2018 Tax Credit

2018 Tax Credit – Changes for Personal Income Tax

2018 Tax Credit – Children’s Fitness and Arts Amounts

For the 2018 tax season the Children’s Fitness and Arts Tax Credits can no longer be claimed.

2018 Tax Credit – Public Transit

Amounts spent for public transportation will only be deductible up to June 2017. The tax credit will no longer be eligible past July 1, 2017.

Seniors may still claim their public transportation costs in Ontario.

2018 Tax Credit – Education and Textbook Amounts

As of Jan. 1, 2017, you may no longer claim the education or textbook tax credits.

However, if you carried forward credits from a previous tax year, you may claim those credits on your tax return for 2017 or later years.

2018 Tax Credit – Tuition Tax Amounts

The tuition tax credit are now extended to fees paid to a university, college or other post-secondary institution in Canada for occupational skills courses that are not at the post-secondary level.

2018 Tax Credit – Disability Amount

As of March 22, 2017, nurse-practioners will be allowed to certify eligibility for the disability tax credit.

Tax deadline

Tax deadline for individual

tax deadline

March 1 – RRSP Deadline

March 1 is RRSP deadline for contributing to your Registered Retirement Savings Plan (RRSP) for the past tax filing year.

April 30 – Tax Filing and tax owing Payment deadline

April 30 – Tax filing deadline for most individuals for personal income tax filing for the past tax year.

Tax deadline for business

February 28 – T4, T5 and T4A filing deadline

If you have employees, you have to file a T4 and T4 summary by the last day of February.

If you pay commissions or service fees to subcontractors of your business, you have to file T5 and T5 summary by the end of February.

If your company pay dividends to shareholders, you have to file T5 and T5 summary by the end of February.

GST/HST filing and payment deadline

If your GST/HST filing period is annually, your filing and payment deadline will be three month after fiscal year-end.

If your GST/HST filing period is quarterly, your filing and payment deadline will be one month after the end of the reporting period.

The personalized GST/HST return (Form GST34-2) will show the due date at the top of the form as part of the pre-printed personal information. Most GST/HST payments are due at the same time as your GST/HST returns.

Payroll remittance deadline

Most small employers are qualified for quarterly remittance. Remittance due date is the 15th of the month after the calendar quarter in which you pay or give remuneration.

The calendar quarters, and your due dates, are:

  • January to March: due by April 15
  • April to June: due by July 15
  • July to September: due by October 15
  • October to December: due by January 15

Corporation income tax return deadline

File your return no later than six months after the end of each tax year.

Generally, all corporation taxes charged under the Income Tax Act are due two months after the end of the tax year. For most Canadian-controlled private corporations (CCPC), the balance of tax is due three months after the end of the tax year.

Authorize or cancel your tax representative

Your tax account information is confidential. The Canada Revenue Agency (CRA) need your authorization if you want the CRA to deal with your tax preparer or accountant who would act as your representative for income tax matters.

How your tax representative can help you.

The CRA’s secure online services make it easier for your tax representative to access your tax information online.

Services that your tax representative can do on behalf of you

  • Use the Auto-fill tax return program launched by the CRA in 2016 to automatically fill in portions of your tax return
  • Access your tax information slip – T4, T4A, T4A(P), T4A(OAS), T4E, T4RSP, T4RIF, T5007, T3, T5, T5008 and RRSP Contribution Receipt
  • View Home Buyers’ Plan and Lifelong Learning Plan
  • View carryover amounts
  • View benefits and credits
  • View account balance and statement of account
  • View carryover amounts
  • View disability tax credit
  • View installments
  • View returns and notices of assessment and reassessment
  • View RRSP
  • Change your tax return
  • Submit documents

Services that your tax representative can NOT do on behalf of you

  • View or update your addresses or telephone numbers
  • Apply for child benefits
  • Arrange your direct deposit
  • Change your marital status
  • View and update children in your care

How to cancel the authorization

You can immediately cancel an existing authorization by using My Account or by calling the CRA at 1-800-959-8281.

You can also cancel an existing authorization by completing parts 1, 4, and 5 of Form T1013, Authorizing or Cancelling a Representative.

Corporation Tax Preparation Checklist- Income Statement

An income statement is a summary of your company’s income and expenses over a specific accounting period. Most common items in an income statement are listed below.

