Latest CRA News
For Home Based Business Owners

This refundable tax credit was announced in the 2024 budget. It is a retroactive payment with respect to fuel charge years 2019 to 2024 for the designated provinces Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, PEI, and Newfoundland. It excludes the territories, BC and Quebec.

A fuel tax year runs April to March. You do not need to apply for the credit, it will be automatically calculated and issued.

To be eligible to receive the credit a CCPC must have employed one or more persons in a designated province, have less than 500 employees throughout the calendar year, and file your T2 return for 2023 no later than July 15, 2024.

Source:  CRA website

Here is a reminder of CRA's new policy on information returns.

"As of January 2024, businesses filing six or more information returns (slips and summaries) must file electronically to avoid penalties. Examples of information returns include the T4 (remuneration paid), T5 (investment income), T3 (trust income) and T4A (pension and other income)."

To file electronically:

• Use My Business Account or Represent a Client is you do not have a web access code.
• If you have a web access code, use Web Forms  or XML.

Effective January 2025, CRA is making changes to the T619 electronic transmittal form. Part of this change will require submitting only one type of information return per file. For example, you will no longer be able to submit T4s and T4As in the same file. They must be sent in separate files.

Last week, CRA gave notice that they will be shutting down the system in December 2024 rather than the normal January shutdown. In 2024, CRA shut down the electronic submission services from January 20th to February 20th for annual maintenance required to get ready for the upcoming tax season. Now they are saying they will shutting down in December.

CRA is giving this notice now so that you can plan to have all your information returns filed before the December 2024 shutdown. I'm not sure how that will work. I hope it means they reopen in late January.

Source: CRA Newsroom June 28, 2024 Get ready: By January 2025 there will be changes to the electronic filing of information returns

TRACING HISTORY -  CRA NEWS RELATED TO THIS TOPIC

July 23, 2009
Mandatory E-filing Starts in 2010

CRA announced today, that beginning in January 2010, mandatory e-filing is required for anyone who submits more than 50 information returns.

An information return are returns like T3 slips, T4 slips and T5 slips. You can find more information on the CRA website Mandatory Electronic Filing of Information Returns.

If you have less than 50 information returns, you can still file electronically. It is quick and easy to do ... and you get instant confirmation for your records that the returns have been received. I found it a lot more convenient and efficient than paper filing the returns.

On February 21, 2024 CRA announced new GST/HST electronic filing requirements.

"For GST/HST reporting periods that begin in 2024, all GST/HST registrants, except for charities and selected financial institutions, are required to file returns electronically.

The mandatory electronic filing threshold that was in place for GST/HST returns has been removed for reporting periods that begin on or after January 1, 2024, which means that electronic filing is now required for most businesses."

If you don't file electronically, the Canada Revenue Agency may charge you a penalty.

"The CRA will waive the penalty if you (1) file monthly or quarterly, and (2) were not previously required to file electronically, and (3) are filing a GST/HST return for a filing period beginning on or after January 1, 2024, and before April 1, 2024."

Effective June 25, 2024, the capital gains inclusion rate will increase from 50% to 67% for (1) capital gains over $250,000 per year for individual, and (2) all capital gains for corporations and most trusts. This change does not affect the principal residence exemption.

These are things you cannot do to lessen your capital gain tax burden:

• Current rules do not permit elections to realize a gain or loss on property without an actual transfer.
• Capital gains cannot be averaged over multiple years to stay under the threshold.
• Individuals cannot share their $250,000 annual threshold with corporations they own.
• The 67% exclusion rate applies across all sectors and all assets. There is no preferential treatment.
• There are no special rules based on how long an asset has been held.

August 31, 2024

CRA released the fourth quarter 2024 prescribed interest rates. The rates remained the same except for PLOI rates. It changed from 8.96% to 8.53%.

The CRA quietly released these rates on January 23, 2024.

There is no change to meal rates for 2023. 2024 meal rates will be released in early 2025.

The 2023 meal and travel allowances are used to claim medical expenses, moving expenses, and the northern resident deductions on your personal tax return. You will find them here.

The annual contribution limit increases to $7,000 in 2024, up from $6,500. This Advisor.ca article explains how the increases can be calculated using CPI. It will remain at $7,000 until cumulative annual inflation increases equal $500. This usually takes 3 to 4 years but given current rates of inflation, it is expected to change again in 2026. Then it will move to $7,500.

The cumulative contribution since 2009, for eligible individuals, is now $95,000. Annual limits are as follows:

2009 - 2012 $5,000
2013 - 2014 $5,500
2015  - $10,000
2016 - 2018 $5,500
2019 - 2022 $6,000
2023 - $6,500
2024 - $7,000

With the exception of 2015, TFSA limits are indexed to inflation in $500 increments. Therefore, as inflation has been dropping throughout 2024, the expected contribution limit for 2025 is expected to remain at $7,000.

TRACING HISTORY - CRA NEWS RELATED TO THIS TOPIC

January, 2016
TFSA Contribution Limit to Decrease For 2016

The Liberal Government has decreased the $10,000  annual contribution limit to $5,500 effective in 2016.

It's not clear yet if the TFSA will be indexed to inflation in $500 increments again. 

May 12, 2015
TFSA Contribution Limit to Increase For 2015

The Federal Government will increase the $5,500 annual contribution limit to $10,000 effective in 2015.

Because of this increase, the TFSA will no longer be indexed to inflation in $500 increments. 

Money Sense released a great guide to help you harness the power of the TFSA. Find it here.

July 21, 2010
TFSA Contribution Room - TFSA Non-Arm's Length Loans - TFSA Returns

The Knowledge Bureau free weekly newsletter reminds us that a non-arm's length loan made to allow another person to make TFSA contribution is not allowed. The rules deem it to NOT be a TFSA.

The newsletter pointed out that any interest paid on borrowed money for a TFSA contribution (or RRSP contribution), is NOT deductible.

Listed in the newsletter were the forms and return that needs to be filed if you owe tax on a TFSA.

