Tax Rates, Tax Tips & FAQs

Tax Rates

2016 Tax Tips and Reminders

2016 TFSA limit is $5,500
The Tax Free Savings Account (TFSA) limit was $10,000 for 2015, $5,500 for 2014 and 2013. For 2009 to 2012, the limit was $5,000. As promised in the Liberal Party's election platform, the government has moved forward to reduce the current TFSA contribution limit of $10,000 to $5,500 for 2016. This amount will be indexed in subsequent years. The TFSA annual contribution limit for 2017 will be $5,500.

Contributions can be made by Canadian residents aged 18 or over. Any unused contribution room can be carried forward. There is no lifetime limit to the amount of the contributions. If a person has contribution room, but no funds to contribute, he or she may contribute funds given to them by their spouse or common-law partner, with no attribution of income to the spouse or common-law partner. Note that a withdrawal in any year does not increase the TFSA room until the following calendar year. If you are thinking of making a withdrawal close to year end, make sure it is done by December 31 so you can have the withdrawal amount added back to the TFSA room sooner.

2016 and 2017 RRSP Limits
The RRSP contribution limit increases to $25,370 in 2016 (from $24,930 in 2015). The RRSP contribution limit increases to $26,010 in 2017. If you or your employer do not contribute to a pension plan, your 2016 “earned income” for RRSP purposes must be at least $144,500 to create RRSP contribution room of $26,010 in 2017. Please see the news release.

2017 Employment Insurance Rates
Employment Insurance (EI) rates for 2017 have changed to 1.63% (vs 1.88% for 2016) of earnings for employees. The maximum annual premium decreases to $836.19 (from $955.04 in 2016). The rate for employers is 1.4 times the employee rate or 2.282%. The maximum insurable earnings for 2017 increases to $51,300 from $50,800 in 2016.

2017 Canada Pension Plan Rates
The maximum pensionable earnings under the Canada Pension Plan (CPP) for 2017 will be $55,300 - up from $54,900 in 2016. Contributors who earn more than $55,300 in 2017 are not required or permitted to make additional contributions to the CPP.

The basic exemption amount for 2017 remains at $3,500. Individuals who earn less than that amount do not need to contribute to the CPP.

The employee and employer contribution rates for 2017 will remain unchanged at 4.95%, and the self-employed contribution rate will remain unchanged at 9.9%.

The maximum employer and employee contribution to the plan for 2017 will be $2,564.10 and the maximum self-employed contribution will be $5,128.20. The maximums in 2016 were $2,544.30 and $5,088.60.

Canada Pension Plan Changes for Persons Between Ages 60 and 70
Beginning in 2012, employers must withhold and remit CPP on wages paid to employees between ages 60 and 70, even if the employee is collecting CPP benefits. If the employee is between 65 and 70, he or she may file an election to opt out of paying CPP. These rules also apply to self-employed individuals. In order to avoid paying CPP, the election must be filed with CRA to take effect on the first of the following month. There are several other changes related to CPP benefits. Please contact us for information.

Prescribed Interest Rates
The prescribed rates for all four quarters of 2016 were as follows:

  • The interest rate paid on overpayments was 3%.
  • The interest rate used to calculate taxable benefits for employees and shareholders from interest-free and low-interest loans was 1%.
  • The interest rate charged on overdue taxes, Canada Pension Plan contributions, and Employment Insurance premiums was 5%.

For more information please see CRA's website on prescribed rates.

2016 Combined Federal and Ontario Tax Brackets for Individuals and Corporations

2016 Combined Federal and Ontario Tax Brackets for Individuals

Taxable Income

Regular Income

%

Ineligible (Private Corporation) Dividends %

Eligible Canadian Dividends %

Capital Gains %

$0 to $41,536

20.05

6.13

0.00

10.03

$41,536 to $45,282

24.15

10.93

0.00

12.08

$45,282 to $73,145

29.65

17.37

6.39

14.83

$73,145 to $83,075

31.48

19.51

8.92

15.74

$83,075 to $86,176

33.89

22.33

12.24

16.95

$86,176 to $90,563

37.91

27.03

17.79

18.95

$90,563 to $140,388

43.41

33.46

25.38

21.70

$140,388 to $150,000

46.41

36.97

29.52

23.20

$150,000 to $200,000

47.97

38.80

31.67

23.98

$200,000 to $220,000

51.97

43.48

37.19

25.98

$220,000 and over

53.53

45.30

39.34

26.76

(This table does not include the Ontario Health Premium)

2016 Federal and Ontario Combined Corporate Income Tax Rates

Canadian Controlled Private Corporations

Other Corporations

Small Business Income

(up to $500,000)

Investment Income**

General Manufacturing and Processing

General Active Business Income

15%

50.17%*

25%

26.5%

*30.667% of investment income is eligible for refund at a rate of $1 for every $2.61 of dividends paid.

**Canadian taxable dividend income (not from a connected corporation) is taxed federally only under Part IV at a rate of 38.33%. This tax is eligible for refund at a rate of $1 for every $2.61 of dividends paid.


Tax Tips

The rules are always changing. Here are some tax tips that will help save you money.