Revenue

  • Sales of goods and services
  • Investment revenue
  • Commission revenue
  • Rental revenue
  • Other revenue

Cost of sales

  • Opening inventory
  • Purchases/cost of materials
  • Closing inventory

Operating Expenses

  • Advertising and promotion
  • Donations
  • Amortization of intangible assets
  • Goodwill impairment loss
  • Bad debt expense
  • Employee benefits
  • Amortization of tangible assets
  • Insurance
  • Interest and bank charges
  • Credit card charges
  • Training expense
  • Business taxes, licences and memberships
  • Franchise fees
  • Office expenses
  • Professional fees
  • Rental
  • Repair and maintenance
  • Salaries and wages
  • Directors fees
  • Sub-contracts
  • Supplies
  • Computer-related expenses
  • Property taxes
  • Travel expenses
  • Utilities
  • Vehicle expenses
  • Shipping and warehouse expense
  • Delivery, freight and express
  • Supplies
  • General and administrative expenses
  • Other expense

You can download the Corporation Tax Preparation Checklist- Income Statement

Any questions about this checklist please contact 613-608-8788 Jack Liu or go to our website https://www.incometaxottawa.ca/ to get more information.

Thanks!

GST/HST account for business

Depending on your business you may have to register GST/HST account.

Mandatory GST/HST account registration

You have to register for a GST/HST account if:

  • you provide taxable supplies in Canada; and
  • your business total amount of all revenues (before expenses) is more than $30,000 in four consecutive calendar quarters.

Voluntary GST/HST account registration

If you are a small supplier, which means your business gross annual revenue is less than $30,000, and you are making taxable supplies of goods and services in Canada, you can register voluntarily.

If you decide not to register for the GST/HST,

  • You do not charge the GST/HST to your customers
  • You cannot claim an input tax credit (ITC) to recover the GST/HST paid or payable on your purchases and operating expenses

If you decide to register for the GST/HST,

  • Your effective date of registration is usually the date you applied to be registered. However, the CRA will accept an earlier effective date, if the date is within 30 days of the date of the application for registration.
  • You have to charge, collect, and remit the GST/HST on your taxable supplies of goods and services
  • You have to file GST/HST returns on a regular basis
  • You may claim ITCs to recover the GST/HST paid or payable on your purchases and operating expenses
  • You have to stay registered for at least one year before you can cancel your registration (unless you stop your commercial activities).

You cannot register for a GST/HST account if you provide only exempt goods and services.

What do you need to decide while registering for a GST/HST account

Fiscal year

You have to choose has a fiscal year for GST/HST purposes. The CRA use this fiscal year to determine when your GST/HST returns are due. In most cases, you can choose your GST/HST fiscal year the same as a calendar year, which begins on January 1 and ends on December 31.

Reporting periods

When you register for a GST/HST account, the CRA assign you a reporting period. If you annual revenue is less than $1,500,000, you will be assigned annual reporting period. You also have the option to file monthly or quarterly by making an election.

How do you register for a GST/HST account?

Online

You can register electronically through the link http://www.cra-arc.gc.ca/tx/bsnss/tpcs/bn-ne/bro-ide/menu-eng.html

By telephone

You can register for a business number (BN) and CRA program accounts by calling 1-800-959-5525.

By mail or fax

You can register for a business number (BN) by using Form RC1, Request for a Business Number and mailing or faxing it to your local tax centre.

HST basic concepts for business

What is the HST?

The HST is a sales tax that applies to most goods and services in Canada. Generally, if you are a GST/HST registrant, you have to charge and collect the sales tax for the government on all taxable supplies (other than zero-rated supplies) you provide to your customers.

Taxable supplies of goods and services

Most property and services supplies in or imported into Canada are subject to GST/HST. Examples of taxable supplies

  • sales of new housing
  • sales and rentals of commercial real property
  • sales and leases of automobiles
  • advertising
  • taxi and limousine transportation
  • legal and accounting services
  • hotel accommodation
  • barber and hairstylist services

Zero-rated supplies of goods and services

You do not collect the GST/HST on these supplies. Examples of taxable supplies

  • basic groceries such as milk, bread, and vegetables
  • agricultural products such as grain, raw wool, and dried tobacco leaves
  • most farm livestock
  • most fishery products such as fish for human consumption
  • certain medical devices such as hearing aids and artificial teeth
  • exports (most goods and services for which you charge and collect the GST/HST in Canada, are zero-rated when exported)
  • many transportation services where the origin or destination is outside Canada

Exempt supplies of goods and services

You do not charge or collect the GST/HST on exempt supplies. You cannot claim ITCs to recover the GST/HST paid for your business expenses. Examples of exempt supplies.