• RC243 Tax-Free Savings Account (TFSA) Return 2009
• RC243-SCH-A Schedule A - Excess TFSA Amounts
• RC243-SCH-B Schedule B - Non-Resident Contributions to a Tax Free Savings Account (TFSA)

CRA has extended the deadline date from June 30, 2010 to August 3, 2010.

July 15, 2010
Understand Your TFSA Contribution Room

If you have a Tax Free Savings Account (TFSA), be sure you understand your contribution room.

TFSAs allow Canadian residents to contribute $5,000 annually (plus indexation) where the investment income or capital gains earned are not subject to income tax ... if you stay away from prohibited investments or excess contributions.

Investment income or capital gains earned in the TFSA do not affect your contribution room.

2009 was the first year for this type of tax savings vehicle ... and there was some misunderstanding by some taxpayers of the rules pertaining to unused contribution room.

The general rule for TFSA withdrawals is you can withdraw any amount at any time with no tax consequences ... which then creates contribution room. However ...

withdrawals made during the year may NOT be added back (deposited to the account) until the following year.

The annual contribution room of $5,000 is created by filing a tax return, for those age 18 or older. There is no maximum age limit for TFSAs.

Learn more about TFSA proposed revisions and excess contributions below.

December 2, 2009
Proposed Revisions to TFSAs

On October 16, 2009 the Minister of Finance proposed technical changes to TFSAs due to recent tax planning schemes involving TFSAs.

It is proposed that these changes be effective October 17, 2009.

• Deliberate over contributions and prohibited investments will be subject to anti-avoidance rules.
• Non-qualified investments' income will be taxed at normal tax rates.
• Withdrawals of deliberate over contributions and other non-qualifying investments will not make additional TFSA contribution room.
• Income attributed to deliberate over contribution or prohibitive investments will be charged at 100% as per existing advantage rules.
• Asset transfer transactions (swaps) between TFSAs and other accounts will be prohibited.

You can find the announcement and more in depth information on the Department of Finance Canada website - www.fin.gc.ca. Look under news dated 2009-10-16.

See above to learn more about TFSA contribution room and non-arm's length loans.

The 2024 RRSP limit is 18% of the previous year's earned income, up to a maximum of $31,560  (whichever is less), plus any unused contribution room from previous years. For 2025, the maximum limit is $32,490 which requires an income of $180,500 or more.

Remember if you have a company pension plan, your RRSP contribution limit is reduced.

More >> RRSP Tips and Traps for Small Business Owners in Canada

The 2025 EI rates including the maximum earnings that premiums can be deducted on were released by the Canada Employment Insurance Commission. The mandated 7 year break even objective has resulted in changes to 2025 rates.

Click here for current EI rates.

CPP rates are normally announced in November.

EI Rates are usually released annually in mid- September by the Employment and Social Development Canada. Prior to 2019, they were released by the Finance Department.

TRACING HISTORY - CRA NEWS RELATED TO THIS TOPIC

September 2022
EI Premium Rate Freeze Ended

The Government announced on August 20, 2021 a two year freeze on the EI premium rate for 2021 and 2022 at the 2020 rate. This ended in 2023.

September 9, 2013

2014 EI Insurable Earnings Released

On September 9, the Harper government announced the 2014 EI rates including the maximum earnings that premiums can be deducted on. The rate is frozen at the 2013 rate for the next 3 years.

For more information, go to fin.gc.ca> News> Harper Government Supports Job Creation with Three-Year Freeze of Employment Insurance Premium Rates.

November 14, 2011
How EI Rates Are Calculated

The CEIFB (Canada Employment Insurance Financing Board) announced the 2012 EI rates including the maximum earnings that premiums can be deducted on. 

CEIFB explains that "this amount is indexed annually using the growth in the average weekly earnings as published by Statistics Canada. Thus, an increase in premiums paid by employees is a combination of any change in the EI premium rate, as well as the impact of any change in the MIE (for those at the maximum level of insurable income)."

The Chief Actuary forecasts the break-even rate for 2012 for all provinces except Quebec to be $2.56 per $100 of insurable earnings. 2012 will be the first year the EI Operating Account is expected to break even on an annual basis.

For more information, go to www.ceifb-ofaec.ca> Media Room> CEIFB News Release The Canada Employment Insurance Financing Board Publishes its 2012 Employment Insurance Premium Rate Report

November 12, 2011
EI Expected to Break Even On An Annual Basis

On November 7, 2011, the Finance Minister announced 2012 EI premiums will only rise by 5 cents to 1.83% due to the global economic slowdown. They had been expected to rise by 10 cents as announced on September 30, 2010.

An 16 week extension to the Work-Sharing Program was also announced.

2012 EI maximum insurable earnings have NOT been released yet ... but I am expecting they will be released by the third week in November as they were last year.

2012 CPP Rates were released on November 1.

BACKGROUND

In 2009, EI premiums were frozen as part of Canada's Economic Action Plan. The plan called for the premiums for 2011 and beyond to be set on a break-even basis.

The Finance Minister announced on September 30, 2010 that it still supported the principle that the EI system should break even over time ... but at a slower rate. This means there will need to be modest increases over a number of years to repay the deficit built up in 2009 and 2010.

To continue to support the current economic recovery, 2011 EI premiums only rose by 5 cents (.05%) instead of 15 cents (.15%) ... to 1.78% from the current 1.73%.

Subsequent years were expected to increase by 10 cents (.10%) per year.

For more information, go to Department of Finance>Publications and reports> Backgrounder on EI Rate Increase Limit and Department of Finance>News> Harper Government Takes Action to Support Jobs and Growth.

CRA released the 2024 Payroll Deductions Online Calculator (PDOC) today. The rates are effective January 1, 2024.

CRA wants small business owners to know that PDOC, the online calculator, is NOT meant to be used as a statement of earnings for your employees. It is recommended you check your employment standards to determine what information is legally required.

The manual payroll deduction tables (T4032) used for common pay periods and the supplementary tables (T4008) used for unusual pay periods have also been released online. You will find the digital guides here. The CRA no longer publishes the paper and CD versions of the Guide T4032, Payroll Deductions Tables. 

There is also a payroll deduction table for "outside Canada". Look for T4032OC.

The 2024 CPP and EI rates were released earlier this year.

