered charity that, in the opinion of the Minister of International Cooperation, meets conditions prescribed by regulation. (In the event that no such Minister has been appointed, the opinion will be required of the Minister responsible for CIDA.) The main purpose of these conditions will be to ensure that eligible charities: act in a manner consistent with the principles and objectives of the World Health Organization Guidelines for Drug Donations; have expertise in delivering medical donations to the developing world; and implement appropriate policies and practices with respect to the delivery of international development assistance. Currently, the additional deduction is available in respect of medicines that meet the requirements of the Food and Drugs Act even if those medicines' expiry date is imminent. Budget 2008 proposes that eligible gifts must be donated at least six months prior to the expiration date of the medicines. These changes will apply to eligible donations of medicines made on or after July1, 2008.

CRA released its update to payroll deduction formulas for July 1, 2008 in draft format to enable programmers of payroll programs to get to work early, despite the fact that the Northwest Territories budget is expected this week. An overview of the important issues follows: Federal Tax Rates and Brackets. There are no changes to the federal tax rates, income thresholds, or personal amounts required for July 1, 2008. However, the federal Form TD1 has been revised for July 2008 but has yet to be released by the CRA. General refiling of the 2008 federal Form TD1 is not necessary, but a new employee, a new pensioner, or an individual who wishes to change his or her federal claim amounts will have to complete the July 2008 federal Form TD1. Canada Pension Plan (CPP) and Employment Insurance (EI). There are no changes to CPP or EI for July 1, 2008. An overview of the contribution rates and amounts follows: Provincial Changes for July 1, 2008. Some provincial and territorial changes have been announced for July 1, 2008: Newfoundland and Labrador, Ontario and British Columbia. Some of these proposals are not yet law but would be retroactive when passed. There are new formulas for withholding taxes, starting with the first payroll in July 2008. For more information see Publication T4127: Payroll Deductions Formulas for Computer Programs ñ 87th Edition For formulas and factors not included in this edition, see publication T4127, Payroll Deductions Formulas for Computer Programs ñ 86th Edition, effective January 1, 2008. 1. Newfoundland and Labrador. In the provincial Budget 2008 of April 29, 2008, changes were announced to the provincial tax rates. Effective July 1, 2008, the rates and tax brackets for Option 1 are as follows: 7.7% (formerly 8.7%) on income less than or equal to $30,215; 12.8% (formerly 13.8%) on income greater than $30,215, but less than or equal to $60,429; and 15.5% (formerly 16.5%) on income greater than $60,429. For the provincial tax rates to apply for Option 2, starting July 1, 2008, (cumulative averaging) see the Option 2 formulas beginning on page 17 of Publication T4127. Non-refundable personal tax credits amounts for Newfoundland and Labrador have not changed since January 1, 2008. Refer to Form TD1NL for complete information on personal amounts. The basic personal amount remains at $7,566. The spouse or common-law partner amount remains at $6,183. Personal amounts will be multiplied by the province's lowest non-zero tax rate of 7.7% (formerly 8.7%). For the provincial surtax payable to apply for Option 2, starting July 1, 2008, see the Option 2 formulas beginning on page 17. The provincial labour-sponsored funds tax credit (factor LCP) for Newfoundland and Labrador remains the lesser of $750 and 15% of the approved shares purchase. 2. Ontario. In the provincial Budget 2008 of March 25, 2008, the provincial labour-sponsored funds tax credit (factor LCP) has been changed. Retroactive to January 1, 2007, the maximum investment that can qualify for the tax credit has been increased to $7,500 (formerly $5,000). As a result of the above change, the formula for calculating Ontario's LCP is changed to: LCP = The lesser of: (i) $1,125 (formerly $750); and (ii)15% of the purchase of approved shares. 3. British Columbia. In the provincial Budget 2008 of February 19, 2008, changes were announced to the provincial tax rates and the provincial tax reduction for British Columbia. Effective July 1, 2008, the rates and tax brackets for Option 1 are as follows: 5.13% (formerly 5.35%) on income less than or equal to $35,016; 7.81% (formerly 8.15%) on income greater than $35,016, but less than or equal to $70,033; 10.5% on income greater than $70,033, but less than or equal to $80,406; 12.29% on income greater than $80,406, but less than or equal to $97,636; and 14.7% on income greater than $97,636. Non-refundable personal tax credits amounts for British Columbia have not changed since January 1, 2008. Refer to Form TD1BC for complete information on personal amounts. The basic personal amount remains at $9,189. The spouse or common-law partner amount remains at $7,868. Personal amounts will be multiplied by the province's lowest non-zero tax rate of 5.13% (formerly 5.35%). The provincial labour-sponsored funds tax credit (factor LCP) for British Columbia remains the lesser of $2,000 and 15% of the approved shares purchase. Provincial tax reduction for British Columbia. The provincial tax reduction for British Columbia is indexed and is calculated as follows: Where net income is less than or equal to $16,946, the reduction is equal to the lesser of (i) basic provincial tax, and (ii) $381; Where net income is greater than $16,946 and less than or equal to $28,852.25, the reduction is equal to the lesser of (i) basic provincial tax, and (ii) $381 ñ [(Annual net income ñ $16,946) ◊ 3.2%]; Where net income is greater than $28,852.25, the reduction is equal to $0.

