Ottawa, December 31, 20092009-125
Government Announces 2010 Automobile Deduction Limits and Expense Benefit Rates for Business
The Minister of Finance, today announced the automobile expense deduction limits and the prescribed rates for the automobile operating expense benefit that will apply in 2010.
All of the limits and rates in effect in 2009 will continue to apply in 2010.
Specifically:
The ceiling on the capital cost of passenger vehicles for capital cost allowance (CCA) purposes will remain at $30,000 (plus applicable federal and provincial sales taxes) for purchases after 2009. This ceiling restricts the cost of a vehicle on which CCA may be claimed for business purposes.
The maximum allowable interest deduction for amounts borrowed to purchase an automobile will remain at $300 per month for loans related to vehicles acquired after 2009.
The limit on deductible leasing costs will remain at $800 per month (plus applicable federal and provincial sales taxes) for leases entered into after 2009. This limit is one of two restrictions on the deduction of automobile lease payments. A separate restriction prorates deductible lease costs where the value of the vehicle exceeds the capital cost ceiling.
The limit on the deduction of tax-exempt allowances paid by employers to employees using their personal vehicle for business purposes for 2010 will remain at 52 cents per kilometre for the first 5,000 kilometres driven and 46 cents for each additional kilometre. For Yukon, the Northwest Territories and Nunavut, the tax-exempt allowance will remain at 56 cents for the first 5,000 kilometres driven and 50 cents for each additional kilometre.
The general prescribed rate used to determine the taxable benefit relating to the personal portion of automobile operating expenses paid by employers for 2010 will remain at 24 cents per kilometre. For taxpayers employed principally in selling or leasing automobiles, the prescribed rate will remain at 21 cents per kilometre. The additional benefit of having an employer-provided vehicle available for personal use (i.e., the automobile standby charge) is calculated separately and is also included in the employee’s income.
The Government reviews these rates and limits annually, and announces any planned changes prior to the end of the calendar year. This practice ensures that businesses are aware of the new rates before the beginning of the year in which they apply.
Sunday, January 3, 2010
Monday, April 6, 2009
CRA GST Quick Method rates effective Jan 1 2008
This election could benefit your company by you not having to remit all of the GST you collect. This works best if your GST paid on purchases (input tax credits) are low. The Quick Method of accounting is a simple way to calculate the GST/HST you have to remit. It is generally available for small businesses with annual worldwide taxable sales or supplies (including GST/HST, zero-rated supplies, and associated business supplies) of no more than $200,000 in any four consecutive fiscal quarters over the last five fiscal quarters. The $200,000 limit does not include the following: supplies of financial services; sales of real property; sales of capital assets; and goodwill. If you use this method, you have to continue using it for at least a year. New remittance rate for use by small businesses that provide services is 3.6% for eligible supplies made in a non-participating province through a permanent establishment of the business in a non-participating province. Credit of 1% on the first $30,000 of eligible supplies In calculating your net tax using the Quick Method, you are entitled to a 1% credit on the first $30,000 of your eligible supplies (including GST/HST) on which you must collect 5% GST or 13% HST in each fiscal year.
For further details on the GST Quick method go to:http://www.cra-arc.gc.ca/E/pub/gp/rc4058/rc4058-e.html#P257_23031
For further details on the GST Quick method go to:http://www.cra-arc.gc.ca/E/pub/gp/rc4058/rc4058-e.html#P257_23031
Tuesday, January 27, 2009
2009 Vehicle Deductions Limits
Government Announces 2009 Automobile Deduction Limits and Expense Benefit Rates for Business
The automobile expense deduction limits and prescribed rates for the automobile operating expense benefit that applied in 2008 will apply in 2009. Specifically:
· The ceiling on the capital cost of passenger vehicles for capital cost allowance (CCA) purposes will remain at $30,000 (plus applicable federal and provincial sales taxes) for purchases after 2008. This ceiling restricts the cost of a vehicle on which CCA may be claimed for business purposes.