QuickBooks® desktop payroll tax tables for the coming year are expected to become available around December 23 each year. 

In mid-June every year, CRA releases the July 1 edition of PDOC on their website. If you do your payroll calculations manually, remember to look for the July edition of T4032 and T4008. 

QuickBooks® desktop July Update Payroll Tax Tables usually become available mid-June as well. 

TRACING HISTORY - CRA NEWS RELATED TO THIS TOPIC

Nov 11, 2023
CRA's Annual Inflation Indexation Adjustments

CRA usually releases the annual indexation adjustment for personal income tax and benefit amounts in in the second week of November each year. The chart reflects an indexation increase of 4.7% for 2024 and compares the indexed amounts to the 2021 to 2023 tax years.

In 2016, the second lowest tax bracket of 22% was reduced to 20.5% and a new tax bracket introduced for those earning above $200,000 at 33%. All tax brackets are adjusted for inflation annually.

Tax brackets for 2024 are:

• 15% up to $55,867 of taxable income
• 20.5% between $55,867 and $111,733
• 26% between $111,733 and $173,205
• 29% between $173,205 up to $246,752
• 33% on any taxable income exceeding $246,752

Tax brackets in 2015 before the Liberal government were:

• 15% up to $44,701 of taxable income
• 22% between $44,702 and $89,401
• 26% between $89,402 and $138,586
• 29% on any taxable income exceeding $138,586

June 6, 2024

There are no updates to the T4127 Payroll Deductions Formulas effective July 1, 2023 . You can subscribe to CRA's electronic service that notifies you of any changes for payroll deductions.

November 27, 2023

CRA News announced the T4127-JAN payroll deduction formulas for computer programs effective January 1, 2024 have been released. The publication includes 2024 indexed personal amounts and income thresholds, federal tax rates, in addition to 2024 EI and CPP amounts.

2024 indexing factor is 4.7% compared to 6.3% in 2023 and 2.4% in 2022.

The summary sheet for 2024 has the federal and provincial figures. It can be found in chapter 8.

The payroll tables and indexing amounts are expected to be released towards the end of November / early December.

TRACING HISTORY - CRA NEWS RELATED TO THIS TOPIC

May 15, 2013

CRA News announced the T4127-JUL Payroll Deductions Formulas for Computer Programs changes effective July 1, 2013 are available on the their website. The changes apply to New Brunswick.

CRA will NOT be issuing a mid-year version of the T4127 as they have in past years. 

The federal government has put many programs in place to assist Canadians and business experiencing hardship related to the COVID-19 pandemic.

Some of the programs for businesses are:

CEWS - Canada Emergency Wage Subsidy - March 15 to June 6, 2020
(Rehired employees have to cancel and repay their CERB payments.) 

CEBA - Canada Emergency Business Account - Loan program

GST/HST - Remittance Deferral - June 30, 2020 must still file return on time

Importers - Custom Duty and Sales Tax Deferral - June 30, 2020

BC PST filers - filing and payment due dates are extended to September 30, 2020.

Reference: www.canada.ca/en/department-finance/news/2020/03/additional-support-for-canadian-businesses-from-the-economic-impact-of-covid-19.html#_New_Loan_Programs

Effective October 19, 2015 you will be issued a unique access code to file your GST/HST returns online. You will also be able to sign into the CRA website and change the code assigned to one of your choice.

CRA will also only be mailing out one GST 34-3 package for the entire year instead of each filing period ... Yahoo I say!!! The package will contain:

• Your unique access code
• A list of your reporting periods for the coming year
• A list of your filing due dates for the coming year
• Remittance vouchers (Form RC 158 E) for each period you are required to file

TRACING HISTORY - CRA NEWS RELATED TO THIS TOPIC

January 22, 2013
Red Tape Reduction Action Plan - Corporate Reporting Thresholds Updated

Government is raising the reporting thresholds in the Corporations Returns Act. The CRA news / press release stated:

"The thresholds were last amended in 1981, when they were set at $15 million in operating revenues, $10 million in assets and $200,000 of foreign debt or equity. Under the old thresholds, many smaller corporations are required to file ownership returns while not having any foreign ownership or control.

With these changes, only corporations with revenues of more than $200 million, assets over $600 million, or foreign debt and equity over $1 million will have to report financial and ownership information under the Act. At the same time, 99 percent of total foreign-controlled assets and 98 percent of total foreign-controlled revenues will still be covered. The reform will come into force in the spring of this year."

January 22, 2013
Red Tape Reduction Action Plan - Business Enquiries: Agent Greeting Policy

The Minister of National Revenue announced the Agent ID requirement for business enquiries phone service at the Canada Revenue Agency (CRA) is now permanent. It had been a test pilot program since 2011.

When greeting clients, call agents must provide their first name, a number, and a regional suffix at the beginning of each call.

The regional suffixes are:

• A-T-L for Atlantic Region
• O-N-T for Ontario Region
• P-R-A for Prairie Region

The Agent ID number is meant to establish a friendly relationship as well as a sense of accountability; allow business owners and representatives to provide feedback; and foster a user-friendly experience.

Business callers and bookkeepers should be aware of the Agent ID and make it a practice to take note of it for future reference whenever you make an enquiry with CRA.

You can also expect highly specialized or complex technical enquiries to be referred to an audit specialist on that topic or to the CRA rulings programs for income tax or GST/HST. This "centre of expertise" approach results in higher accuracy and better service to taxpayers.

Don't forget that since April 2012, you can also ask your tax-related questions online through My Business Account. You will receive a written answer to your enquiry.

The CRA has created a page on their website on tips to help protect yourself from anyone obtaining your tax information fraudulently. I think it can be applied to protecting all your financial information and identity documents.

