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.

As of April 30, the deadline for filing your taxes, the Canada Revenue Agency (CRA) had already processed 17 million tax returns. And for the 66% of those filers who got money back, the average refund was $1,570. If you are on the receiving end, you want to be sure to put your refund to work for you. Consider the following six strategies for spinning your refund into gold: Put it into a Tax-Free Savings Account (TFSA). Withdrawals from a TSFA are tax-free ó meaning investment returns can accumulate inside your TFSA without generating taxes ó making a TFSA tomorrow's tax-free pension. So, do maximize this opportunity. Put it into an RRSP. It's the next best thing to a TFSA, if you have contribution room. It will not only increase your tax refund next year, but it will also add to your tax-sheltered savings and, in some cases, increase social benefits such as the Child Tax Credit. Given that the median annual RRSP contribution is about $2,800, Canadians can increase total sheltered retirement savings by 56% just by contributing the average refund. Pay down non-deductible debt. Debt that is not business- or investment-related ó and, therefore, tax deductible ó such as credit card debt, home mortgages and lines of credit erode your potential for savings. You can't effectively optimize saving room if you are paying down debt, particularly debt bearing high interest rates. Shore up risk management. Every family should be able to go six months without earning income, in case of job loss, illness or caregiving responsibilities. How have you managed your risk? Do you have an emergency fund or insurance? Your tax refund can help. Reduce your withholding taxes at source. Next year, reduce that tax refund. Instead of loaning money to the government interest-free, it could be funding your future. You are obligated to pay only the correct amount of taxes ó no more. So, review the amount of taxes withheld from your pay cheque. Reducing the deduction at source allows you, rather than the government, to maximize the time value of money. See a professional advisor. If you expect a major life event ó such as a marriage or a divorce, a birth or a death ó professional help can be a good use of at least some of that refund. It's Your Money. Your Life. Remember, Canadians under the age of 54 will now wait two additional years, until age 67, to receive their $6,500 annually in Old Age Security. By taking control of your tax refund and investing it tax-efficiently, you are taking a giant step toward financial freedom: $1,570 invested each year for 11 years (age 54 to 65) amounts to slightly more than $17,000 ó which means you can retire at 65 after all! Evelyn Jacks is president of Knowledge Bureau and author of Essential Tax Facts 2012 and co-author of Financial Recovery in a Fragile World with Al Emid and Robert Ironside. Follow her on twitter @evelynjacks.    Additional Educational Resources: Take Home Pay Calculator  

The Canada Revenue Agency (CRA) is always updating its website and two recent additions are worth noting ó the form, RC354 Election for Transitional Relief by a Participant Taxpayer of a Joint Venture and the 7-page GST/HST Policy Statement re the treatment of gift certificates. Prior to March 22, 2011, in certain cases the CRA allowed a joint venture to establish a fiscal period different from the tax year of participants. That is no longer the case. For tax years ending after March 22, 2011, each participant taxpayer ó be it individuals or trusts ó must calculate the income from a joint venture according to the taxpayer's tax year. That means this year the income earned from the end of the joint venture's fiscal period to the end of the Dec. 31, 2011, tax year ó the "stub period incomeî ó has to be reported on your 2011 return. But you can request transitional relief, hence the RC354. Complete this form and the CRA will allow you to exclude the stub period income from your 2011 income. Instead you can report it over the following five years. GST/HST Policy Statement, gift certificates, or P-202, delineates when taxes become payable for gift certificates, with a large focus on defining the characteristics of a valid gift certificate under Section 181.2 of the Excise Tax Act. Various examples are provided. The CRA considers a gift certificate to have all of the following attributes: It has a monetary exchange value that is evident on the certificate or that is easily determined by the parties involved. Note: Certificates or gift cards that can be "topped-upî still fit in this category. It is issued or sold for use at a particular supplier, whether by that supplier or a third party. The amount paid may not necessarily be the same as the monetary exchange value. It is accepted as a form of payment for a good or service at that supplier. The bearer of the certificate