Year End Tax Planning

  1. Consider paying reasonable salaries to family members before year end. Reasonable salaries can be deducted by you and taxable to them at possibly lower rates.
  2. Businesses should purchase capital assets before year end. Assets purchased and in use before the business year end are eligible for one half of the usual capital cost allowance rate.
  3. Owner-managers should consider their salary/dividend mix from their corporation. If you have drawn funds from your corporation throughout the year, you should determine whether these amounts should be characterized as salary or dividends before the year end. Ritchie Shortt & Tully LLP can help you with this decision.
  4. Consider gifting funds or making interest-free loans to your spouse or an adult child to contribute to the Tax Free Savings Account.
  5. Consider selling investments with accrued losses before the end of the year to offset any gains you have had during the year. Capital losses in excess of gains can be carried back three years and forward indefinitely.
  6. Contribute to your RRSP by March 1, 2017 to make the contribution deductible for 2016. Also remember to make your required Home Buyer's repayment by March 1, 2017.
  7. Charitable donations, medical expenses, political donations, child care expenses, investment counsel fees and professional dues should be paid by December 31 to be creditable or deductible in the 2016 year.
  8. Contribute to Registered Education Savings Plans for your children by December 31. Rather than an annual RESP contribution limit there is now a lifetime contribution limit of $50,000. When you contribute money to any RESP, the federal government will deposit an additional amount - the Canada Education Savings Grant (CESG) - equal to 20% of your contribution up to certain limits. The maximum CESG each year is $500 (20% x $2,500 contribution). The lifetime CESG limit is $7,200.
  9. Family caregiver tax credit -beginning in 2012, there is a $2,000 tax credit available to caregivers of infirm relatives including spouses, common-law partners and minor children.
  10. Direct Deposit - Canada Revenue Agency will soon stop mailing tax refunds and other benefits. We urge you to set up direct deposit at this time. This can be done online through "My Account" (if you are registered), by phone (call 1-800-959-8281), by completing and mailing the Direct Deposit Enrolment Form, or by providing us with a void cheque (we will submit this information to CRA when we electronically file your return).
  11. Ontario Healthy Homes Renovation Tax Credit - effective in 2012, this credit is a 15% refundable credit on up to $10,000 of eligible expenses per year incurred on or after October 1, 2011 for permanent home modifications that improve mobility and accessibility for seniors. The individual does not have to be disabled. Eligible expenses include ramps, stair lifts, walk-in tubs, handrails and more.

GST/HST Registry

CRA now has a GST Registry on their website. The GST/HST Registry lets you validate the GST/HST number of a business, which helps to ensure that claims submitted for input tax credits only include GST/HST charged by suppliers who are registered for GST/HST. To get information to validate the GST/HST number of a business, you have to enter in the space provided the business name, the GST/HST number, and the date of the transaction in question. Click here to access the registry.

Harmonized Sales Tax for Ontario

On March 26, 2009, the Ontario government announced in its annual budget that Ontario will eliminate its existing provincial sales tax (PST) and introduce a harmonized sales tax (HST) with the Federal GST. This will take effect on July 1, 2010. The HST rate in Ontario will be 13% of which 5% will represent the federal part and 8% will represent the provincial part.

On October 14, 2009, the Ontario Ministry of Finance released Information Notice No. 3, General Transitional Rules for Ontario HST. Further details of how the HST will be implemented will be released in the coming months. The complete policy and administrative details will be released by the end of March 2010.

Unlike the GST, many Ontario businesses pay PST on business expenses and assets with no ability to recover the tax. This embedded PST forms part of the costs of the business. Under a harmonized sales tax system, input tax credits (ITCs) will be available to recover the provincial component of the tax, which should result in lower costs – those savings can be passed on to consumers through lower prices.

Small Businesses

To compensate small businesses (generally, annual taxable revenue of less than $2 million) for the increased administrative burden of the change to HST, a credit will be allowed for the first reporting period after harmonization.

Total taxable revenues in first full fiscal quarter commencing after June 30, 2010 Amount of transition credit
Up to and including $15,000 $300
Over $15,000 and up to and including $50,000 2% of taxable revenue for the quarter
Over $50,000 and up to and including $500,000 $1,000

Individuals

To compensate individuals, a sales-tax transition credit will be paid to individuals and families in three approximately equal instalments, in June and December 2010 and June 2011, totaling a maximum of $300 for single individuals and $1,000 for single parents and families. The credits are reduced by 5% of income over a threshold of $80,000 per individual and $160,000 per family or single parent. The credits phase out for an individual at an income level of $82,000 and for single parents and families at an income level of $166,700. You must file your 2009 and 2010 income tax returns to qualify for the 2010 and 2011 payments, respectively.

Phase-in of ITCs for Larger Businesses

Large businesses with annual taxable sales in excess of $10 million, and financial institutions, will be unable to claim ITCs for the Ontario portion of the HST for the first 5 years of the new system. Full ITCs on these purchases will be phased in, in equal amounts, over a three-year period. The restricted groups of expenses are as follows:

  • Energy (except for energy used for farming or the production of goods for sale);
  • Telecommunication services other than internet access or toll-free numbers;
  • Road vehicles weighing less than 3,000 kg (and parts and certain services) and fuel to power those vehicles and
  • Food, beverages and entertainment.

Preparing for HST

Businesses will need to think about certain items as harmonization approaches:

Conversion – invoices, sales receipts, purchase orders, expense reports, identification numbers, billing cycles, treatment of refunds over transition period, collecting HST from customers that were previously PST exempt, maintain information on percentage completion before and after implementation date

Budgeting and cash flow – ability to recover HST, collection and remittance of HST on a broader range of services and goods, payment of HST on business assets and expenses, implementation costs, importance of quick collection of receivables. Small businesses may want to purchase items after June 30, 2010 while individuals and the MUSH (Municipalities, Universities and Colleges, School Boards, Hospitals) and Charities and Qualifying Non-Profit Organizations sectors may want to purchase goods and services before July 1, 2010. Businesses may want to consider filing more frequently – note that an election must be filed before your fiscal year.

Contractual obligations, leasing and service agreements – ensure the implications are taken into account with contracts straddling the July 1, 2010 implementation date

Retail sector

HST will tax a much broader range of goods and services. Businesses must also ensure that their systems will be equipped to distinguish between items which are fully taxable from those that are subject to the new point-of-sale rebate for the provincial portion of the HST for certain items:

  • Print newspapers
  • Qualifying prepared food and beverages ≤ $4
  • Books
  • Children’s clothing - not costumes, sports protective clothing
  • Children’s footwear – not skates, cleats, ski boots
  • Children’s car seats and booster seats
  • Diapers
  • Feminine hygiene products

Public Service Bodies

Many supplies made by entities in the MUSH and Charities and Qualifying Non-Profit Organization sectors are exempt from GST/HST – no tax is collected on these supplies. Consequently, these entities are unable to claim ITCs on most of their purchases. To compensate these entities for the difference in tax content, these entities will be entitled to rebates of a portion of the Ontario portion of the HST. The rate for municipalities, universities and colleges is 78%, for school boards is 93%, for hospitals is 87% and for charities and qualifying non-profit organizations is 82%.