Here are their suggestions with a few of my own embellishments:

• Choose your bookkeeper, accountant or tax preparer carefully.
• Keep your information up-to-date. Notify CRA when you change your address.
• Don't put personal information in emails. Sending an email on the internet is like putting a postcard in a Canada Post mailbox. Anyone who knows how can read it. It's much better to send sensitive and confidential information ... including your personal information ... by encrypted email.
• This one is pretty basic ... don't share your passwords or access codes or user IDs.
• Secure your documents that have your name and SIN. Shred documents with your personal identification on them ... especially those unrequested pre-approved credit card applications. If you have your business information on a computer, password the information. If you have a home office, keep you financial documents like bank and credit card statements in a locked filing cabinet.
• Don't let your bookkeeper open your bank and credit card statements ... or have blank cheques. You should be doing that.
• Remove your SIN card from your purse or wallet. It will prevent its theft in the event you lose your wallet or purse ... and don't release your SIN on applications unless you are completing financial information for a bank, brokerage house or your employer. They need it to issue tax slips. I'd question why anyone requires this information nowadays. Same goes for your birth date. Before just handing it over, find out why they want it.
• Don't let your mail pile up while you are away. It could be stolen, giving thieves access to your personal information. Have a family member or trusted neighbour pick it up ... or pay to have Canada Post hold it until you return.

January 22, 2024
Special Clothing

"Generally, if an employer provides a benefit such as special clothing, an allowance or a reimbursement for special clothing to their employee, the benefit is taxable. Depending on the situation, the benefit may not be taxable under the CRA's administrative policy."

December 22, 2023
What's New

Here's a summary of some of the changes for 2024 payroll:

• Second additional CPP contributions (CPP2) - requires keeping track of the year-to-date pensionable income during the year. CPP2 kicks in for pensionable income between $68,500 and $73,200. No additional contributions are required for pensionable income above $73,200.
• CCP1 contributions for pensionable income below $68,500 are subject to a base amount of 4.95% plus an enhanced amount of 1% for a total rate of 5.95%.
• It's good policy to have employees fill out the TD1 and if applicable the Form T1213 every December. It confirms the required withholdings and ensures you have the most up-to-date personal information for the issuance of T4s.

TRACING HISTORY - CRA NEWS RELATED TO THIS TOPIC

October 13, 2024
Dental Benefits

Effective for tax slips filed for calendar year 2023, the new T4 box 45 and T4A box 014 "must be used to indicate whether the employee/recipient or any of their family members were eligible, on December 31 of that year, to access any dental care insurance, or coverage of dental services of any kind, that an employer or payer offered."

October 13, 20224
T4 slip and T4 Summary – CPP2 Boxes Added

New T4 box 16A and T4A box 16A must be used to report the amount of CCP2.

December 11, 2014
Direct Deposit for Payroll Accounts

Here's a summary of some of the changes for 2015 payroll:

• Remittance thresholds amount increase
• Tax deduction estimator - answer the questions and it produces a PDF version of the PD1 form
• Small business job credit replaces the hiring credit
• E-PD7As will not be available through epost effective January 1, 2015. Register online using My Business Account - Manage online mail to receive your statement electronically.
• PRPP - not a taxable benefit

You can find out about all the changes to payroll on CRA's website under Payroll.

October 17, 2012
Remittance Voucher for Current Source Deductions

The CRA stopped sending the paper remittance of form PD7A-RB remittance Voucher for Current Source Deductions this December if you have been making your remittances electronically.

October 10, 2012
RC 4120 - Filling out the T4 Summary - Employers' Guide - Direct Deposit

In the 2012 edition of RC 4120 - Filling out the T4 Summary - Employers' Guide, it announces that "direct deposit will be available for your payroll account as of October 2012. If you request it, the CRA will deposit your refund directly into your account at most financial institutions."

When I followed the link they provided for information on how to request this diect deposit, the page did not have payroll information link added under the Business section yet ... but soon hopefully. You can request direct deposit of payroll by completing Form RC366.

Other information listed under "What's New" is:

• Small business payroll videos can be found in the CRA video gallery located under Payroll> Multimedia> Video series
• Proposed legislation extends the one-time temporary hiring credit for small businesses for 2012.
• "Under proposed legislation, employer contributions to a group sickness or accident insurance plan will be considered a taxable benefit to the extent that the contributions are not in respect of a wage loss replacement benefit payable on a periodic basis and must be reported as income on the employee’s T4 slip for the year the contributions are made."
• Again under proposed legislation, the OETC will be phased out over three years and eliminated by 2016.

October 22, 2011
RC4120 - Employer's Guide - Filing the T4 Slip and Summary

On October 7, CRA updated publication RC4120 - Employer's Guide - Filing the T4 Slip and Summary for 2012 tax year. Under the what's new section you'll find information about:

• CCP reform for working beneficiaries come into effect on January 1, 2012.
• Pensionable earnings in box 26 must now be completed on all T4 slips.
• EI insurable earnings in box 24 must now be completed on all T4 slips.
• Report exempt payments to volunteer firefighters using code 87 in the "Other Information" of the T4 slip.
• You can begin to electronically file original and amended information returns using Web Forms.

2016 report called Tax Gap in Canada: A Conceptual Study states: "The CRA has yearly letter campaigns to inform selected taxpayers about their tax obligations and to encourage them to correct any inaccuracies in their past income tax and benefit returns. As part of these campaigns, educational letters are mailed to certain individuals in selected activity groups where taxpayers are at risk of misunderstanding their tax obligations."

January 2016
2016 Education Letter Campaign

CRA's annual letter campaign will be focusing on taxpayers carrying on rental (Form T776), business and professional (Form T2125), or employment (Form T776) activities. It will also cover businesses that file a corporate T2 return.

Scott Parker & Co Inc. list the reasons a small and medium sized businesses (SME) might get slated for an audit letter campaign: past errors or non-compliance, comparative information, random selection, underground economy, non-compliance related to real estate transactions.

In addition to having to provide the documentation CRA requested for your business, be aware they may also ask for documents pertaining to your personal finances.

December 8, 2014
2015 Education Letter Campaign

In 2012, "Someone" at CRA had a sense of humor. On Christmas Eve, "Someone" sent out CRA's annual email reminding us about the annual letter campaign that would begin in January 2013. This year, like last year, the email was sent out in early December.

This the sixth year in a row CRA will be sending out 33,000 informational letters to help taxpayers understand their obligations. 