Andrew Brash Update Andrew Brash, Knowledge Bureau Faculty member seems to have the delays and interruptions of this year's Mt. Everest climbing season behind him. He and his team have been able to stick to their plan of action for reaching the summit in motion. They waited at base camp until the stampede of climbers made their way up the mountain. Once they left, they have climbed to camp 1, camp two and even as far as camp 3. The team is currently in the process of making their way back to base camp for three days of rest before making their climb to the summit. The Knowledge Bureau is a proud sponsor of Andrew's return to Mt. Everest. 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 andrewbrash for live updates. Stay tuned for updates! Remember to book Andrew as a keynote speaker for your next conference or educational event. Contact The Knowledge Bureau now: 1-866-953-4769.

The technical side of payroll, if done incorrectly, can cost the employer or the employee money. It is important to make sure payroll is more than simply accurate. As an individual employer, you may have specific documentation new employees are required to complete. In addition to these, there is also specific documentation required from new employees for CRA purposes. The information CRA requires and why it is helpful to have are showcased below. SOCIAL INSURANCE NUMBER (SIN) The Social Insurance Number is required for employment in Canada. The SIN must be requested from a new employee within 3 days from the date of commencement of employment. Having a valid SIN ensures all payroll information being sent to CRA and HRSDC is being sent for the right employee. TD1 FORM The new employee must complete form TD1 ñ Personal Tax Credits Return, and the employer must keep this form on file. Note, there are a variety of different TD1 forms available for different situations and, over and above the federal TD1 form; there is an additional, separate form for each province or territory. 2008 Federal and Provincial TD1 Forms can be found here by clicking here. It is very important every employee fills out this form each year. This ensures all information in the employee's file is current. If a person stops going to school or has a change to their dependants, it is necessary for them to fill out a new TD1 form. Other information completed by the employee should be retained and put in the employee's personal file. A TD1 form helps the employer and employee determine the proper amount of tax to be deducted from the pay. An employee may have deductions and/or credits available that are not on the TD1 to help reduce the amount of tax to be deducted. STATUTORY DEDUCTIONS After an employer hires an employee it is important to find out the birth date of the employee. Employees who are under the age of 18 or over the age of 70 should have CPP deductions taken unless the employee is receiving benefits under the Canada Pension Plan while continuing to work. In the year an employee reaches the age of 18, CPP will commence being deducted on the first pay of the month following the month in which they reach 18 years of age. Excerpted from Advanced Payroll for Professionals, one of the courses that is part of the DFA, Certified Bookkeeping Specialist program. Learn how to handle this and many more payroll issues with ease - Register before June 15 and save. This course also provides the opportunity to gain insight into: completion of a full payroll cycle, TD1/T1213 form completing, accounting for statutory and non-statutory deductions, taxable and non-taxable perks and benefits and T-slip preparation for any business using Simply Accounting as the framework.