Construction and Real Estate Development

Currently, new housing is only subject to 5% GST with a GST rebate available of 36% of the tax paid on the first $350,000 of the purchase price (this is phased out for homes priced between $350,000 and $450,000). Under harmonization, new homes will be subject to the 13% HST. To ease the burden of the new tax, Ontario will provide a new housing rebate equal to 75% of the provincial portion of the HST up to a maximum of $24,000 for new homes purchased as primary residences across all price ranges. The transitional rules are quite complex and vary depending on the type of property and the date that the agreement to rent or purchase was entered into.

Transition – Key Dates

July 1, 2010 – implementation of the HST in Ontario

May 1, 2010 – HST has to be collected on amounts that are paid or become payable on or after May 1, 2010 for goods or services provided on or after July 1, 2010

October 14, 2009 – date of Ontario’s Notice regarding transitional rules. Certain businesses and public service bodies may be required to self-assess the Ontario component of the HST on amounts payable after October 14, 2009 and before May 2010 for goods or services provided on or after July 1, 2010

October 31, 2010 – date on which any outstanding PST becomes payable under the transitional rules to ensure an efficient wind-down of the PST. Watch out for the impact of this on returns and exchanges.

Sales – The HST will generally apply to any consideration that becomes due or is paid without having become due, on or after May 1, 2010 for a supply by way of sale of tangible personal property (i.e., goods) to the extent that the consideration is for TPP that is delivered and for which ownership is transferred, to the recipient of the supply on or after July 1, 2010. The HST would not apply to a supply by way of sale of TPP if the TPP is delivered or ownership of the TPP is transferred to the recipient of the supply before July 2010 regardless of when the consideration for the supply becomes due or is paid without having become due.

Example A:

A customer orders and pays for a refrigerator on June 15, 2010 and it is delivered in July 2010.

GST is payable at 5% on June 15, 2010

PST is not payable

The Ontario portion of the HST is payable at 8% on July 1, 2010.

Example B:

A customer orders and pays for a refrigerator on April 30, 2010 and it is delivered in July 2010.

GST is payable at 5% on April 30, 2010

PST is payable at 8% on April 30, 2010

The Ontario portion of the HST is not payable.

Services - To determine whether GST or HST applies to services performed during the period that includes July 1, 2010, suppliers must consider:

  • When the service is performed;
  • When an amount for the service becomes due; and
  • Whether an amount is paid without having become due.

Example C:

I provide an accounting service from January 2010 to June 2010, and issue an invoice for my service in August 2010. The client pays me after receiving the invoice.

GST is payable at 5%

Since all of the service is performed before July 2010, the OHST does not apply to the consideration for this service.

Example D:

I provide a decorating service in June and July 2010. 60% of the service is performed in June 2010. I issue an invoice for my service in August 2010. The client pays me after receiving the invoice.

HST applies to the portion of the consideration that relates to the 40% of the service that is performed on or after July 1, 2010.

The OHST does not apply to the portion of the consideration that relates to the 60% of the service that is performed before July 2010.

The transitional rules are very complex and extensive; please see the GST/HST Notice (http://www.rev.gov.on.ca/en/notices/hst/pdf/03.pdf ) for further information and examples.


RST Client Portal

Terms of Agreement

Ritchie Shortt & Tully LLP, Chartered Accountants, Client Portal Agreement

This Client Portal Agreement is made by and between Ritchie Shortt & Tully LLP, Chartered Accountants (RST) and you (the "Client"). Access by the Client of the Client Portal confirms acceptance of this agreement.

  1. Purpose. RST owns and provides a Client Portal to permit easy and secure electronic transfer of documents between our Clients and RST and to allow the Client to access certain documents created or maintained by RST. The Client Portal web-based applications are exclusively provided to RST's clients and intended for their sole use. However, we may approve registration and access to the portal for individuals who are not clients of RST at our discretion with Client consent.

  2. Use. By accessing the Client Portal, the Client consents to the following terms and conditions and acknowledges that RST is relying on your consent in allowing you to use RST's Client Portal. Your continued use of RST's Client Portal after the posting of any amended terms and conditions shall constitute your agreement to be bound by any such changes. RST may modify, suspend, discontinue or restrict use of any portion of RST's Client Portal, including the availability of any portion of the content at any time, without notice or liability.

    The Client Portal will be used for communications with you. As a registered user of the portal, you may access, view, use, and download documents and files relevant to the service provided to you at any given time. You will receive a notification email when we add a document or file to the Client Portal.

    Registered users are also permitted to upload documents and files onto the Client Portal for review, download and use by RST. We will receive an email notification when you add a document or file to the Client Portal.

  3. Service Availability. There is a risk that the Client may not be able to access their information using the Client Portal at any given time. The Client Portal is reliant on computer and telecommunications systems and disruptions to those systems may result in the Client Portal being unavailable from time to time. RST will not be liable for any loss, damage, cost or expense resulting from any delay in operation or transmission, communications failure, internet access difficulties and malfunctions in equipment or software.

  4. Security. A username and password are required for access to the Client Portal and any documents maintained on the Client Portal. All files are maintained behind firewalls to protect against outside intruders. The client acknowledges that, despite these efforts to make Client Portal secure from unauthorized access, no system for electronic data transfer is completely secure.

  5. Login Accounts and Their Security

    RST will set up individual login accounts for any person employed by the Client who requires access to the Client Portal. RST strongly recommends that the Client does not share the login information with others.