CRA says there are two types of letters that will be going out. "Some taxpayers will receive a letter explaining the eligibility criteria for certain deductions they have claimed on their recent income tax returns. Others will receive a letter with the same information, but it will also inform them that their income tax returns may be selected for audit."

CRA wants "to allow taxpayers to amend their income tax returns by completing an adjustment request in cases where they may have claimed deductions in error or provided inaccurate information".

You can find more informatin on this campaign on CRA's website under Businesses> Other Topics> Audit> The CRA letters about your rental, business, professional or employment activities.

TRACING HISTORY - CRA NEWS RELATED TO THIS TOPIC

November 23, 2012
Current CRA Audit Priorities and Policies

The CRA Toronto Centre Tax Professionals Group had a breakfast seminar on November 14, 2012 where CRA's current audit priorities and policies were discussed.

You can find the GST/HST and Income Tax priority lists at lexology.com. Using their search box, set:

• Jurisdiction = Canada
• Workarea = Corporate Tax
  
• Firm name = Fraser Milner Casgrain LLP

Scroll through the articles until you come to the November 14, 2012 article.

The article also includes CRA's comments on third party penalties and revocation of e-file privileges. The Guidon court case found that penalties imposed under the section 163.2 of the ITA is a criminal penalty not a civil one. CRA is now reassessing their options pertaining to third party penalties.

CRA is working on gaining access to accountants' working papers.

I found it interesting that the "CRA measures the performance of auditors based on six major elements:

1. planning the audit;
2. conducting the audit;
3. applying the appropriate legislation/policy;
4. the end product of the audit;
5. professionalism in the audit; and
6. timeliness of completion of the audit."

Another comment that caught my eye was:

"The CRA reiterated that issues that arise during the audit process should be raised with the auditor, after which it may be appropriate to involve the auditor’s team leader. If the issue cannot be resolved at that level, it would be appropriate to raise the issue with the auditor’s manager or the assistant director of audit at the particular TSO."

In the December 15, 2011 issue of The Bookkeeper's Notes, I reviewed the most common sales tax issues found during a CRA audit. One item was the required elections which must be filed BEFORE an intercompany charge could be treated as an exempt supply ... or in other words ... as a nil consideration.

Nil consideration means the parties do not have to account for the sales tax that would be required if the election has not been made.

Yesterday, CRA issued GST/HST Memoranda Series - 14.5 Election for Nil Consideration.

This memorandum looks at the requirements for the election as well as the terms set out in section 156 of the Excise Tax Act (ETA). It includes the rules for closely related parties.

Every year in December, the CRA updates their website provide the coming year's TD1 forms. The form must be completed by employees and returned to you. You should retain the completed forms on file. You do not send a copy to CRA.

A new form is NOT required every year ... only if there is a change to the employee's personal tax credit amounts, although it is a good idea to update the TD1 each January for existing employees. It helps ensure you have the most up-to-date employee information on file.

The latest TD1 form should be used by bookkeepers for all new employees or revisions to existing employees. 

You can find the forms for all provinces and territories on the CRA website at http://www.canada.ca> Canada Revenue Agency> Forms and Publications - CRA> TD1 Personal Tax Credit Returns.

Yes. The signed forms must be retained by both the tax preparer and the taxpayer for at least six years when a tax preparer has electronically filed the tax return on the taxpayer’s behalf.

More >> CRA Electronic Signatures

TRACING HISTORY - CRA NEWS RELATED TO THIS TOPIC

March 24, 2023
Electronic Signatures

CRA announced effective immediately, they "will recognize electronic signatures as having met the signature requirements of the Income Tax Act. This temporary measure will reduce the necessity for taxpayers and tax preparers to meet in person and will reduce administrative burden during this difficult time."

November 25, 2014
T1013 and Electronic Signatures

CRA announced this week that they will not be accepting digital and/or electronic signatures on Form 1013 Authorizing or Cancelling a Representative. They are still in the preliminary stages of research to determine if they will approve them in the future.

ATTENTION BOOKKEEPERS AND TAX PREPARERS

A CRA news release announced that  effective January 1, 2024, tax preparers preparing more than 5 returns ... and who charge a fee ... must register with and use CRA's eFile. Volunteer tax preparers who do not charge a fee are not required to register.

Registration requires a tax preparer to sign up for an eFile number in addition to using certified eFile software. The cost to register is free.

Non compliance may result in penalties being charged - $25 for each T1 or T3 return that is paper-filed and $100 for each T2 Corporation return that is paper-filed.

Registration can be done online on the CRA website ... canada.ca > Taxes > Digital Services > Digital Services for Businesses >  EFILE for electronic filers.

A note to small business owners who have a tax preparer prepare your taxes ... ask what tax program they use. If they tell you they are using a program like H&R Block (but are not employed by H&R Block) or TurboTax - these tax programs allow you to purchase a return to prepare your own taxes ... I'd find someone else. They are not using CRA certified software. They are relying on the programmed tax interview meant for your personal use. Knowledgeable tax preparers do not use these types of tax software!

More >> see CRA's Mandatory electronic filing for tax preparers

TRACING HISTORY -  CRA NEWS RELATED TO THIS TOPIC

June 2017
CRA Drops RTPP

CRA has decided to not move forward with the RTPP. The CRA says it is "considering other options that would serve to implement the objectives of the proposed Registration of Tax Preparer Program (RTPP) through existing CRA programs and initiatives at lower costs.”

These cost-effective methods include the Liaison Officer initiative, possibly a dedicated telephone service for income tax service providers, partnerships with various associations and expanding the electronic services offered.

January 22, 2014
CRA Proposed Registration of Tax Preparers

Almost 70% of small businesses use a tax preparer to prepare their annual income tax returns.

As a result, CRA is proposing to register tax preparers who are paid a fee for their services. The Registered Tax Preparers Program (RTPP) would help the CRA can identify preparers who making errors in their tax preparation.  They want to work with them to correct problems and avoid errors BEFORE a tax return is filed.

CRA will consulting with the public about this proposal until May 2014.

January 4, 2013
Processing Review Program Goes Online

Beginning in May 2013, representatives registered with "Represent a Client" will be able to submit T1 Processing Review requests for documents electronically. Currently documentation requested must be faxed or sent by mail.