  • a sale of housing that was last used by an individual as a place of residence
  • long-term rentals of residential accommodation (of one month or more) and residential condominium fees
  • most health, medical, and dental services performed by licensed physicians or dentists for medical reasons
  • child care services, where the primary purpose is to provide care and supervision to children 14 years of age or under for periods of less than 24 hours per day
  • legal aid services
  • many educational services
  • music lessons
  • most services provided by financial institutions such as lending money or operating deposit accounts
  • the issuance of insurance policies by an insurer and the arranging for the issuance of insurance policies by insurance agents

How to deduct Canada Pension Plan (CPP) contributions

As an employer, you have to deduct Canada Pension Plan contributions from an employee’s pensionable earnings if that employee:

  • is in pensionable employment during the year; and
  • is not considered to be disabled under the CPP or the Quebec Pension Plan (QPP); and
  • is 18 to 70 years old even if the employee is receiving a CPP or QPP retirement pension. Exception: do not deduct Canada Pension Plan (CPP) if the employee is 65 to 70 years old, and gives you Form CPT30, Election to Stop Contributing to the Canada Pension Plan, or Revocation of a Prior Election with parts A, B and C completed.

You have to deduct CPP contributions from your employee’s pensionable earnings. As an employer, you must contribute an amount equal to the CPP contributions that you deduct from your employees’ remuneration.

Each year, the CRA provide the maximum pensionable earnings($54,900 in 2016), the year’s basic exemption amount($3,500 in 2016), the rate(4.95 in 2016) the maximum annual employee and employer contribution ($2,544.30 in 2016), and maximum annual self-employed contribution($5,088.60 in 2016).

Example

CPP contributions you deducted from your employee’s salary($2000/month) in the month ($84.56) + your share of CPP contributions ($84.56) = Total amount you remit for CPP contributions ($169.12).

You should stop deducting deduct Canada Pension Plan contributions when the employee’s annual earnings reach the maximum pensionable earnings or the maximum employee contribution for the year ($2,544.30 for 2016).

The annual maximum pensionable earnings ($54,900 for 2016) applies to each job the employee holds with different employers . If an employee leaves one employer during the year to start work with another employer, the new employer also has to deduct CPP contributions without taking into account what the previous employer paid. This is the case even if the employee has contributed the maximum amount during the previous employment.

Any overpayments will be refunded to employees when they file their income tax and benefit returns. However, there is no provision in the CPP that would allow the CRA to refund or credit the employer for his or her contributions in those circumstances.

How much you get from the new Canada Child Benefit (CCB)

Starting from July 2016, the old Canada tax benefit – including the Universal Child Care Benefit – will be cancelled, and the new Canada Child Benefit will start.

You don’t need to apply if you already get child benefits, but you and your spouse or common law partner have to file a 2015 tax return. If you are eligible, you will automatically start receiving the new Canada Child Benefit as of July 2016.

How much you get from this new Canada Child Benefit

The maximum payment for families with children under age six will be $6,400 per child. And the maximum payment for families with children between the ages of six and 17 will receive up to $5,400 annually. Families with annual income below $30,000 will receive the maximum payment.

Family with 1 child
Household Income New Child Benefit Old Child Benefit
$15,000 $6,400 $5,825
$45,000 $5,380 $3,350
$90,000 $3,245 $2,125
$140,000 $1,695 $1,500
$200,000 0 $1,425
Family with 2 child
Household Income New Child Benefit Old Child Benefit
$15,000 $11,800 $10,175
$45,000 $9,850 $5,900
$90,000 $5,875 $3,300
$140,000 $3,125 $2,050
$200,000 0 $1,950

You can use the simple calculator to calculate the new Canada Child Benefit you entitled to get.

There is also Ontario Child Benefit which provides a maximum payment of $1,356 per child per year.

The chart below estimates your monthly payments.

Family Net Income
Number of Children $20,706 $25,000 $30,000
1 $113 $84.37 $51.04
2 $226 $197.37 $164.04
3 $339 $310.37 $277.04
4 $452 $412.37 390.04

On July 20, you will get the first new Canada Child Benefit payment.

How to get the most of the new Canada Child Benefit

The amount of CCB you can get is determinate by your family net income. When your income decreases, the CCB increases. To be exact, your net income shown on line 236 of your tax return is used to calculate the new Canada Child Benefit. Tax deductions such as RRSP contribution, child cares expenses and union fees will reduce your net income and increase the CCB.

In simple words, buying RRSP can reduce your net income, thus increases your new Canada Child Benefit.