    The Client must keep the username and password details confidential and secure against unauthorized use at all times. RST will not be held responsible for access to the Client's confidential personal and financial information by an unauthorized third party to whom the Client has given their username and password details. The Client is responsible for any expense, loss, damages, costs, demands or liabilities arising out of or in connection with the use (including improper or unauthorized use) of the Client's username and password.

    If the Client suspects that their username and password have been lost, stolen or misused, please notify RST immediately.

  6. Termination of Login Account. The Client agrees to notify RST via email immediately when an individual login account is to be terminated. RST will make every effort to confirm and terminate access as soon as possible. However, the Client cannot be assured that access has been terminated until the Client receives and e-mail from RST with confirmation of the termination.

  7. No Unlawful or Prohibited Use. The Client must only access the Client Portal for legitimate and lawful purposes and in accordance with instructions posted on our website from time to time. You agree not to upload any documents, images or files that might be considered offensive or discriminatory.

  8. Disclosure. RST reserves the right at all times to disclose any information as necessary to satisfy any applicable law, regulation, legal process or government request, or to edit, refuse to post or to remove any information or materials, in whole , or in part, at RST's sole discretion.

  9. Client's Responsibility. The Client must indemnify and hold harmless RST from and against any claims, liabilities, or damages arising out of the Client's use of the Client Portal or Client's breach of this agreement.

  10. Warranties. RST makes no warranty, express of implied, regarding the Client Portal's security or efficiency, the content and services are provided on an "as is" basis and RST specifically disclaims any express or implied warranties, including without limitation, warranties of fitness for a particular use, warranties of merchant ability or warranties against infringement. RST and its partners and employees shall not be liable for any damages or losses, including, with limitation, indirect, consequential, special, incidental, or punitive damages, resulting from or caused by client's use of the Client Portal. Any breach of security of the Client Portal or any services provided herein. RST does not warrant that the Client Portal's functions will be uninterrupted or error-free. That any defects will be corrected, or that RST's Client Portal or the server that makes it available is free from viruses or other harmful components.

  11. Term and Termination. This agreement and the services contemplated by it may be terminated by RST with or without cause and with or without notice at any time. RST may at any time terminate in whole or in part RST Client's Portal without notice or liability.

  12. Miscellaneous. This is the entire agreement between RST and the Client regarding its subject matter. This agreement does not modify or affect any existing or future agreement between RST and the client. RST, may, in its discretion, add to or delete the Terms and Conditions from time to time without any prior notice. Unless otherwise specified by RST all alterations, additions, and deletions shall take effect automatically and be binding on and from the day they are posted on the Client Portal.

How do I access RST's Client Portal?

To obtain access to our Client Portal, please contact our office and provide the email address that you would like to use as your Login. Please note that this is the email address that will receive notifications when documents are added to your Client Portal. Over the telephone, we will also give you a password that will enable you to open a secure PDF document that we will email to you. Please note this password.

The secure PDF document that we email you will confirm your Login and will provide you with an initial password for the portal. To access the Client Portal, simply click on the words "Client Portal Login" at the top right corner of our website. Login to the Client Portal using the Login and password. Once you have logged into the Client Portal, you may change the password, if you choose.

You can select "Change Password" from the top of the page once you have successfully logged in. Please note that RST will not be able to recover your password if you lose it. Please use the "Forget Your Password?" function on the login screen.

Under the Client Name, you will see a series of folders. The folder with the Client Name can be seen only by the specific user and RST, not by any other users associated with the Client. The Public folders can be accessed by any user associated with this client and are where most documents will be placed.

Generally, RST will upload final documents to the Download folder in one of the Advisory, Tax, or Year End subfolders. Documents stored in these folders will remain on the Client Portal for three years.

The File Transfer folder is used to either send documents to RST (Client to Firm) or receive documents from RST (Firm to Client). Documents stored in these folders will only be available on the Client Portal for 30 days.

If you have any troubles using the Client Portal, please contact our office.

How do I upload a file?

To upload a file, choose the folder that you wish to upload the file to by clicking on the folder and subfolders until you are in the desired folder. Click the blue arrow that is pointing up. If the blue arrow is muted in colour you do not have the right to upload to that specific directory. Click "Add" and then user the windows browser to locate the file that you wish to upload. Add as many files as you would like to upload then click "Upload". The status should change to "Completed" and click "Close". Once you have uploaded the document(s), RST will receive an email notifying us that a document has been placed in the Client Portal.

How do I download a file?

To download a file, choose the folder that you wish to download the document from, click on the document, and the click on the blue arrow that points down. Use windows explorer to choose where you would like to save the file on your computer. You can rename the file when you save it.

When RST places a document in the Client Portal, you will receive an email indicating that a document has been added to the Client Portal for your use.

FAQs

So many questions, so little time … Ritchie Shortt & Tully LLP, Chartered Accountants answers some of your questions.

"I've had a strange call/voicemail/email from "CRA" - is this a scam?"

There are many fraud types, including new ones invented daily.

Taxpayers should be vigilant when they receive, either by telephone, mail, text message or email, a fraudulent communication that claims to be from the Canada Revenue Agency (CRA) requesting personal information such as a social insurance number, credit card number, bank account number, or passport number.

These scams may insist that this personal information is needed so that the taxpayer can receive a refund or a benefit payment. Cases of fraudulent communication could also involve threatening or coercive language to scare individuals into paying fictitious debt to the CRA. Other communications urge taxpayers to visit a fake CRA website where the taxpayer is then asked to verify their identity by entering personal information. These are scams and taxpayers should never respond to these fraudulent communications or click on any of the links provided. Read more.

What information will Ritchie Shortt & Tully LLP require to prepare my tax returns?

We send our clients the following letter and attachments. If you have misplaced your copy or have just become a client of Ritchie Shortt & Tully LLP, a copy of the letter and attachment is available here: T1 Client Letter and 2016 Personal Income Tax Questionnaire. These are required for your personal tax return.