· The limit on deductible leasing costs will remain at $800 per month (plus applicable federal and provincial sales taxes) for leases entered into after 2008. This limit is one of two restrictions on the deduction of automobile lease payments. A separate restriction prorates deductible lease costs where the value of the vehicle exceeds the capital cost ceiling.
· The maximum allowable interest deduction for amounts borrowed to purchase an automobile will remain at $300 per month for loans related to vehicles acquired after 2008.
· The limit on the deduction of tax-exempt allowances paid by employers to employees using their personal vehicle for business purposes for 2009 will remain at 52 cents per kilometre for the first 5,000 kilometres driven and 46 cents for each additional kilometre. For the Yukon Territory, Northwest Territories and Nunavut, the tax-exempt allowance will remain at 56 cents for the first 5,000 kilometres driven and 50 cents for each additional kilometre.
· The general prescribed rate used to determine the taxable benefit relating to the personal portion of automobile operating expenses paid by employers for 2009 will remain at 24 cents per kilometre. For taxpayers employed principally in selling or leasing automobiles, the prescribed rate will remain at 21 cents per kilometre. The additional benefit of having an employer-provided vehicle available for personal use (i.e., the automobile standby charge) is calculated separately and is also included in the employee’s income.
The automobile expense deduction limits and prescribed rates for the automobile operating expense benefit that applied in 2008 will apply in 2009. Specifically:
· The ceiling on the capital cost of passenger vehicles for capital cost allowance (CCA) purposes will remain at $30,000 (plus applicable federal and provincial sales taxes) for purchases after 2008. This ceiling restricts the cost of a vehicle on which CCA may be claimed for business purposes.
· The limit on deductible leasing costs will remain at $800 per month (plus applicable federal and provincial sales taxes) for leases entered into after 2008. This limit is one of two restrictions on the deduction of automobile lease payments. A separate restriction prorates deductible lease costs where the value of the vehicle exceeds the capital cost ceiling.
· The maximum allowable interest deduction for amounts borrowed to purchase an automobile will remain at $300 per month for loans related to vehicles acquired after 2008.
· The limit on the deduction of tax-exempt allowances paid by employers to employees using their personal vehicle for business purposes for 2009 will remain at 52 cents per kilometre for the first 5,000 kilometres driven and 46 cents for each additional kilometre. For the Yukon Territory, Northwest Territories and Nunavut, the tax-exempt allowance will remain at 56 cents for the first 5,000 kilometres driven and 50 cents for each additional kilometre.
· The general prescribed rate used to determine the taxable benefit relating to the personal portion of automobile operating expenses paid by employers for 2009 will remain at 24 cents per kilometre. For taxpayers employed principally in selling or leasing automobiles, the prescribed rate will remain at 21 cents per kilometre. The additional benefit of having an employer-provided vehicle available for personal use (i.e., the automobile standby charge) is calculated separately and is also included in the employee’s income.
FEDERAL BUDGET 2009 highlights
Budget 2009 supports small businesses by:
· increasing the amount of small business income eligible for the reduced federal tax rate of 11% to $500,000 from the current limit of $400,000 as of January 1, 2009.
· Introducing a temporary 100% capital cost allowance rate for computers acquired after January 27, 2009 and before February 1, 2001.
For individual taxpayers:
the government will boost the basic personal amount – which would allow people to earn more before they have to pay federal tax. The basic amount would go from $9,600 to $10,320, retroactive to Jan. 1.
The government also plans to raise the upper limits on the two lowest income tax brackets. The upper limit for the 15 per cent bracket would go to $40,726, while the upper income limit for the 22 per cent bracket would rise to $81,452.
A new home renovation tax credit would give up to $1,350 in tax relief on home improvement projects. The eligible expenses must be at least $1,000, but not more than $10,000, and the work would have to be done between Jan. 27, 2009, and Feb. 1, 2010.