The new system will only accept documents with a valid PR letter reference number.

And by the by, Payroll e-Services resume Monday, January 7, 2013.

The Bookkeeper News source: CRA release

October 22, 2012
Mandatory eFile Registration for Tax Preparers Preparing More Than 10 Returns

A CRA news release reminds tax preparers that effective January 2013, tax preparers preparing more than 10 returns ... and who charge a fee ... must register with CRA's eFile. Volunteer tax preparers who do not charge a fee are not required to register.

Registration requires a tax preparer to sign up for an eFile number in addition to using certified eFile software. The cost to register is free. Registration for the 2012 tax season begins today.

Non compliance may result in penalties being charged.

Registration can be done online on the CRA website ... cra-arc.gc.ca> Information for> Tax professionals> E-services for tax preparers> EFILE for electronic filers.

A note to small business owners who have a tax preparer prepare your taxes ... ask what tax program they use. If they tell you they are using QuickTax or TurboTax (a tax program you can buy to prepare your own taxes) ... I'd find someone else. They are not using CRA certified software. They are relying the on the programmed tax interview meant for your personal use. Knowledgeable tax preparers do not use these types of tax software!

Just a reminder that the deadline to internet file 2011 T1s is midnight Pacific Time today. You have until 8 pm Eastern Time on December 4 to retrieve your acknowledgement files.

You can still efile T2s and T1013s.

11.75 T1s were electronically processed in 2012.

2012 information return efiling is available until December 3, 2102. Information returns are T3, T4, T4A, T4A-NR, T4E, T4RIF, T4RSP, T5, T5007, T5008, T5018, and NR4 returns.

TRACING HISTORY -  CRA NEWS RELATED TO THIS TOPIC

October 22, 2011

Yesterday, CRA announced all the new tax slips that can be electronically filed using CRA's Web Forms starting in January 2012. Each submission can include up to 50 slips.

They are T3, T4, T4A, T4A-NR, T4E, T4RIF, T4RSP, T5, T5007, T5008, T5018, and NR4.

CRA points out the benefits of filing electronically using Web Forms in their new release dated October 21. 2011. They are:

1. file original, additional, amended, and cancelled slips directly from the CRA Web site;
2. create an electronic information return;
3. validate data in real time, with prompts to correct errors before filing your slips;
4. calculate the totals for the summary;
5. print slips for recipients; and
6. securely submit encrypted returns over the Internet.

CRA released GST/HST Info Sheet GI-131 - Phasing Out of the Penny today.

As discussed in The Bookkeeper's News on July 30, 2012, pennies will no longer be circulated as of February 4, 2013.

This info sheet gives 22 examples of how to account properly for GST/HST once price rounding comes into effect.

More >> Click here for the general guidelines on how to record bookkeeping entries pertaining to the phasing out of the penny.

CRA will be launching a new Income Tax Technical Publication called Income Tax Folio.

As a result, archived outdated and redundant content were cancelled and removed from their website on September 30. The entire archived Income Tax Interpretation Bulletins section was removed. Current Income Tax Interpreation Bulletins are still available.

The intention to is to slowly replace Income Tax Interpreation Bulletins with the Income Tax Folios. This new section will be broken into 7 series:

1. Individuals
2. Employers and Employees
3. Property, Investments and Savings Plans
4. Businesses
5. International and Residency
6. Trusts
7. Charities and Non-profit Organizations.

The new section can be found on the CRA website under Forms and Publications> Document type> Income tax folios> Income tax folios index.

CRA announced today that it is discontinuing their TELEFILE services due to declining use. They recommend filing electronically using NETFILE.

In the Winter 2011 edition of the Excise and GST/HST News publication, CRA has announced it will be discontinuing combined audits.

They will also be changing their approach to GST/HST pre-assessments.

The changes are being made to enhance its focus on GST/HST compliance and will take place over a number of years. The first changes have already been implemented by through a restructuring of the organization ... which has lead to the discontinuing combined audits as mentioned.

The initial focus will be on:

• RITC of energy and telecommunications;
• housing rebates; and
• transitional rebates.

Deloitte's Weekly Tax Highlights newsletter points out that this will lead to additional compliance costs to businesses.

Personally, I would like it if the CRA GST/HST return split the sales amount reporting into three (or four) categories ... GST, HST, and zero rated ... instead of one lump sum number.

CRA is reminding eFilers that their new national inventory for the processing review program went into effect on July 23.

Under the new system, it is really important that you forward requested documentation to the Tax Centre that made the request.

Under the old system, only the tax centre that assessed the initial return would contact the taxpayer or their authorized representative. This is no longer the case.

TRACING HISTORY -  CRA NEWS RELATED TO THIS TOPIC

July 23, 2012

Effective today, the Processing Review Program will begin using a "national inventory" rather than a "tax centre inventory". Prior to this, only the tax centre that initially assessed your return could undertake a review.

This means your return can now be reviewed by any tax office in Canada. When forwarding requested documentation, you will now have to note which tax center made the request.

JonHall Tax Solutions has an excellent article titled Income Reporting Requirements for eBay Sellers. Two court challenges are reviewed - Brian J. Stewart and Jack Walls, reasonable expectation of profit and willful blindness in the context of source of income are discussed with references to ITNEWS-25 Income Tax - Technical News No. 25.

You can find the article at jonhalltax.com> ebay. It is an oddly designed website as there is no menu bar or link that I see to read their articles so you will probably have to Bing/Google the title to locate the article.

TRACING HISTORY - CRA NEWS RELATED TO THIS TOPIC

July 23, 2011
Ebay

The Tax Guy wrote a blog on March 30, 2011 ... sorry I'm a bit behind on my reading ... about Selling on eBay Can Be Taxing.

He discusses what personal use property is and why eBay Power Sellers and Frequent Sellers are considered a business.

You can find his entire blog at blog.resources.ca> archive> By month> March 2011.

August 1, 2009
Electronic Income

CRA sent a reminder out on July 30, 2009 that Canadian electronic income is treated the same way as traditional commerce income. Both are taxable.