If you require us to report your business or professional activities please use our worksheet. You can print it out and fill it in. Additional information must be reported in 2016 if you earn income from your webpages or websites. You must also report the exact or estimated percentage of income generated from the Internet. Please see the details here. If you require us to report your rental income, please complete the rental summary.

We will also need to know if you owned specified foreign property in excess of $100,000 CDN. Form T1135, is the Foreign Income Verification Statement that must be filed. The CRA has implemented changes to Form T1135 for the 2015 and subsequent tax years. The changes will allow taxpayers, who held specified foreign property with a total cost amount of less than $250,000, throughout the year, to report under a new simplified reporting method rather than providing the detail of each such property. The current detailed reporting method will continue to apply to those taxpayers who, at any time during a year, held specified foreign property with a total cost of $250,000 or more. For more information, click here.

To help you determine if you need to disclose your foreign holdings, please refer to pages 4 to 6 of the form to review the types of specified foreign property that must be included.

Direct Deposit
Canada Revenue Agency will soon stop mailing tax refunds and other benefits. We urge you to set up direct deposit at this time. This can be done online through "My Account" (if you are registered), by phone (call 1-800-959-8281), by completing and mailing the Direct Deposit Enrolment Form, or by providing us with a void cheque (we will submit this information to CRA when we electronically file your return). More information is available on CRAs website.

Ontario Healthy Homes Renovation Tax Credit
This is a 15% refundable credit on up to $10,000 of eligible expenses per year for permanent home modifications that improve mobility and accessibility for seniors. The individual does not have to be disabled. Eligible expenses include ramps, stair lifts, walk-in tubs, handrails and more. Starting with the 2017 taxation year, the Healthy Homes Renovation Tax Credit is no longer available.

Family Caregiver Tax Credit
There is a $2,000 tax credit available to caregivers of infirm relatives including spouses, common-law partners and minor children. Find out more.

Federal Children's Fitness Tax Credit - reduced to a maximum of $500 per child
There is a 15% non-refundable tax credit based an amount of up to $500 (from $1,000 in 2015) for eligible fees related to the cost of registration or membership for your or your spouse's or common-law partner's child in a prescribed program of physical activity. The child must have been under 16 years of age (or under 18 years of age if eligible for the disability tax credit) at the beginning of the year in which an eligible fitness expense was paid. An additional amount of $500 related to children eligible for the Disability Tax Credit is available if a minimum of $100 has been paid for eligible fees in the year. The Children's Fitness Tax Credit is a refundable credit for 2015 and 2016. Check out eligibility and prescribed programs. The children's fitness tax credit, including the supplement for children with disabilities, will be eliminated for 2017 and later tax years.

Federal Children's Arts Amount
There is a 15% non-refundable tax credit based on an amount of up to $250 for eligible programs of artistic, cultural, recreational or developmental activities for children under 16 years of age. This credit is in addition to the federal fitness credit. Check for a list of frequently asked questions and eligible activities.

Ontario Children's Activity Tax Credit
The Children's Activity Tax Credit is a refundable tax credit for parents to help with the cost of enrolling their children in eligible extracurricular activities that encourage them to be healthy and active. For 2016, you can claim up to $560 in eligible expenses. The maximum value of the credit is $56 per child under the age of 16 and $112 for a child with a disability under age 18. Check for a list of frequently asked questions and eligible activities. This credit will be eliminated for 2017 and later years.

New for 2016 - Reporting the sale of your principal residence for individuals (other than trusts)
On October 3, 2016, the Government announced an administrative change to Canada Revenue Agency's reporting requirements for the sale of a principal residence.

When you sell your principal residence or when you are considered to have sold it, usually you do not have to report the sale on your income tax and benefit return and you do not have to pay tax on any gain from the sale. This is the case if you are eligible for the full income tax exemption (principal residence exemption) because the property was your principal residence for every year you owned it.

Starting with the 2016 tax year, you will be required to report basic information (date of acquisition, proceeds of disposition and description of the property) on your income tax and benefit return when you sell your principal residence to claim the full principal residence exemption. More information.

New for 2016 - Eligible educator school supply tax credit
The Government of Canada values the contribution teachers make providing young Canadians with the education and skills they need. There is a new refundable tax credit for 2016 and beyond: the Eligible Educator School Supply Tax Credit. If you are an eligible educator you can now claim a 15% refundable tax credit on up to $1,000 of supply purchases per year. More information.

What is involved in GST/HST Registrations?

The following link to the CRA website provides links to access GST/HST forms and guides. http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/menu-eng.html We can assist you with all of your GST/HST-related questions, including registration, calculating GST/HST payable or refundable, and filing requirements.

When are my personal income tax installments due?

Your personal income tax installments are due on the following dates:

  • March 15
  • June 15
  • September 15
  • December 15

When are my corporate tax returns and final tax payments due?

Generally, the balance of tax payable is due 2 months after the end of the taxation year. However, the tax is due 3 months after the end of the taxation year under certain conditions. Please visit www.ccra-adrc.gc.ca/E/pub/tg/t4012/t4012-03-e.html#P84_4667 for more information.

Where can I get tax information for small businesses?

The following link to the CRA website provides information for businesses including business registration, corporate income tax, payroll and HST. http://www.cra-arc.gc.ca/tx/bsnss/menu-eng.html

We've helped start many small business organizations at the onset and can help save you money in the long run.

Do I need to register for WSIB?

The following link provides information for employers on whether your business needs to register or not as well as the steps required to register including a downloadable registration form. http://www.wsib.on.ca/en/community/WSIB

What are the Automobile Limits?