For Canadians hit by layoffs, the government plans to extend maximum EI benefits by five weeks, bringing it up to a maximum of 50 weeks. The measure would be in effect for the next two years, at a cost of $1.15 billion.
· increasing the amount of small business income eligible for the reduced federal tax rate of 11% to $500,000 from the current limit of $400,000 as of January 1, 2009.
· Introducing a temporary 100% capital cost allowance rate for computers acquired after January 27, 2009 and before February 1, 2001.
For individual taxpayers:
the government will boost the basic personal amount – which would allow people to earn more before they have to pay federal tax. The basic amount would go from $9,600 to $10,320, retroactive to Jan. 1.
The government also plans to raise the upper limits on the two lowest income tax brackets. The upper limit for the 15 per cent bracket would go to $40,726, while the upper income limit for the 22 per cent bracket would rise to $81,452.
A new home renovation tax credit would give up to $1,350 in tax relief on home improvement projects. The eligible expenses must be at least $1,000, but not more than $10,000, and the work would have to be done between Jan. 27, 2009, and Feb. 1, 2010.
For Canadians hit by layoffs, the government plans to extend maximum EI benefits by five weeks, bringing it up to a maximum of 50 weeks. The measure would be in effect for the next two years, at a cost of $1.15 billion.
Monday, December 15, 2008
NEW: TAX FREE SAVINGS ACCOUNT (TFSA)
This fall, the federal government announced a nice little perk for Canadians with investment income. Starting January 1, 2009, everyone 18 and over, can contribute up to $5,000 to a Tax Free Savings Account (TFSA). Nearly every type of investment can be deposited there. The beauty of these is that they are not taxed when income is earned. For example, if you deposit $5,000 to a GIC, the interest is not taxed when you pull it out.
Where this is possibly more powerful is if you have (non RRSP registered) stocks that have devalued recently. If you believe that they are underpriced, they could be a good choice for this TFSA deposit. Of course, you must be of the mind-set that the market will come back and that these stocks are currently a bargain. Transferring these stocks into the TFSA would trigger a gain or loss for your personal tax in the year transferred.
Note, that you do not get to write off the deposit, as you would an RRSP, but unlike an RRSP, you will never be taxed on the growth and there is no requirement to collapse this plan, as there is with RRSPs.
Over the years, as long as this plan is in place, you will get an additional $5,000 of contribution room, per year.
Your bank or investment advisor should be able to assist you in setting one of these up. Note that every bank has a link if you search “Tax Free Savings Account”. Please read through their summaries and FAQ’s.
Where this is possibly more powerful is if you have (non RRSP registered) stocks that have devalued recently. If you believe that they are underpriced, they could be a good choice for this TFSA deposit. Of course, you must be of the mind-set that the market will come back and that these stocks are currently a bargain. Transferring these stocks into the TFSA would trigger a gain or loss for your personal tax in the year transferred.
Note, that you do not get to write off the deposit, as you would an RRSP, but unlike an RRSP, you will never be taxed on the growth and there is no requirement to collapse this plan, as there is with RRSPs.
Over the years, as long as this plan is in place, you will get an additional $5,000 of contribution room, per year.
Your bank or investment advisor should be able to assist you in setting one of these up. Note that every bank has a link if you search “Tax Free Savings Account”. Please read through their summaries and FAQ’s.
Monday, March 17, 2008
2008 Automobile/ Vehicle Deduction Limits and Expense Benefit Rates for Business
Ottawa, December 24, 20072007-111
2008 Automobile Deduction Limits and Expense Benefit Rates for Business
The ceiling on the capital cost of passenger vehicles for capital cost allowance (CCA) purposes will remain at $30,000 (plus applicable federal and provincial sales taxes) for purchases after 2007. This ceiling restricts the cost of a vehicle on which CCA may be claimed for business purposes.
The limit on deductible leasing costs will remain at $800 per month (plus applicable federal and provincial sales taxes) for leases entered into after 2007. This limit is one of two restrictions on the deduction of automobile lease payments. A separate restriction prorates deductible lease costs where the value of the vehicle exceeds the capital cost ceiling.