is not required to do anything other than present the certificate for payment, as if it were cash. The certificate should not have value other than its monetary exchange value. P-202 gives the example of a company issuing "goldî certificates that are either redeemable for some good or service or frameable as a collector's piece as celebration of 50 years in business. As a result of the intrinsic value of the piece, the certificate would not be held to be a valid gift certificate under s. 182.1 of the ETA. If these conditions are met, then the sale of a gift certificate is deemed not to be supplies for GST/HST purposes and there is no GST/HST payable. When presented at the retailer, the certificates are deemed to be money for GST/HST purposes. At this stage, if applicable, the GST/HST will be payable on the value of the whole supply. Greer Jacks is updating jurisprudence in the EverGreen Explanatory Notes, an online research library of assistance to tax and financial professionals in working with their clients.   Additional Educational Resource: DFA-Bookkeeping Services Specialistô  

At a time when you might expect Canadians to pull in their horns, charitable donations of money and time remained constant. In 2010, almost 24 million Canadians ó or 84% of the population aged 15 and over ó donated on average $446 to a charity or non-profit for a total of $10.6 billion. This is unchanged since 2007, despite the recession of 2008-2009. At the same time, says Statistics Canada, 13.3 million people ó 47% of the population ó volunteered on average 156 hours in 2010 through a group or an organization. In fact, the 2.1 billion hours volunteered is the equivalent of 1.1 million full-time jobs, assuming 40 hours a week for 48 weeks. That, too, is in line with 2007 numbers. The data come from StatsCan's 2010 Survey of Giving, Volunteering Participating, the fifth of the series. The first survey of this type was done in 1997, the last in 2007. Those who donate money, says StatsCan, are likely to be older, have a higher household income and a formal education. Or, they attend weekly religious services or meetings. Those who volunteer the most hours are likely to be older with no children at home, widowed or no longer in the workforce. Or, they attend weekly religious services or meetings. The highest participation rate, however, was among younger Canadians. Geographically, the Atlantic provinces ó led by Newfoundland and Labrador (92%) and Prince Edward Island (91%) ó can boast the highest proportion of their population making financial donations. The 2010 national average was 84%. Western Canada, on the other hand, donated the highest amounts in 2010. People from Alberta, Saskatchewan and British Columbia donated $550 on average, compared to the $446 national average. Average donations were lowest in Quebec.   Additional Education Resource: Investment Strategies in Charitable Giving.  

All the provinces and territories but one have delivered their budgets for the fiscal year ending March 31, 2013. Although their governments are focusing on deficit reduction (See Knowledge Bureau Report, April 18), many provinces have opted to leave personal taxes as they were. But there are always exceptions, as the following table shows. Province Tax changes announced in 2012 provincial budgets British Columbia First-time new homeowners bonus ó from Feb 12, 2012, to March 31, 2013, first-time home buyers who purchase newly built homes are eligible for a $10,000 refundable bonus. Childrenís fitness tax credit ó this $500 provincial tax credit mirrors the federal childrenís fitness tax credit. Childrenís arts tax credit ó likewise, this $500 provincial tax credit mirrors the federal childrenís arts tax credit. Medical Expense Limit for Other Dependants ó the $10,000 limitation on medical expense is being eliminated. Dividend Tax Credit ó the B.C. DTC rate for eligible dividends increased to 10% from 9.76% as of Jan. 1, 2012. HST ó the province reverts to the GST/PST system as of April 1, 2013. Alberta No personal tax changes. Saskatchewan First-time home buyersí tax credit ó a $10,000 non-refundable tax credit for first-time home buyers mirrors the federal first-time home buyersí tax credit. Active Families Tax Credit ó the age of eligibility for this credit is extended to children up to age 17. Age 14 was the previous cutoff. Post-secondary tuition credit ó up to $500 a year for four years for post-secondary students. Manitoba The basic personal amount will increase $250 to $8,634 in the 2012 tax year. The dividend tax credit for eligible dividends will decrease to 8% from 11%. After 2012, the Co-op Education & Apprenticeship Tax Credit will be expanded for apprentices and journey people outside of Winnipeg. Ontario Ontario Healthy Homes Renovation Tax Credit. Originally announced in the 2011 budget, this credit was not passed for the 2011 tax