Andrew Brash Update Andrew Brash, Knowledge Bureau Faculty member is back at base camp on the Nepal side of Mt. Everest. His team and dozens more were allowed to return after the Olympic flame reached the summit on the Tibet side late last week. The plan as of Andrew's last post, on May 9, was for he and his team to wait for the rush of climbers to get safely ahead of them and then begin up the mountain to camp 3. After that, they will return to base camp for one more rest and then head back up. This will see the team attempting the summit on the 19th or 20th with arrival on top of the world on the 23rd or 24th, as long as conditions permit. Andrew also writes: ìIt is a huge relief that we can now get on with climbing the mountain. Now all we have to deal with are the usual Everestey things like teams giving each other bogus weather reports, fixed line crowding, rumours and fibs about who's going for the top and when (of course you can bank on the dates above...), and of course deciding when you're going to try and drag your own sorry butt through all of it. I am damn excited that the opportunity has opened up though - here we go!î The Knowledge Bureau is a proud sponsor of Andrew's return to Mt. Everest. 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 andrewbrash.com for live updates. Stay tuned for updates! Remember to book Andrew as a keynote speaker for your next conference or educational event. Contact The Knowledge Bureau now: 1-866-953-4769.

There was a young man who was being trained by his father to take over a large clothing store. The father had emigrated from Europe after the war, and had started the business with only a pack of needles and a spool of thread. He walked his son through the large store which was stacked to the ceiling with bolts of cloth, dresses, suits, shoes, coats, boots, etc. "How do you keep track of inventory, Dad?" the young man asked. His father opened a drawer and took out a pack of needles and a spool of thread. "This is inventory, son," he said. "Everything else is profit." There may have been a time when a business required as little information as the father did in order to operate successfully, but that time has long since passed. Today even the smallest business requires timely information about a variety of the attributes of the business, if it is to succeed and thrive. It is the job of the management accountant to produce the financial and other information that is needed to manage a business enterprise. In the first course of this Professional Bookkeeping series, we examined the role of the bookkeeper in identifying, classifying and recording financial transactions arising from a business undertaking. We reviewed the importance of the bookkeeper ensuring that such information is complete and accurate, that it is recorded on a timely basis, and that it is reported to the owners and managers of the business. We reviewed how that information ultimately ends up in the general ledger, from which the enterprise's financial statements are prepared. Virtually every business, however, needs to "get behind" the financial information that is reflected in a business's financial statements. It is almost always true that the aggregate information reflected in financial statements does not give the complete story. Example ñ Making a Business Decision on Incomplete Information The general manager of Universal Construction was under pressure from the business owners to meet the sales targets for the year. In order to boost sales, he authorized his sales team to offer a 10% discount to any customer who placed an order before year end. Sure enough, there was big boost in sales revenue. However, it soon came to light that several large customers had long-term standing orders for Universal's products, and they were upset to find that customers ordering in the short term were getting a better price. The general manager had not been aware of the significance of the long-term supply agreements to Universal's business. In order not to alienate the long-term customers, Universal had to give them a 10% discount too, and many of them insisted on having the discount apply to all their purchases for the year. When the adjustments were reflected in the financial statements, Universal fell well short of its sales goals for the year. This is a simple example, but it is illustrative of the need for the management accountant to be involved in providing information to be used in making business decisions. There is no place in the general ledger or the financial statements that a business owner or manager can go to find the dollar value of sales that are made to customers with long-term supply contracts. That information must be accumulated outside the regular financial systems, analyzed and reported separately. Universal's general manager would obviously have been well advised to have that information before he instructed his sales force to offer a 10% price discount. It is the role of the management accountant to accumulate this information, in order to assist the owners and managers of a business in making rational business decisions. In many businesses, the responsibility for accumulating and reporting this information rests with the professional bookkeeper, as it is the bookkeeper who knows best how the information flows through the business's information systems. However, the bookkeeper cannot accumulate this management information in a vacuum. It flows from an understanding of how management decisions are made. Excerpted from Managerial Accounting for Professional Bookkeepers, one of the courses that comprise the Certified Bookkeeping Specialist program.