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.

The Federal Task Force on Financial Literacy has been travelling across Canada holding consultations with Canadians on the issues that matter most to them with respect to literacy issues and financial matters.  For those that missed the public sessions, comments are still welcome on their website at www.financialliteracyincanada.com.   The Task Force was formed to make recommendations to the Minister of Finance on a cohesive national strategy on financial literacy and they have a website with more information on the work they do and what they hope to accomplish.  The Task Force travels East next.  See the full list of public consultations by clicking here.   The objective is to recommend ways to improve financial literacy so Canadians are better able to make sound financial decisions in a world that is fast moving and very complex.   Evelyn Jacks, the founder and President of The Knowledge Bureau, is a member of the Task Force. Interested subscribers to the Knowledge Bureau Report may wish to follow the work of the Task Force. Stay tuned for more details on the consultations as the Task Force continues its way across Canada.

Many employees have deductions or credits available to them that are not reflected on the TD1 form. Where an employee has such deductions or credits available, it is to his or her advantage to have the employer take these into account when calculating the tax to be withheld. Reducing tax withheld at source enhances the employee's cash flow ñ amounts that would otherwise be received as a lump-sum refund when the tax return is filed are converted into an increase in the take-home paycheque received every pay period. This is one of the reasons that in 2008 the average tax refund was $1,400 per taxpayer.  Non-Statutory Deductions Some deductions can be taken into account by the employer without having to obtain the consent of CRA. Others require a pre-authorization from CRA before the employer can take them into account and reduce withholdings. Deductions that do not require Approval the employee's contributions to a registered pension plan, the deduction available to an employee who resides in a prescribed Northern zone, union dues, contributions to a Retirement Compensation Arrangement or certain other pension arrangements, and certain contributions to a Registered Retirement Savings Plan. Deductions that Require Approval An employee may have deductions or credits available other than those described above which will reduce the amount of tax he or she ultimately has to pay when the tax return is filed. The employee has the right to request that the employer take these into account in calculating the amount of income tax to withhold from net pay. However, the employee must first obtain the written permission of the Canada Revenue Agency. Permission is requested by filling a Form T1213 with the CRA on which the employee identifies the employer and the dollar amounts of deductions or credits that will be available to reduce the amount of tax. If the CRA is in agreement, an authorization will be issued to the employer. Education resource: Excerpted from Advanced Payroll for Professional Bookkeepers, one of the courses that comprise the DFA, Bookkeeping Services Specialist designation program.

Increase in Taxes - A Sign of Things to Come?To cope with a $9 Billion deficit, and an expected deficit of $222 Million in 2010-2011, Nova Scotia will raise its Harmonized Sales Tax to 15% starting on July 1st, and create a new "high income" tax bracket, taxing those with incomes above $150,000 at 21%, beginning retroactively on January 1, 2010. This 21% rate is one of the highest penalties for those with top earnings in the country. With other provinces and the federal government itself facing large deficits, this may signal the advent of new taxation trends for the years to come. Other tax initiatives include: HST offset for low income earners (less than $30,000) of $240 per year plus an additional $57 for children under 19 and living at home Elimination of the 10% surtax on provincial income tax payable greater than $10,000 effective January 1, 2010 Taxes on small business (under $400,000) declining to 4.5% from 5%, effective January 1, 2011 Capital taxes on non-financial institutions declining and set to be eliminated in two years How does this compare to taxation changes in other provinces? See KBR budget summations in archived issues by linking here.The bottom line for Nova Scotians? At a time when recovering economies need fiscal stimulus, consumers will pay more (and this penalizes in particular, young familiesin the middle class) and the tax disincentive for high income earners may create a brain drain Nova Scotia may miss for its future. Planning to reduce, change or diversify investment or business income sources may help to average down these new tax rates. So will RRSP contributions which save tax dollars on a proportionately higher basis for high income earners.Your thoughts? Evelyn Jacks is President of The Knowledge Bureau and author of Essential Tax Facts 2010, Master Your Taxes, and Make Sure It's Deductible; all available from the Knowledge Bureau bookstore at bulk purchase pricing for advisors and their clients.

The Minister of Finance, The Honourable Jim Flaherty, released a statement recently advising proposed changes contained in the Notice of Ways and Means Motion tabled on March 22, 2010 will provide clear GST rules for those within the financial services industry. The draft legislation relating to the application of GST within the industry was introduced to improve on the legislation previously released in January 2007. The current system for applying GST contains very complex rules relating to registered pension plan trusts, and the new system will offer an equitable application of GST rebates and an updated process for GST returns to provide improved reporting. Some highlights of the draft legislation are as follows: The CRA and financial institutions will have an improved and more flexible pre-approval process for the allocation method of input tax credits (ITC's) Canadian financial institutions with foreign branches can choose a self-assessment process that is simpler to implement when services are provided by those foreign branches Banks and other large dealers will be allowed to use their own methods to allocate ITC's Large derivative transactions undertaken by financial institutions could be excluded from self-assessment rules. A new GST annual information return would be introduced, due the same time as the institution's annual tax return To review the GST Notice related to the changes, link here. Educational Resources: 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.