year. For the 2012 tax year, expenses from Oct. 1, 2011, to Dec. 31, 2012, will be eligible. The credit is only available to seniors and taxpayers who share a home with a senior. The refundable credit is 15% of the eligible expenditures up to a maximum credit of $1,500 ($10,000 eligible expenditures). Eligible expenditures are those that improve accessibility or help a senior be more functional or mobile in the home. Ontario Child Benefit's maximum benefit will increase to $1,210 from $1,100 starting July 2013 and to $1,310 come July 2014. Ontario Clean Energy Benefit will be capped at 3,000 kWh a month beginning Sept. 1, 2012. Ontario Trillium Benefit combines the Ontario Sales Tax Credit, the Ontario Energy and Property Tax Credit and the Northern Ontario Energy Credit into one monthly payment. The budget promises to consider giving taxpayers the choice of receiving an annual lump sum vs. monthly payments. Budget debate resulted the government introducing a 2% surtax to taxpayers with taxable incomes over $500,000. (See Knowledge Bureau Report, May 2) Quebec No new income tax changes for 2012. New Brunswick No new personal tax changes for 2012. Nova Scotia The amount for spouse or common-law partner as well as the amount for eligible dependants increased to $8,481 from $7,201 as of Jan. 1, 2012. The disability amount was raised to $7,341 from $5,035 as of Jan. 1, 2012. The Nova Scotia Child Benefit will increase by 5% effective July 1, 2012. The Nova Scotia Affordable Living refundable tax credit will increase to $255 an adult plus $60 a child effective July 1, 2012. The Poverty Reduction refundable tax credit will increase to $250 a year effective July 1, 2012. Prince Edward Island PEI will introduce a 14% HST on April 1, 2013. An enhanced refundable tax credit will be announced for low-income families. A refundable tax credit of $500 will be available for 2012 for volunteer firefighters with at least 200 hours of volunteer service. Newfoundland & Labrador No new income tax changes for 2012. Yukon No new income tax changes for 2012. Northwest Territories 2012 Budget has not been delivered. Nunavut No new income tax changes for 2012. Walter Harder is the co-author of several income tax courses for The Knowledge Bureau including Introduction to Personal Tax Preparation Services, Advanced Tax Preparation and Research, Tax Preparation for Proprietorships, Tax Strategies for Financial Advisors, and Death of a Taxpayer.  

Eight mayors of cities in British Columbia ó Vancouver, Burnaby, North Vancouver, Vernon, Armstrong, Enderby, Lake Country and Metchosin ó argued in an April 26 letter to B.C.'s premier, its Opposition NDP leader and the leader of the B.C. Conservative Party that marijuana should be legalized and taxed. Their argument is persuasive, but have they considered all the ramifications?Clearly, prohibition has proven to be an ineffective solution. Despite increased spending on law enforcement, the use and availability of marijuana has been increasing across Canada. Not only that, the eight mayors state, 85% of the province's marijuana industry is controlled by criminal groups. As prohibition drives prices up, it puts more money into the hands of these criminal organizations. (Think Al Capone and his boot-legging and smuggling activities in Prohibition-era United States.) Late last month, the chief medical health officers of three provinces weighed in on the discussion, publishing a paper that compares Canada's illicit drug policies to those of other countries. "For the last decade, Portugal has decriminalized all drug use and [it has] some of the lowest rates of drug use in Europe and some of the least amounts of harm from drug use,î said Dr. Robert Strang, Nova Scotia's chief medical health officer. In contrast, the three reported, drug use hasn't decreased since the US$1-trillion "war on drugsî was declared and aggressive law enforcement began. There is evidence that the U.S., too, is rethinking its policy in the face of the stark, underlying statistics. Notably, John McKay, the former U.S. district attorney who prosecuted B.C. marijuana activist Marc Emery in a cross-border sting, is calling for the legalization and taxation of pot in Canada and the U.S. Stop the Violence BC ó a coalition of high-profile academic, legal, law enforcement and health experts which is working to reduce crime and public health problems stemming from the prohibition on marijuana ó recently held a lecture in Vancouver. McKay took the stage, maintaining that the laws keeping pot illegal no longer serve a purpose, but allow gangs and cartels to generate billions in profits. "I want to say this just as clearly and as forthrightly as I can,î he said, "marijuana prohibition, criminal prohibition of marijuana is a complete failure.