What are the old benefits cut

The new Canada Child Benefit replaces:

  • The Universal Child Care Benefit (UCCB), the current taxable monthly payments of $160 per child under six and $60 for kids between 6 and 17.
  • Canada Child Tax Benefit (CCTB)
  • National Child Benefit-a supplemental child benefit for low income family
  • The Family Tax Cut – also known as “income-splitting for families” with children under 18.
  • Children’s Fitness Tax Credit and Children’s Arts Tax Credit. These credits are being phased out — cut in half in 2016, then eliminated entirely for 2017 and beyond.

In all, the new Canada Child Benefit is:

  • simpler — most families will receive a single payment every month
  • tax-free — families won’t have to pay taxes on payments received when they file their tax returns
  • better-targeted to those who need it most — low and middle-income families get higher payments, and those with the highest incomes (generally over $150,000) receive less than under the previous system
  • much more generous — families benefiting will see an average increase of almost $2,300 in the 2016-17 benefit year.

How to deduct employment insurance (EI) premium

As an employer, you have to deduct employment insurance (EI) premiums from your employee’s insurable earnings up to the yearly maximum. And you must contribute 1.4 times the amount of EI premiums that you deduct from your employee’s remuneration.

Insurable employment includes most employment in Canada under a contract of service (employer-employee relationship).

There is no age limit for deducting EI premiums.

EI premium rate and maximum

Each year, the CRA give the maximum insurable earnings and rate for you to calculate the amount of EI to deduct from your employees.

In 2016, the maximum annual insurable earning is $50,800; the EI premium rate is 1.88%; the maximum annual employee premium is $955.04 and the maximum annual employer premium is $1,337.06.

You have to deduct EI premiums from insurable earnings you pay to your employees. In addition, you must pay 1.4 times the amount of the employee’s premiums.

Example

If you pay salary $2000/month to one employee in 2016, the EI premiums you deducted from this employee for the month

$37.6 ($2000 x 1.88%)

Plus: Your share of EI ($37.6× 1.4)

$52.64

Total amount you remit for EI premiums for this month

$90.24

You should stop deducting employment insurance premiums when you reach the employee’s maximum insurable earnings ($50,800 for 2016) or the maximum employee premium for the year ($955.04 for 2016).

The annual maximum insurable earnings ($50,800 for 2016) apply to each job the employee holds with different employers. If an employee leaves one employer during the year to start work with another employer, the new employer also has to deduct EI premiums without taking into account what the previous employer paid. This is the case even if the employee has paid the maximum premium amount during the previous employment.

The CRA will credit or refund any overpayments to employees when they file their income tax and benefit return.

EI premiums are not required to be deducted for the following types of employment:

  • Casual employment if it is for a purpose other than your usual trade or business.
  • Corporate employee who controls more than 40% of the corporation’s voting shares receiving salary, wages or other remuneration
  • Directors’ fees
  • Employment that is an exchange of work or service (even if there is a contract of service)
  • Tips and gratuities (direct tips or gratuities – not controlled by the employer)

What is new for payroll deductions and remittances

As an employer, you have to make payroll deductions and remittances to pay yourself and/or your employees. Below is the latest update you should know to make your payroll deduction and remittances easier and painless.

Remit your payroll deductions quarterly instead of monthly.

Starting in 2016, if you are an new small employers, you can choose to remit your payroll deductions quarterly instead of monthly.

If your monthly withholding amount is less than $1,000 and you have a perfect compliance history, you will be eligible for quarterly payroll deductions and remitting.

You have to send your deduction before the 15th of the month immediately following the end of each quarter. The due dates for quarterly deductions are April 15, July 15, October 15 and January 15.

Online services for payroll deductions and remittances

You can now:

  • authorize the CRA to withdraw an amount from your bank account on date(s) that you choose; and
  • enrol for direct deposit, or update the banking information.

To access CRA online services, go to: http://www.cra-arc.gc.ca/mybusinessaccount/. You can also authorize a registered representative to act on your behalf.

Penalties and interest if you make your payroll deductions late

The penalty is:

  • 3% if the amount is one to three days late;
  • 5% if it is four or five days late;
  • 7% if it is six or seven days late; and
  • 10% if it is more than seven days late, or if no amount is remitted.

In addition, if you are assessed this penalty more than once in a calendar year, the CRA may apply a 20% penalty on the second or later failures if they were made knowingly or under circumstances of gross negligence.

If you do not pay an amount, the CRA may apply interest from the day your payment was due. The interest rate we use is determined every three months, based on prescribed interest rates. Interest is compounded daily.