Time’s Up: CRA’s 100 Day Mandate for Improvement

After years of frustration on the part of tax professionals and taxpayers alike, the Finance Minister ordered the Canada Revenue Agency to clean up its act in 100 days. Specifically, the improvement plan was to run from September 2 through December 11. Finance Minister and Minister of National Revenue, Francoise-Phillippe Champagne instructed CRA to fix “unacceptable wait times and service delays.” Time’s up this week and CRA has released an update on progress. What gets measured, gets done. Let’s see what CRA’s metrics show. 

By Evelyn Jacks Happy New Year! The tax preparation and wealth planning process will take on new importance this quarter with tax season beginning again for over 24 million Canadian tax filers in the aftermath of an unprecedented financial stimulus into the global marketplace, over the past two years. It appears Canada is poised for a significant economic recovery in 2010, and with that comes some tax planning opportunities. The personal net worth of Canadians has rebounded above its ten-year average and Canadian savings rates are at an eight-year high, according to statistics from the Bank of Canada and the Department of Finance. In addition, millions of Canadians have responded to the economic stimulus provided by the Home Renovation Tax Credit. This provision might well result in significant bottlenecks in tax preparation services, as busy tax advisors prepare for the increased data entry required on new Schedule 12, which requires an itemization of home renovation receipts. Specifically then, investment and financial advisors and their clients will want to focus on a review of the following provisions, sooner rather than later, to maximize tax preferences and reduce waiting time for tax refunds and their related investment benefits: RRSP top-ups for 2009 tax year TFSA contributions for 2010 A 2010 income projection and quarterly instalment tax review for March 15, 2010 Completion of source deduction and reduction forms: TD1 and T1213 A review of personal amounts for 2010 to ensure receipting is properly started for the calendar year A review of remaining opportunities under the temporary Home Renovation Tax Credit, under which work must be completed by February 1, 2010, but materials can be acquired for later use by the same date. Additional Educational Resource: EverGreen Explanatory Notes: Your online gateway to the latest changes at the Department of Finance and CRA.

Tax filing season 2010 will bring with it some new tax provisions and numerous increases in personal tax deductions, as well as refundable and non-refundable tax credits. Reviewing new personal provisions is a great way to start the financial year, particularly as Canadians get ready to file their 2009 tax returns, top up their RRSP contributions and make TFSA deposits. To help advisors and their clients prepare to pay only the correct amount of tax on personal and business activities, Evelyn Jacks, Canada's most trust tax author has recently released her 45th and 46th books, Essential Tax Facts 2010 (Knowledge Bureau, Inc) and Make Sure It's Deductible (McGraw Hill) and the following checklist to discuss in preparation for tax season 2010. 2010 TAX SEASON READINESS CHECKLIST: WHAT'S NEW? Tax receipting for the new Home Renovation Tax Credit The New Home Buyers' Amount ($5000) The GST/HST New Housing Rebate Increased EI Benefits and Clawback Zones ($52,875) Wage Earner Protection Program Employment Perks. Employees will be treated to new tax free perks of employment in certain circumstances. New RPP Contribution Maximums New RRSP Contribution Maximums Deductibility of Losses in RRSP/RRIF values on final return Child Care Expense Limitation for Working Teenagers Moving Expenses review Increased claims for Trucker's Meal Expenses Changes to GST/HST Rebates on Employment Deductions ( 5/105 for GST and 13/113 for HST) Indexing changes to personal amounts including Basic Personal Amount and Age Amounts and many more.  Changes under the CANADA-US Tax Treaty GST and the Financial Services, including Trailer Commissions or Trailer Fees Additional Education Resources: Distinguished Advisor T1 Tax Update Tour. Join us for a concentrated, focused day on the personal tax filing issues of concern to taxpayers, investors and professional planners in major centres across Canada January 15 to 25.   EverGreen Challenge 2010 Self Study Course: Hands-on practical training designed especially for tax and financial advisors and their new and returning staff. Convenient self study course to enable in-office certificate studies before the busy tax season starts. Lower in-office group study rates available. Don't delay! Call 1-866-953-4769 to register now.

<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com🏢office" />  We look forward to working with you in sharing knowledge on tax efficient retirement, investment and wealth management strategies in 2010.   All the best for a happy and healthy year!