The maximum allowable interest deduction for amounts borrowed to purchase an automobile will remain at $300 per month for loans related to vehicles acquired after 2007.
The limit on the deduction of tax-exempt allowances paid by employers to employees using their personal vehicle for business purposes for 2008 will be increased by 2 cents to 52 cents per kilometre for the first 5,000 kilometres driven and 46 cents for each additional kilometre. For the Yukon Territory, Northwest Territories and Nunavut, the tax-exempt allowance will rise by 2 cents to 56 cents for the first 5,000 kilometres driven and 50 cents for each additional kilometre. The allowance amounts reflect the key cost components of owning and operating an automobile, such as depreciation, financing, insurance, maintenance and fuel costs.
The general prescribed rate used to determine the taxable benefit relating to the personal portion of automobile operating expenses paid by employers for 2008 will increase by 2 cents to 24 cents per kilometre. For taxpayers employed principally in selling or leasing automobiles, the prescribed rate will increase by 2 cents to 21 cents per kilometre. The amount of the benefit reflects the costs of operating an automobile. The additional benefit of having an employer-provided vehicle available for personal use (i.e., the automobile standby charge) is calculated separately and is also included in the employee’s income.
The Government reviews these rates and limits annually and announces any planned changes prior to the end of the calendar year. This practice ensures that businesses are aware of the new rates before the beginning of the year in which they apply.
2008 Automobile Deduction Limits and Expense Benefit Rates for Business
The ceiling on the capital cost of passenger vehicles for capital cost allowance (CCA) purposes will remain at $30,000 (plus applicable federal and provincial sales taxes) for purchases after 2007. This ceiling restricts the cost of a vehicle on which CCA may be claimed for business purposes.
The limit on deductible leasing costs will remain at $800 per month (plus applicable federal and provincial sales taxes) for leases entered into after 2007. This limit is one of two restrictions on the deduction of automobile lease payments. A separate restriction prorates deductible lease costs where the value of the vehicle exceeds the capital cost ceiling.
The maximum allowable interest deduction for amounts borrowed to purchase an automobile will remain at $300 per month for loans related to vehicles acquired after 2007.
The limit on the deduction of tax-exempt allowances paid by employers to employees using their personal vehicle for business purposes for 2008 will be increased by 2 cents to 52 cents per kilometre for the first 5,000 kilometres driven and 46 cents for each additional kilometre. For the Yukon Territory, Northwest Territories and Nunavut, the tax-exempt allowance will rise by 2 cents to 56 cents for the first 5,000 kilometres driven and 50 cents for each additional kilometre. The allowance amounts reflect the key cost components of owning and operating an automobile, such as depreciation, financing, insurance, maintenance and fuel costs.
The general prescribed rate used to determine the taxable benefit relating to the personal portion of automobile operating expenses paid by employers for 2008 will increase by 2 cents to 24 cents per kilometre. For taxpayers employed principally in selling or leasing automobiles, the prescribed rate will increase by 2 cents to 21 cents per kilometre. The amount of the benefit reflects the costs of operating an automobile. The additional benefit of having an employer-provided vehicle available for personal use (i.e., the automobile standby charge) is calculated separately and is also included in the employee’s income.
The Government reviews these rates and limits annually and announces any planned changes prior to the end of the calendar year. This practice ensures that businesses are aware of the new rates before the beginning of the year in which they apply.
Tuesday, October 30, 2007
October 30, 2007 Tax Relief for Individuals, Families and Businesses
Ottawa, October 30, 20072007-083
Canada’s Government Delivers Broad-Based Tax Relief for Individuals, Families and Businesses
The Honourable Jim Flaherty, Minister of Finance, today presented the Government’s 2007 Economic Statement, which proposes broad-based tax relief for all Canadians, including a further reduction of the goods and services tax (GST).