You still have time to amend 2008 personal tax returns, if this income was omitted. If a CRA audit uncovers the unreported income, penalties will occur along with the possibility of prosecution.

eBay sellers were used as an example. CRA has a list of all eBay sellers due to a recent Federal Court of Canada decision. Beginning late this summer, this information will be used to determine if they properly reported their income on their personal tax returns.

Under the Voluntary Disclosures Program, penalties and prosecution will not be applied it the taxpayer takes the initiative to correct returns already filed.

eBay sellers can learn about what business deductions they are eligible for in "The Tax" section.

Read more here on unreported income and which tax form to use to file your amendment with CRA.

You may also be interested in reading information about GST/HST and Electronic Commerce.

I was reading E&Y's latest Tax Matters newsletter. One article reviewed CRA's comments on the reporting requirements for interest income.

IT-396R Interest Income reviews how to compute and report investment income when no principal or interest payments are made on a loan.

For investments made before 1990, you may report accrued interest may be reported annually or triannually. If the money is invested in a long-term contract but does not make annual payments, you should be reporting your accrued interest based on the anniversary date of the contract, not the calendar year.

Interest earned on investments made after 1989 must be reported annually. How or when the interest is paid is not a factor.

If you do not report accrued interest, CRA will assess a late payment fee as well as assessing the accrued interest for the period. A gross negligence penalty may also be applied.

CRA released GST/HST Info Sheet GI-127 Documentary Evidence when Making Tax-Relieved Sales to Indians and Indian Bands over the Telephone, Internet and Other Electronic Means . It compliments GST/HST Technical Information Bulletin B-039,GST/HST Administration Policy - Application of the GST/HST to Indians.

CRA released GST/HST Memoranda Series 8.4 Documentary Requirements for Claiming Input Tax Credit. It replaces GST Memorandum 400-1-2, Documentary Requirements.

A breakdown of what the supporting documentation should contain is included. My chat on what constitutes a legitimate receipt covers this requirement.

CRA released GST/HST Memorandum 8-3, Calculating Input Tax Credits. This memo cancels GST/HST Policy Statement P‑63, Output‑Based Method for Input Tax Credit Allocation.

"This memorandum explains the general method for calculating input tax credits (ITCs) as provided for under the Excise Tax Act (Act). It sets out the requirement to apportion goods and services between commercial and non‑commercial activities, and outlines methods for doing so. It also explains the rules affecting ITCs in respect of improvements to capital property as well as those for leases and ongoing services."

CRA released a new article explaining Canada's international social security agreements. You can find the article under *CPP/EIrulings> CPP/EI explained> Canada Pension Plan and Employment Insurance Explained: Canada’s international social securityagreements.

CRA replaced GST Memorandum 400-3-11 Allowances and Reimbursements with two new documents:

GST/HST Memorandum 9-3, Allowances
GST/HST Memorandum 9-4, Reimbursements

You can find the new releases on the CRA website under Forms and Publications.

Small Business Job Credit

Yesterday, the Harper government announced a new Small Business Job Credit effective for 2015 and 2016. It will reduce small businesses' EI premiums by about 15%. To ensure there is no additional administrative burden to small business owners, CRA will automatically calculate the credit on your business return.

It was also announced that the 2017 EI rates for employees and employers will see a substantial reduction as the new seven year break-even rate setting mechanism takes effect. Annual rate adjustments will be limited to 5 cents.

The hiring credit for small business has been eliminated for 2014. It was in effect for 2011-2013.

For more information, go to fin.gc.ca> News> Harper Government Introduces Small Business Job Credit.

TRACING HISTORY - CRA NEWS RELATED TO THIS TOPIC

October, 2013
Hiring Credit for Small Business

As mentioned under "What's New in Payroll", proposed legislation extends the temporary hiring credit for small businesses for 2013. Last year, they also extended it for 2012.

I chat about how to record your hiring credit in QuickBooks here ...

2014 Update - The hiring credit was NOT extended to 2014. A job credit for small business was introduced in its place.

August 22, 2011
Hiring Credit for Small Business

Back in June, I briefly mentioned the hiring credit for small business.

CRA has an information page on the subject. It can be found at About CRA> Federal Government Budgets> 2011.

Basically, "the HCSB is a one-time credit of up to $1,000 based on the increase in an employer's employment insurance (EI) premiums paid for 2011 over those paid for 2010."

You qualify if your 2010 EI premiums were $10,000 or less and you experienced an increase in premiums in 2011.

CRA's new website is live. If you look at the top navigation bar, you should still be able to find you way around the site fairly easily.

So far, the only I don't like is the presentation of "News". I now need an RSS feed reader to read it instead of viewing it in my web browser.

In April, CRA's new "Manage mail online" service went into effect. Finally you can stop receiving all that paper if you choose ... and look it up online.

February 5, 2013
CRA Webinar on Non-residents Working in Canada and Canadians Working Abroad

CRA held a free webinar aimed at Canadian withholding, remitting and reporting requirements for non-residents working in Canada and Canadians working abroad, on Thursday, February 14, 2013, presented at 11:00 a.m. EDT. You can find a rebroadcast of that webinar in the video gallery:

https://www.canada.ca/en/revenue-agency/news/cra-multimedia-library/businesses-video-gallery/transcript-canadian-withholding-remitting-reporting-requirements-non-residents-working-canada-canadians-working-abroad.html

October 16, 2012 (Updated January 4, 2017)
CRA Webinar On The Taxability of Automobile Benefits Provided To Employees

CRA held a free webinar the taxability of automobile benefits provided to employees, on October 25, 2012, presented at 9:00 a.m. EDT, and at 1:30 p.m. EDT. You can find a revised webinar on this topic called Automobile and Motor Vehicle Benefits and Allowances broadcast on January 4, 2017:

https://www.canada.ca/en/revenue-agency/news/cra-multimedia-library/businesses-video-gallery/transcript-automobile-motor-vehicle-benefits-allowances.html

May 3, 2012 (Updated December 13, 2016 & January 2, 2022)
CRA 2012 Webinar on Gifts and Awards
CRA 2016 Video Series: Gifting and Receipting

You can find the 2012 archived version of this webinar in the CRA Video Gallery along with a downloadable transcript.