As we discussed in our last issue of Breaking Tax and Investment News, with the end of the year now past us, it is worthwhile to review changes that have occurred during 2009 that may impact you or your clients at tax filing time.   Following are recent tax changes specific to those who are employed. It is important to review various tax provisions available to employees in this year of change, as the economic downturn has led to numerous job losses, especially in the automotive, media and manufacturing sectors. Travel Within a Municipality or Metropolitan Area. Starting with tax year 2009, allowances paid for an employee to travel within the municipality or metropolitan area may be excluded from income if the allowance is paid primarily for the benefit of the employer. Certain criteria must be met including that the vehicle is specifically designed or suited for the employer's business and essential for the performance of the employee's duties, and that there are legitimate business reasons why the employee must take the vehicle home at night. Gifts and Awards. Effective for 2010, the CRA's policies regarding gifts and awards paid to employees will be as follows: ï Non-cash gifts and non-cash awards to an arm's length employee, regardless of number, will be non-taxable to the extent that the total aggregate value of all non-cash gifts and awards to that employee for the year is less than $500.   ï In addition, a separate non-cash long service/anniversary award may also qualify for non-taxable status to the extent its total value is $500 or less.   ï For the purposes of applying the $500 thresholds, the annual gifts and awards threshold and the long service/anniversary awards threshold are separate. Nominal Value Gifts. Items of an immaterial or nominal value, such as coffee, tea, T-shirts with employer logos, mugs, plaques, trophies, etc., will not be considered a taxable benefit to employees.   All of these amounts will already be included in Box 14 of the T4 slip, however, it's good to know about them as you negotiate your compensation from your employer. Transit Passes. Effective for 2010, note the following for employees of transit companies (including bus, streetcar, subway, commuter trains or buses and ferry services): ï Passes for the exclusive use of the employee will be tax-free. ï Free or discounted passes for the use of the employee's family will be a taxable benefit. Educational Resources:  Now is a good time to look at retirement income plans, family succession and estate plans in an attempt to better understand financial needs for a future which could certainly include tax increases on both income and capital.  To learn more consider the following Educational Resources available from The Knowledge Bureau: Tax Efficient Retirement Income Planning    Master Your Retirement       Master Your Taxes <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com🏢office" />Tax Efficient Investment Income Planning                      Master Your Real Wealth      Master Your Investment in the Family Business

The Knowledge Bureau management and staff would like to extend warm holiday wishes to all Knowledge Bureau clients, students and faculty members and all the best for a happy and healthy 2010. Please note that The Knowledge Bureau's offices will be closed for the holiday season, beginning on December 24th and will open with reduced holiday hours from December 28th - 30th. The offices will be open with regular hours beginning on Monday, January 4th, 2010.      Student support questions received from December 24th - 27th will be responded to by end of day December 28th.   The Knowledge Bureau Management and Staff

The Minister of Finance, The Honourable Jim Flaherty, has announced that consultations with Canadians will take place nationally in order that the country can be led into an economic recovery with the help of measures in the 2010 Federal Budget. Flaherty plans to continue with the implementation of measures introduced through the Economic Action Plan introduced in January 2009. Some of the items introduced under the Action Plan are: Income tax reductions put in place since April 2009 Increased child benefits beginning mid 2009 Availability of the Home Renovation Tax Credit of up to $1,350 for renovations completed by February 1, 2010 Increased Working Income Tax Benefits of up to $925 per individual or $1,680 per couple for low income Canadians to access Increased small business deduction Increased capital cost allowances for specific purchases such as computers Minister Flaherty advises "We would like to hear from Canadians on how best to implement the remaining stimulus measures in Canada's Economic Plan and to keep on track towards a stronger economic future.î The Government will be looking for answers to the following: To what level has your industry or community been impacted by measures provided by the Economic Action Plan? Do you have any suggestions for making the making the various programs more effective? Are there other steps that could be taken in order for the Canadian economy to remain competitive? Can you suggest a time period over which the Government can rebalance the budget? The Federal Government will be holding consultations with Canadians across the nation, and in addition individuals can go on-line and and submit their views by linking here. Educational Resource: For the latest budget information sign up now to Canada's leading  online tax reference for taxpayers, financial advisors and their clients: EverGreen Explanatory Notes.