"Given the uncertainty in the global economy, now is the time to provide additional tax relief for Canadians," said Minister Flaherty. "Our strong fiscal position provides Canada with an opportunity that few other countries have—to make broad-based tax reductions that will strengthen our economy and leave more money in the pockets of ordinary Canadians."
Since coming to office 21 months ago, the Government has taken action that will reduce the overall tax burden for Canadians and businesses by about $190 billion, bringing taxes to their lowest level in nearly 50 years.
At the heart of the Tax Relief Package is an additional 1-percentage-point reduction in the GST, effective January 1, 2008. This tax cut fulfills the Government’s key campaign commitment and builds on the initial GST reduction introduced in Budget 2006. For consumers, the total savings from the 2-percentage-point reduction in the GST will amount to approximately $12 billion next year.
Individual savings will be significant:
A family purchasing a new $300,000 home will save $3,840 in GST.
A family spending $10,000 on home renovations will save $200 in GST.
A family spending $30,000 on a new minivan will save $600 in GST.
The GST credit will be maintained at its current level, translating into more than $1.1 billion in benefits annually for low- and modest-income Canadians.
The Government is proposing additional tax relief for individuals and families by:
Increasing the basic personal amount to $9,600 retroactive to January 1, 2007. The basic personal amount will be increased to $10,100 on January 1, 2009. This proposal will provide Canadians with an additional $2.5 billion in tax relief in 2007 and 2008.
Reducing the lowest personal income tax rate to 15 per cent from 15.5 per cent retroactive to January 1, 2007.
Families earning between $15,000 and $30,000 will pay on average almost $180 less in tax in 2008 as a direct result of the tax measures announced in the Fall Economic Statement.
Families earning between $45,000 and $60,000 will pay on average almost $400 less in tax in 2008 as a direct result of the tax measures announced in the Fall Economic Statement.
Families earning between $80,000 and $100,000 will pay on average $602 less in tax in 2008 as a direct result of the tax measures announced in the Fall Economic Statement.
In order to make businesses even more competitive, it is essential
that Employment Insurance rates be reduced for employers and
employees.
The premium rate for employees will fall to $1.73 from its current level of $1.80 per $100 of insurable earnings, effective January 1, 2008. The rate paid by employers will be reduced as well, to $2.42 from $2.52 per $100 of insurable earnings.
The maximum insurable earnings (MIE) for 2008, will be $41,100, up $1,100 from its 2007 level.
The MIE is the income level up to which earnings are insured and on which premiums are paid by employees and employers.
Also for Canadian businesses, the Government will be:
Reducing the general corporate income tax rate to 15 per cent by 2012, starting with a 1-percentage-point reduction in the rate in 2008 beyond the already scheduled reductions.
Reducing the small business income tax rate to 11 per cent in 2008, one year earlier than scheduled.
"We are putting business taxes on a five-year track downward to help stimulate further economic growth and create even more jobs," said Minister Flaherty. "We are ushering in a new era of declining business taxation in Canada. It will be a steady, predictable decline that businesses can count on and can plan on."
With these reductions, Canada’s general federal corporate income tax rate will fall by one-third between 2007 and 2012, and Canada’s corporate tax rate will become the lowest among the major industrialized economies.
The Government also announced it is planning additional debt reduction of $10 billion this fiscal year, for a total of more than $37 billion in debt relief since coming to office. This is the equivalent of $1,570 for each man, woman and child in Canada.
As a result, the federal government’s debt-to-GDP ratio—its debt load as a share of the economy—is expected to fall below 25 per cent by 2011–12, three full years ahead of the original target and its lowest level since the late 1970s.
With the additional debt reduction in the Economic Statement, the total value of personal income tax relief provided under the Tax Back Guarantee will rise to $2.5 billion by 2012–13.
The 2007 Economic Statement is available on the Department of Finance website.
Canada’s Government Delivers Broad-Based Tax Relief for Individuals, Families and Businesses
The Honourable Jim Flaherty, Minister of Finance, today presented the Government’s 2007 Economic Statement, which proposes broad-based tax relief for all Canadians, including a further reduction of the goods and services tax (GST).
