News/Tips
HST (July 1, 2010)
Ontario will combine its PST with the federal GST to create a single sales tax that will be federally administered. The single sales tax rate of 13% (5% GST plus 8% PST) will take effect July 1,2010. The single sales tax will generally use the same rules as the GST.
If you are currently registered for GST, then you are automatically registered for HST. The existing GST return will be used to report GST & HST transactions
Sales:
The tax that you charge will normally depends on where your customer is located.
For retail operations, the customer is located where the store is located.
[The detailed rules can be found below under additional information - CRA place of supply rules].
If your customer is located in a HST province (see below), you will charge the HST rate applicable to that province.
If your customer is located in a non-HST province (including Quebec), you will only charge GST (5%).
If your customer is located outside of Canada, you will not charge GST or HST.
Quebec companies: If your customer is located in Quebec, you will continue to charge GST & TVQ.
HST provinces:
Ontario (13%)
New Brunswick (13%)
Nova Scotia (15%)
Newfoundland (13%)
British Columbia (12%)
The Ontario Government and its agencies did not pay GST. However they must be charged HST (13%) starting July 1, 2010.
Purchases:
All suppliers who charged you GST @ 5% should now charge you HST @ 13% effective July 1, 2010.
Quebec companies: You will continue to pay GST & TVQ if your supplier is located in Quebec, and you will pay GST only if your supplier is located outside of Quebec.
Additional Information:
http://www.cra-arc.gc.ca/E/pub/gm/b-103/b-103-e.pdf [CRA place of supply rules]
Payroll (January 1, 2010)
The federal basic personal exemption is $10,382 (Ontario $8,943)
CPP maximum earnings increased to $47,200 (maximum contribution $2,163)
EI maximum earnings increased to $43,200 (maximum contribution $747)
Ontario Budget (November 2009)
The small business tax rate will be reduced to
4.5% (from 5.5%) effective July 1, 2010.
Corporations with less than $50 million in assets (was $5 million) or less than $100 million in revenue (was $10 million) will not pay corporation minimum tax effective for taxation years ending after June 30, 2010.
The Apprenticeship Tax Credit will increase to 35% (from 25%), the enhanced rate for small businesses will increase to 45% (from 30%) and the annual limit will increase to $10,000 (from $5,000) effective March 26, 2009.
Federal Budget (January 27, 2009)
Home renovation tax credit - Individuals can claim a 15% tax credit on their 2009 tax return for significant renovations made to their principal residence (home or cottage) in excess of $1,000 but not more than $10,000, between January 27, 2009 and before February 1, 2010. The maximum credit is $1,350 ($9,000×15%) per family. Click here for additional information.
New Computers purchased after January 27, 2009 and before February 2011 can be written off 100% in the year purchased.
Manufacturing and processing equipment purchased after March 19, 2007 and before 2012 can be written off 50% straight line (subject to the half-year rule).
The small business limit on active business income earned by a corporation is increased to $500,000 (from $400,000) effective January 1, 2009.
Payroll (January 1, 2009)
The basic personal exemption is $10,320 federal ($8,881 Ontario)
CPP maximum earnings increased to $46,300 (was $44,900)
CPP maximum contribution increased to $2,119 (was $2,050)
EI maximum earnings increased to $42,300 (was $41,100)
EI maximum contribution increased to $732 (was $711)
Tax-Free Savings Accounts (TFSA) (January 1, 2009)
Effective January 1, 2009, individuals 18 and over can contribute up to $5,000 to a tax-free savings account. Although the contribution is not tax-deductible, any income earned inside this account is tax-free. All types of investments (including GICs, funds, stocks) can be held within the TFSA. Click here for additional information (http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/menu-eng.html).
GST (January 1, 2008)
Effective January 1, 2008 the GST rate is being reduced from 6% to 5%.
Businesses that use the “Quick” method will use a rate of 3.6% on sales after January 1, 2008. If your reporting period is November 2007 to January 2008, you will use the old 4.3% rate on the November & December sales and the new 3.6% rate on the January sales.
The GST included in purchases will now be calculated using 5/105. If PST was charged, the calculation will be 5/113.
Detailed CRA instructions and examples can be found here (http://www.cra-arc.gc.ca/E/pub/gi/notice226/README.html).
Installments (2008)
If the tax payable is below $3,000 (was $1,000), installments will not be required
For individuals & GST, this starts in 2008.
For corporations, this starts for taxation years that begin after 2007.
Lifetime Capital Gains Exemption (March 19, 2007)
Increased from $500,000 to $750,000
RRSPs & RRIFs (2007)
The conversion age is now 71 (from 69)
Capital Cost Allowance (CCA) (March 19, 2007)
Rates changed for the following assets acquired after March 19, 2007
Non-residential Buildings – from 4% to 6%
Computer Equipment – from 45% to 55%
Manufacturing Equipment – from 30% to 50% straight line (to Dec 31/08)
Registered Education Savings Plan ( RESP) (2007)
The maximum annual RESP contribution qualifying for the 20% grant is increased from $2,000 to $2,500. The maximum lifetime grant, however, remains at $7,200.
Children's Fitness tax Credit (2007)
Parents will be able to claim a maximum credit of $500 per year per child under 16 who participates in an eligible fitness program. Click for additional information (http://www.cra-arc.gc.ca/whatsnew/fitness-e.html)
Pension income splitting (2007)
Up to 50% of certain types of pension income can be transferred to a spouse. It includes traditional monthly pension benefits, but excludes CPP & OAS. If you are 65 or over, you can also split RRSP annuities and RRIF payments. No advance action is required; a joint election signed by both spouses will be required when your personal tax returns are prepared.
CAUTION: Increasing your spouse’s income may affect the age, spousal and medical credits as well as OAS entitlement and OAS clawback.
GST (July 1, 2006)
Effective July 1, 2006 the GST rate is reduced from 7% to 6%.
Businesses that use the 5% (quick) method will use a rate of 4.3% on sales after July 1, 2006. The GST included in purchases will now be calculated using 6/106. If PST was also charged, the calculation will be 6/114.
Universal Child Care Benefit (July 1, 2006)
Families with children under the age of six may be entitled to receive $100 per month per child under the new universal child care benefit program. If you do not receive the Child Tax Benefit, you must apply for this benefit. Additional information can be found at http://www.cra-arc.gc.ca/benefits/uccb/menu-e.html