2017 2016
Limit on cost of vehicle for capital cost allowance purposes $30,000.00* $30,000.00*
Limit on deductible monthly lease expense $800.00* $800.00*
Maximum allowable monthly interest deductions in respect of amounts borrowed to purchase an automobile -based on year of purchase $300.00* $300.00*

Deduction limit for tax-exempt allowances paid by employers to employees

-on first 5,000 km

-for each additional km

$0.54/km

$0.48/km

$0.54/km

$0.48/km

Benefit from employer-paid automobile operating expenses based on personal kilometers driven

-general rate

-rate for employees of automobile dealers

Portion of above in respect of GST/HST which must be remitted by employer who is a GST/HST registrant in Ontario

$0.25/km

$0.22/km

9%/6%**

$0.26/km

$0.23/km

9%/6%**

* plus GST/HST

** The 6% rate in 2012 applies to a registrant that is a large business (as defined in subsection 236.01(1)). The 6% rate for a large business will apply until calendar 2014, at which time it will increase as follows: 6.6% for 2015, 7.2% for 2016, 7.7% for 2017, 8.4% for 2018, and 9% thereafter.

See the Department of Finance News Release.

What are CRA's record-keeping requirements?

The Canada Revenue Agency (CRA) recently released revised guides and circulars regarding record-keeping, retention and destruction of records and electronic record keeping. (RC4409, IC 78-10RY and IC 05-1) Click on http://www.cra-arc.gc.ca/tx/bsnss/tpcs/kprc/menu-eng.html to read these documents.


Archived Tax Tips

2016 Tax Tips and Reminders

2014 Employer Health Tax Changes
As of January 1, 2014, the EHT exemption increased to $450,000 from $400,000. To better target EHT relief, the exemption is eliminated for private-sector employers (including groups of associated employers) with annual Ontario payrolls over $5 million. Registered charities will continue to claim the exemption at all payroll sizes.

2015 Combined Federal and Ontario Tax Brackets for Individuals

Taxable Income

Regular Income %

Ineligible (Private Corporation) Dividends %

Eligible Canadian Dividends %

Capital Gains %

$0 to $40,922

20.05

5.35

0.00

10.03

$ 40,922 to $44,701

24.15

10.19

0.00

12.08

$ 44,701 to $72,064

31.15

18.45

9.63

15.58

$ 72,064 to $81,847

32.98

20.61

10.99

16.49

$ 81,847 to $84,902

35.39

23.45

14.31

17.70

$ 84,902 to $89,401

39.41

28.19

19.86

19.70

$ 89,401 to $138,586

43.41

32.91

25.38

21.70

$138,586 to $150,000

46.41

36.45

29.52

23.20

$150,000 to $220,000

47.97

38.29

31.67

23.98

$220,000 and over

49.53

40.13

33.82

24.76

(This table does not include the Ontario Health Premium)

2015 Federal and Ontario Combined Corporate Income Tax Rates

Canadian Controlled Private Corporations

Other Corporations

Small Business Income

(up to $500,000)

Investment Income

General Manufacturing and Processing

General Active Business Income

15.5%

46.17%*

25%

26.5%

*26.667% of investment income is eligible for refund at a rate of $1 for every $3 of dividends paid.

Canadian taxable dividend income (not from a connected corporation) is taxed federally only under Part IV at a rate of 33.33%. This tax is eligible for refund at a rate of $1 for every $3 of dividends paid.

Universal Child Care Benefit (UCCB)

The UCCB was introduced in 2006 as a taxable benefit designed to help Canadian families. On January 1, 2015, the UCCB was expanded to include a new benefit for children aged 6 through 17, and the payments that parents receive for children under the age of 6 were increased. The UCCB was increased from $100 to $160 per month for each child under the age of 6. The UCCB was expanded to children aged 6 through 17. Parents will receive a benefit of up to $60 per month for each child in their care aged 6 through 17.

For more information on how to apply for the UCCB, visit the CRA website UCCB information.

Note that on December 7, 2015, Finance Minister Bill Morneau commented on two Liberal platform commitments. He announced that the proposed Canada Child Benefit, which will replace the Universal Child Care Benefit, Child Tax Benefit and National Child Benefit Supplement, will begin July 1, 2016. The Finance Minister also announced the intention to eliminate the Family Tax Cut for 2016 and subsequent tax years.

Investing in the UCCB

The UCCB is taxable in the hands of the lower-income spouse. However, recent changes to the law mean that you can invest the UCCB money in your child's name so that all the investment earnings are taxed in your child's hands. In 2015, everyone can earn up to $11,327 tax-free, so your child is not likely to owe tax on the earnings.

For information on how to apply for the UCCB, visit the CRA website UCCB information.

2015 Tax Tips and Reminders

2015 TFSA limit is $5,500
The Tax Free Savings Account (TFSA) limit is $5,500 for 2015. The limit was $5,500 for 2014 and 2013. For 2009 to 2012, the limit was $5,000. Contributions can be made by Canadian residents aged 18 or over. Any unused contribution room can be carried forward. There is no lifetime limit to the amount of the contributions. If a person has contribution room, but no funds to contribute, he or she may contribute funds given to them by their spouse or common-law partner, with no attribution of income to the spouse or common-law partner. Note that a withdrawal in any year does not increase the TFSA room until the following calendar year. If you are thinking of making a withdrawal close to year end, make sure it is done by December 31 so you can have the withdrawal amount added back to the TFSA room sooner.

2015 RRSP and Pension Limits
The RRSP contribution limit increases to $24,930 in 2015 from $24,270 in 2014. Please see the news release.

2014 Employer Health Tax Changes
As of January 1, 2014, the EHT exemption increased to $450,000 from $400,000. To better target EHT relief, the exemption is eliminated for private-sector employers (including groups of associated employers) with annual Ontario payrolls over $5 million. Registered charities will continue to claim the exemption at all payroll sizes.

2015 Employment Insurance Rates
Employment Insurance (EI) rates for 2015 have remained unchanged at 1.88% of earnings for employees. The maximum annual premium increased to $930.60 (from $913.68 in 2014). The rate for employers is 1.4 times the employee rate or 2.632%. The maximum insurable earnings for 2015 increased to $49,500 from $48,600 in 2014.