"Given the uncertainty in the global economy, now is the time to provide additional tax relief for Canadians," said Minister Flaherty. "Our strong fiscal position provides Canada with an opportunity that few other countries have—to make broad-based tax reductions that will strengthen our economy and leave more money in the pockets of ordinary Canadians."
Since coming to office 21 months ago, the Government has taken action that will reduce the overall tax burden for Canadians and businesses by about $190 billion, bringing taxes to their lowest level in nearly 50 years.
At the heart of the Tax Relief Package is an additional 1-percentage-point reduction in the GST, effective January 1, 2008. This tax cut fulfills the Government’s key campaign commitment and builds on the initial GST reduction introduced in Budget 2006. For consumers, the total savings from the 2-percentage-point reduction in the GST will amount to approximately $12 billion next year.
Individual savings will be significant:
A family purchasing a new $300,000 home will save $3,840 in GST.
A family spending $10,000 on home renovations will save $200 in GST.
A family spending $30,000 on a new minivan will save $600 in GST.
The GST credit will be maintained at its current level, translating into more than $1.1 billion in benefits annually for low- and modest-income Canadians.
The Government is proposing additional tax relief for individuals and families by:
Increasing the basic personal amount to $9,600 retroactive to January 1, 2007. The basic personal amount will be increased to $10,100 on January 1, 2009. This proposal will provide Canadians with an additional $2.5 billion in tax relief in 2007 and 2008.
Reducing the lowest personal income tax rate to 15 per cent from 15.5 per cent retroactive to January 1, 2007.
Families earning between $15,000 and $30,000 will pay on average almost $180 less in tax in 2008 as a direct result of the tax measures announced in the Fall Economic Statement.
Families earning between $45,000 and $60,000 will pay on average almost $400 less in tax in 2008 as a direct result of the tax measures announced in the Fall Economic Statement.
Families earning between $80,000 and $100,000 will pay on average $602 less in tax in 2008 as a direct result of the tax measures announced in the Fall Economic Statement.
In order to make businesses even more competitive, it is essential
that Employment Insurance rates be reduced for employers and
employees.
The premium rate for employees will fall to $1.73 from its current level of $1.80 per $100 of insurable earnings, effective January 1, 2008. The rate paid by employers will be reduced as well, to $2.42 from $2.52 per $100 of insurable earnings.
The maximum insurable earnings (MIE) for 2008, will be $41,100, up $1,100 from its 2007 level.
The MIE is the income level up to which earnings are insured and on which premiums are paid by employees and employers.
Also for Canadian businesses, the Government will be:
Reducing the general corporate income tax rate to 15 per cent by 2012, starting with a 1-percentage-point reduction in the rate in 2008 beyond the already scheduled reductions.
Reducing the small business income tax rate to 11 per cent in 2008, one year earlier than scheduled.
"We are putting business taxes on a five-year track downward to help stimulate further economic growth and create even more jobs," said Minister Flaherty. "We are ushering in a new era of declining business taxation in Canada. It will be a steady, predictable decline that businesses can count on and can plan on."
With these reductions, Canada’s general federal corporate income tax rate will fall by one-third between 2007 and 2012, and Canada’s corporate tax rate will become the lowest among the major industrialized economies.
The Government also announced it is planning additional debt reduction of $10 billion this fiscal year, for a total of more than $37 billion in debt relief since coming to office. This is the equivalent of $1,570 for each man, woman and child in Canada.
As a result, the federal government’s debt-to-GDP ratio—its debt load as a share of the economy—is expected to fall below 25 per cent by 2011–12, three full years ahead of the original target and its lowest level since the late 1970s.
With the additional debt reduction in the Economic Statement, the total value of personal income tax relief provided under the Tax Back Guarantee will rise to $2.5 billion by 2012–13.
The 2007 Economic Statement is available on the Department of Finance website.
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