The new 2016 video series covers topics such as:

• split receipting
• the de minimis rule
• determining the fair market value of a gift
• auctions
• gifts of service

You can access it here:

https://www.canada.ca/en/revenue-agency/services/charities-giving/charities/operating-a-registered-charity/video-series-gifting-receipting.html

CRA updated their web pages for updates to the CRA administrative policy effective January 1, 2022. You can find the updates here:

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/benefits-allowances/gifts-awards-social-events/gifts-awards-long-service-awards.html

Reporting fees for service consultations

CRA is undertaking an online survey to determine:

• Appropriate methods and challenges with fees for service reporting
• Invoicing practices for goods and services
• How to minimize the administrative burden
• How prepared businesses and organizations are to meet this reporting requirement
• How to minimize challenges and provide proactive support for businesses and organizations who need to meet this requirement

It looks like Fee for Services reporting will become mandatory rather than optional very soon.

TRACING HISTORY - CRA NEWS RELATED TO THIS TOPIC

August 3, 2022

Small business payers to subcontractors are required to report fees for services on a T4A, T5018 or T1204 slip, depending on who the payment was made to.

February, 2011

On CRA's website under What's new for payroll?, subcontractor reporting is being referred to as fees for services.

Box 048 was added to the newly designed T4A slip as the place to report subcontractor payments. It is interesting to note the following comment:

"Until such time as the CRA undertakes a review for the purposes of clarifying the types of fees for services that are to be reported on the T4A slip, taxpayers will not be penalized for failing to complete Box 048."

More >> T4A Slip Box 048 For Subcontractor Services

Two changes were made to the EI regulations back in March, 2009 that affect users who file ROEs (record of employment) electronically using ROE Web. The changes do NOT apply to employers still filing paper ROEs.

1. If you submit an ROE electronically, you are no longer required to print paper copies for employees or Service Canada. Employees can go to My Account to view or print their ROE. You are asked however to supply a copy of the ROE as a courtesy if the employee asks for one.
2. You now have up to 5 days after the end of the pay period to issue an electronic ROE. Previously, the ROE had to be issued within 5 days of the employee's earnings interruption. This should reduce the number of amendments required and make the processing of EI claims more efficient for Service Canada.

You can find the Service Canada announcement at www.servicecanada.gc.ca under publications and reports>records of employment>Changes to Regulations Concerning Electronic ROEs or Pamphlet - Changes to Regulation 19.

CRA has changed it's administrative policy on low-interest or interest-free loans received because of employment effective January 1, 2023.

When a loan is received because of employment, the benefit will not need to be reported if the following criteria are met:

• Total amount of all loans received is $10,000 or less per calendar year; AND
• Term of the loan(s) is 60 days or less; AND
• Loan is not received because of shareholdings.

Source: CRA What's new and updated for payroll

On June 28, 2024, CRA changed its administrative policy on province of employment (POE) for full-time remote workers effective January 1, 2024. It's important to get this right as it dertmindes payroll withholdings. You cannot chose the POE based on the most advantageous payroll taxes. 

Generally, an employee's home office is not considered an establishment of the employer.

More >> How to Determine the Province of Employments - POE for Remote Workers

Code 94 Indian (exempt employment income) - RPP contributions and code 95 Indian (exempt employment income) - Union dues were added to the T4 slip for 2024.

Effective for 2024 T4 slips, these new codes must be used to report RPP contributions or union dues relating to tax-exempt employment income you paid to your employee who is registered, or entitled to be registered under the Indian Act.

The Canada Revenue Agency (CRA) is updating its position on non-resident subcontractor fees for service reimbursements. This change could impact your contractual and tax obligations on non-resident subcontractor fees for service.

Effective October 1, 2024, reimbursements for subcontractor services provided in Canada by non-resident corporations to Canadian resident corporations will be subject to a 15% withholding tax under Regulation 105. The CRA's 2008 position, which excluded travel and meal expense reimbursements from this withholding tax, remains unchanged.

Key Points:
Effective Date: October 1, 2024.

• Subject to Withholding Tax: Subcontractor fees reimbursed for services performed in Canada.
• Not Subject to Withholding Tax: Travel and meal expense reimbursements.

Recommendations:
EY recommends revising contracts with non-resident contractors to clarify withholding tax responsibilities.

Reporting:
Form T4A-NR: Subcontractor fees should be reported in box 18 (Gross Income) on this form, which is used for non-residents providing services in Canada. Travel expenses should be reported separately on this form.

Source: EY Tax Alert 2024 No. 38, 16 July 2024 - CRA announces a change in position with respect to Regulation 105 withholding tax on subcontractor fees

Yesterday, the Liberal government launched consultations on proposed changes to the Canadian Entrepreneur's Incentive (CEI) that will take effect in January 2025. The CEI will be in addition to the Lifetime Capital Gains Exemption (LCGE).

The CEI reduces the capital gains inclusion rate to 33% on a lifetime maximum exemption of $2 million when selling your business shares. It will be phased in over five years instead of ten years. The sale of fishing and farming property also qualifies for the exemption.

Eligibility for the CEI requires:

• an ownership level of 5% (currently it's 10% available only founding members)
• minimum ownership time revised to be any continuous 24-month period; founding member restriction removed
  
• active in the day-to-day operations for three years (currently five years)

More >> Feds expand eligibility for Canadian Entrepreneurs’ Incentive

Source: Department of Finance August 12, 2024 Government announces details on new Canadian Entrepreneurs’ Incentive

The 2025 maximum pensionable earnings and contributions were released by the Canada Revenue Agency.

The CRA news release stated, "In 2024, a second earnings ceiling was introduced, the Year’s Additional Maximum Pensionable Earnings (YAMPE). The YAMPE is used to determine second additional Canada Pension Plan contributions (CPP2). In 2024, the YAMPE is approximately 7% above the Year’s Maximum Pensionable Earnings (YMPE). In 2025 and every year after, the YAMPE will be approximately 14% above the YMPE."

Click here for current EI rates.

CPP rates for current CPP rates.

CPP Rates are usually released annually in early November by the CRA.