The 2010 Saskatchewan budget was tabled on March 24, 2010. Although it was presented as being a balanced budget, it required some borrowing from its Growth and Financial Security Fund (the rainy day fund) in order to meet that goal, otherwise there would have been a $174 million dollar deficit. The budget contained little in the way of income tax changes or sales tax changes. Announcements were made with respect to cutting just over 500 government positions, many due to programs that were being wound down and some others due to attrition. There were sin tax increases on both beer and cigarettes and there have been a limit established on tax-free cartons for First Nation smokers ñ decreased to one carton from three. An end was also announced regarding subsidies available for universal chiropractic care which would save $10 million dollars a year. Low-income Saskatchewan residents will now be covered to a maximum of twelve visits a year. A three percent increase in health care spending was also announced. For the most up-to-date information on tax forms and tax changes consult: EverGreen Explanatory Notes: Your online gateway to the latest changes at the Department of Finance and CRA.

By Alan Rowell , DFA, Tax Services Specialist Ontario's budget announced on March 25, 2010 was big on repetition of previously announced measures, but low on details. Ontario will record a budget deficit of $21.3 billion, down from the forecasted $24.7 billion, but still holds the dubious distinction of being the highest deficit in Ontario's history. The Ontario government plans to eliminate the deficit over the next seven years, but there is no effective indication or detail as to how this will be achieved, other than government cost cutting and project deferrals. The main thrust of the deficit reduction plan consists of forecasted job creation over the next seven years. In the meantime, Ontario forecasts estimate an interest expense of 10 billion dollars over the 2010-11 fiscal year; almost 10% of Ontario's forecasted revenues.Harmonized Sales Tax Ontario's previously announced move to a Value-Added tax on July 1, 2010 remains the focus of Ontario's budget plan. The budget reaffirmed the government's commitment for the combined federal and provincial HST rate to be 13%. To help offset the impact of the HST, the budget announced two new tax credits, replacing the existing combined property and sales tax credits, effective for the 2010 tax year for individuals and families. Ontario residents will also receive Sales Tax Transition Benefit cheques in June 2010, December 2010 and June 2011. These transition amounts are based on income reported on the 2009 income tax returns and consist of total amounts of $300 for a single taxpayer with income less than $80,000, and $1,000 for family incomes less than $160,000. The new Ontario Sales Tax Credit will consist of quarterly payments totalling $260 per year for each adult and child in an eligible family. These tax credits will be income-tested and will phase out based on the family income. Ontario business will also receive assistance to offset the costs of transitioning to HST of up to $1,000.Tax Cuts for Individuals A previously announced personal tax rate change, reducing the personal rate from 6.05% to 5.05% on the first $37,106 of income gives Ontario, at least temporarily, the distinction of having the lowest personal tax rate in Canada. The previously existing Property Tax Credit will be replaced with a new Ontario Energy and Property Tax Credit. This credit will be paid quarterly beginning in 2011 based on 2010 personal tax return filings. While details are not available, it is almost a certainty that this credit will also be income tested. The Northern Ontario Energy Credit has been made a permanent tax credit to help Northern Ontario residents offset the higher cost of energy. The credit consists of $130 for single persons with incomes up to $35,000 and up to $200 for families with incomes up to $45,000. The credits are income tested and are eliminated at $48,000 and $65,000 respectively.Tax Cuts for Business The budget announced a reduction in the small business corporate income tax rate from 5.5% to 4.5% effective July 1, 2010, on net income under $500,000. Additionally the budget reiterated a number of previously announced measures including: Cutting the general corporate tax rate from 14% to 12%. The rate is to be further reduced to 10% over the next three years. Cutting the corporate income tax rate for manufacturing, processing, mining, logging, farming and fishing from 12% to 10% Elimination of the Ontario Capital Tax effective July 1, 2010 Elimination of the small business surtax of 4.5%Mirroring Federal Tax Ontario adopted and automatically will mirror the Federal budget tax changes announced earlier this year. Roll-over of certain registered plan proceeds to a Registered Disability Savings plan; Taxation options of the Universal Child Care Benefit; Changes to the Medical Expense Tax Credit; Scholarship exemption and Education Tax Credit; Treatment of employee stock options; Deduction for US Social Security benefits; Disbursement quota for charities; and Capital cost allowance system. For the most up-to-date information on tax forms and tax changes consult: EverGreen Explanatory Notes: Your online gateway to the latest changes at the Department of Finance and CRA.