2015 Canada Pension Plan Rates
The maximum pensionable earnings under the Canada Pension Plan (CPP) for 2015 will be $53,600 - up from $52,500 in 2014. Contributors who earn more than $53,600 in 2015 are not required or permitted to make additional contributions to the CPP.

The basic exemption amount for 2015 remains $3,500. Individuals who earn less than that amount do not need to contribute to the CPP.

The employee and employer contribution rates for 2015 will remain unchanged at 4.95%, and the self-employed contribution rate will remain unchanged at 9.9%.

The maximum employer and employee contribution to the plan for 2015 will be $2,479.95, and the maximum self-employed contribution will be $4,959.90. The maximums in 2014 were $2,425.50 and $4,851.00.

Canada Pension Plan Changes for Persons Between Ages 60 and 70
Beginning in 2012, employers must withhold and remit CPP on wages paid to employees between ages 60 and 70, even if the employee is collecting CPP benefits. If the employee is between 65 and 70, he or she may file an election to opt out of paying CPP. These rules also apply to self-employed individuals. In order to avoid paying CPP, the election must be filed with CRA to take effect on the first of the following month. There are several other changes related to CPP benefits. Please contact us for information.

Prescribed Interest Rates
The prescribed rates for the first quarter of 2015 and for all four quarters of 2014 were as follows:

  • The interest rate paid on overpayments was 3%.
  • The interest rate used to calculate taxable benefits for employees and shareholders from interest-free and low-interest loans was 1%.
  • The interest rate charged on overdue taxes, Canada Pension Plan contributions, and Employment Insurance premiums was 5%.

For more information please see CRA's website on prescribed rates.

2014 Tax Tips and Reminders

2014 TFSA limit is $5,500
The Tax Free Savings Account (TFSA) limit is $5,500 for 2014 and was increased in 2013 to $5,500 from $5,000 in previous years beginning in 2009. Contributions can be made by Canadian residents aged 18 or over. Any unused contribution room can be carried forward. There is no lifetime limit to the amount of the contributions. If a person has contribution room, but no funds to contribute, he or she may contribute funds given to them by their spouse or common-law partner, with no attribution of income to the spouse or common-law partner. Note that a withdrawal in any year does not increase the TFSA room until the following calendar year. If you are thinking of making a withdrawal close to year end, make sure it is done by December 31 so you can have the withdrawal amount added back to the TFSA room sooner.

2014 RRSP and Pension Limits
The RRSP contribution limit increases to $24,270 in 2014 and to $24,930 in 2015. The RRSP contribution limit was $23,820 in 2013. Please see the news release.

2014 Employer Health Tax Changes
As announced in the 2013 Ontario Budget, to provide greater Employer Health Tax (EHT) relief to small businesses, the government proposes to increase the amount of annual payroll that is exempt from the tax from $400,000 to $450,000 and index this amount for inflation. To better target EHT relief, the exemption would be eliminated for private-sector employers (including groups of associated employers) with annual Ontario payrolls over $5 million. Registered charities would continue to claim the exemption at all payroll sizes. The government proposes to introduce legislation to implement these proposed changes that would, subject to the approval of the Legislature, be effective January 1, 2014.

2014 Employment Insurance Rates
Employment Insurance (EI) rates for 2014 have remained unchanged at 1.88% of earnings for employees. The maximum annual premium increased to $913.68 (from $839.97 in 2013). The rate for employers is 1.4 times the employee rate or 2.632%. The maximum insurable earnings for 2014 increased to $48,600 from $47,400 in 2013.

2014 Canada Pension Plan Rates
The maximum pensionable earnings under the Canada Pension Plan (CPP) for 2014 will be $52,500 - up from $51,100 in 2013. Contributors who earn more than $52,500 in 2014 are not required or permitted to make additional contributions to the CPP.

The basic exemption amount for 2014 remains $3,500. Individuals who earn less than that amount do not need to contribute to the CPP.

The employee and employer contribution rates for 2014 will remain unchanged at 4.95%, and the self-employed contribution rate will remain unchanged at 9.9%.

The maximum employer and employee contribution to the plan for 2014 will be $2,425.50, and the maximum self-employed contribution will be $4,851.00. The maximums in 2013 were $2,356.20 and $4,712.40.

Canada Pension Plan Changes for Persons Between Ages 60 and 70
Beginning in 2012, employers must withhold and remit CPP on wages paid to employees between ages 60 and 70, even if the employee is collecting CPP benefits. If the employee is between 65 and 70, he or she may file an election to opt out of paying CPP. These rules also apply to self-employed individuals. In order to avoid paying CPP, the election must be filed with CRA to take effect on the first of the following month. There are several other changes related to CPP benefits. Please contact us for information.

Prescribed Interest Rates 2014
The prescribed rates for 2014 were as follows:

  • The interest rate paid on overpayments was 3%.
  • The interest rate used to calculate taxable benefits for employees and shareholders from interest-free and low-interest loans was 1%.
  • The interest rate charged on overdue taxes, Canada Pension Plan contributions, and Employment Insurance premiums was 5%.

For more information please see CRA's website on prescribed rates.

2013 Tax Tips and Reminders

2013 TFSA limit has increased to $5,500
The Tax Free Savings Account limit has increased in 2013 to $5,500 per year (from $5,000). Contributions can be made by Canadian residents aged 18 or over. Up to $5,000 per year ($5,500 for 2013) can be contributed, with unused contribution room being carried forward. There is no lifetime limit to the amount of the contributions. If a person has contribution room, but no funds to contribute, he or she may contribute funds given to them by their spouse or common-law partner, with no attribution of income to the spouse or common-law partner. Note that a withdrawal in any year does not increase the TFSA room until the following calendar year. If you are thinking of making a withdrawal close to year end, make sure it is done by December 31 so you can have the withdrawal amount added back to the TFSA room sooner.