î To be successful, any prohibition in society requires broad support from the population, he added, and that isn't the case with marijuana. Jodie Emery, Marc Emery's wife, and former B.C. Attorney General Geoff Plant, also attended the lecture. McKay went on to say that marijuana, like alcohol, should be produced and sold to adults by the government. That would generate at least US$500 million in revenue annually in Washington State alone. Furthermore and most importantly, he said, ending prohibition would end the violent reign of gangs and drug cartels. Transpose this model to B.C., where the black market is said to be $7 billion annually, and the revenue generated is staggering. Federally, Canada could eradicate its deficit, relieve its court system and stop placing non-dangerous criminals in jail. Indeed, many law enforcers have become reluctant to prosecute people in possession of personal quantities. But marijuana prohibition is a federal law. That means Ottawa has to amend the Criminal Code. The Liberal Party of Canada recently voted almost 80% in favour of placing the legalization of marijuana on its platform, but the ruling Conservatives are not so sure. They argue that legalization will hurt trade with the U.S. and lead to longer waits at the border, although Stop the Violence BC and others believe those concerns are unsubstantiated. There are no clear-cut, easy answers to these questions. But any measure that promises to increase revenue and decrease a major source of funds for organized crime is worth a closer look. Let's go back to Al Capone. Is it, perhaps, instructive that Al Capone was only ever incarcerated for tax evasion? Greer Jacks is updating jurisprudence in the EverGreen Explanatory Notes, an online research library of assistance to tax and financial professionals in working with their clients.  

In an effort to win opposition NDP members' support for its 2012 budget, the Ontario government agreed to impose a "Deficit-Fighting High-Income Tax Bracket.î As a result, 20,000-30,000 Ontarians who earn more than $500,000 annually ó or 0.2% of Ontario tax filers ó face what amounts to a 2% surtax on personal income. According to an Ontario government press release, when fully implemented, the top statutory Ontario income tax rate on taxable incomes over $500,000 will be 13.16%, up from the current 11.16%, and will remain at that level until the budget is balanced in the fiscal year ending March 31, 2018. For 2012, the Deficit-Fighting High-Income Tax Bracket will be 12.16%, one-half of the increase in the rate, with the full 2% increase effective in calendar 2013. This means that the combined federal and Ontario top marginal tax rate will increase to 49.53% from 46.41% in 2013.The government estimates an average incremental tax bill of $19,000 once the tax is fully implemented. Ontario says this change will generate additional revenue of $280 million in 2012/13, $470 million in 2013­/14, and $495 million in 2014­/15. "All of the additional revenue raised by this proposed measure would be used to reduce the provincial deficit,î said the government press release, "and accelerate Ontario's plan to eliminate the deficit by 2017/18.î In fact, a $500 million surplus is expected in 2017/18. Unfortunately, the increased revenue from the tax was not enough to appease credit rating agencies. Standard & Poor's put Ontario on a negative watch ó with a 33% probability of a credit rating downgrade within two years. Moody's then lowered Ontario's rating a notch to Aa2. As TD Bank Group economists Craig Alexander and Sonya Gulati point out in a report, since 2009, all three major rating agencies (DBRS, S&P and Moody's) have downgraded Ontario because of concerns about its "deficit profile, growing debt burden and deficit reduction efforts.î "Credit-rating scores and the risk premium associated with holding provincial debt have important implications for debt-servicing costs,î say Alexander and Gulati in their report. The two economists list some disturbing figures: ï Ontario's net debt as share of the economy will peak at 41.6% in fiscal 2014/15; five years ago the provincial debt burden stood at 26.8%. ï In the current low borrowing environment, interest costs consume about 8¢ of every $1 spent. ï Given the status-quo, in a few years, interest rate payments will inch up to 11¢ of every $1 spent. "If markets demand more of a premium to hold Ontario debt given credit rating agency unease,î say Alexander and Gulati, "Ontarians could see less money directed toward actual programs and services.î CIBC economist Warren Lovely does see some upside as a result of the new tax. In a CIBC report, he notes that every $1 of improvement in Ontario's budget balance will lessen the amount the province has to borrow. "So, for the current 2012/13 fiscal year,î Lovely says, "the long-term borrowing requirement has been lowered to $34.9 billion from $35.6 billion. The province has raised $1.6 billion toward that target since April 1.î