2013 Employment Insurance Rates
Employment Insurance (EI) rates for 2013 have increased to 1.88% of earnings for employees (from 1.83% in 2012) as has the maximum annual premium of $839.97 (from $786.76 in 2012). The rate for employers is 1.4 times the employee rate or 2.632%. The maximum insurable earnings for 2013 increased to $47,400 from $45,900 in 2012.

2013 Canada Pension Plan Rates
The maximum pensionable earnings under the Canada Pension Plan (CPP) for 2013 will be $51,100 - up from $50,100 in 2012. Contributors who earn more than $51,100 in 2013 are not required or permitted to make additional contributions to the CPP.

The basic exemption amount for 2013 remains $3,500. Individuals who earn less than that amount do not need to contribute to the CPP.

The employee and employer contribution rates for 2013 will remain unchanged at 4.95%, and the self-employed contribution rate will remain unchanged at 9.9%.

The maximum employer and employee contribution to the plan for 2013 will be $2,356.20, and the maximum self-employed contribution will be $4,712.40. The maximums in 2012 were $2,306.70 and $4,613.40.

Reminder of 2012 Canada Pension Plan Changes
Beginning in 2012, employers must withhold and remit CPP on wages paid to employees between ages 60 and 70, even if the employee is collecting CPP benefits. If the employee is between 65 and 70, he or she may file an election to opt out of paying CPP. These rules also apply to self-employed individuals. In order to avoid paying CPP, the election must be filed with CRA to take effect on the first of the following month. There are several other changes related to CPP benefits. Please contact us for information.

Prescribed Interest Rates For First Quarter 2013
The CRA announced December 6th, the prescribed interest rates for the first calendar quarter of 2013:

  • The interest rate charged on overdue taxes, Canada Pension Plan contributions, and Employment Insurance premiums will be 5%.
  • The interest rate paid on overpayments will be 3%.
  • The interest rate used to calculate taxable benefits for employees and shareholders from interest-free and low-interest loans will be 1%.

For more information please see CRA’s website on prescribed rates. The prescribed rate has remained the same since April 1, 2009.

2013 RRSP and Pension Limits
The RRSP contribution limit increases to $23,820 in 2013 and to $24,270 in 2014 . The RRSP contribution limit was $22,970 in 2012. Please see the news release.

Please note: this material is general in nature and should not be relied upon to replace the requirement for specific professional advice.

2012 Tax Tips and Reminders

2012 Employment Insurance Rates.
Employment Insurance (EI) rates for 2012 have increased to 1.83% of earnings for employees (from 1.78% in 2011) as has the maximum annual premium of $840 (from $787 in 2011). The rate for employers is 1.4 times the employee rate or 2.56%. The maximum insurable earnings for 2012 increased to $45,900 from $44,200 in 2011.

2012 Canada Pension Plan Rates
The maximum pensionable earnings under the Canada Pension Plan (CPP) for 2012 will be $50,100 - up from $48,300 in 2011. Contributors who earn more than $50,100 in 2012 are not required or permitted to make additional contributions to the CPP.

The basic exemption amount for 2012 remains $3,500. Individuals who earn less than that amount do not need to contribute to the CPP.

The employee and employer contribution rates for 2012 will remain unchanged at 4.95%, and the self-employed contribution rate will remain unchanged at 9.9%.

The maximum employer and employee contribution to the plan for 2012 will be $2,307, and the maximum self-employed contribution will be $4,613. The maximums in 2011 were $2,218 and $4,435.

2012 Canada Pension Plan Changes
Beginning in 2012, employers must withhold and remit CPP on wages paid to employees between ages 60 and 70, even if the employee is collecting CPP benefits. If the employee is between 65 and 70, he or she may file an election to opt out of paying CPP. These rules also apply to self-employed individuals. In order to avoid paying CPP, the election must be filed with CRA to take effect on the first of the following month. There are several other changes related to CPP benefits. Please contact us for information.

Prescribed Interest Rates For First Quarter 2012
The CRA announced December 8th, the prescribed interest rates for the first calendar quarter of 2012:

  • The interest rate charged on overdue taxes, Canada Pension Plan contributions, and Employment Insurance premiums will be 5%.
  • The interest rate paid on overpayments will be 3%.
  • The interest rate used to calculate taxable benefits for employees and shareholders from interest-free and low-interest loans will be 1%.

For more information please see the news release.

2012 RRSP and Pension Limits

The RRSP contribution limit increases to $22,970 in 2012. The RRSP contribution limit was $22,450 in 2011. Please see the news release.

Please note: this material is general in nature and should not be relied upon to replace the requirement for specific professional advice.

2012 Combined Federal and Ontario Tax Brackets for Individuals and Corporations

2012 Combined Federal and Ontario Tax Brackets for Individuals

Taxable Income

Regular Income %

Ineligible (Private Corporation) Dividends %

Eligible Canadian Dividends %

Capital Gains %

$0 to $39,020

20.05

2.77

0.00

10.03

$39,020 to $42,707

24.15

7.90

3.80

12.08

$42,707 to $68,713

31.15

16.65

13.43

15.58

$68,713 to $78,043

32.98

17.81

14.19

16.49

$78,043 to $80,955

35.39

20.82

17.51

17.70

$80,955 to $85,414

39.41

23.82

19.88

19.71

$85,414 to $132,406

43.41

28.82

25.40

21.71

$132,406 to $500,000

46.41

32.57

29.54

23.21

$500,000 and over

47.97

34.52

31.69

23.99

(This table does not include the Ontario Health Premium)

Ontario Personal Tax Rates

In 2012, the 20% Ontario surtax will apply where the basic Ontario tax exceeds $4,213 and the additional 36% surtax will apply to basic Ontario tax over $5,392. This tax affects individuals with taxable income over $500,000. As shown in the tax chart above, this has pushed the top marginal tax rate in Ontario from 46.41% to 47.97% in 2012 and to 49.53% in 2013.Tax planning to limit the amount of income taxed at this top rate is now more important than ever.

Strategies include:

  1. Income splitting with family members. Current legislation requires interest at 1% be charged on spousal loans making shifting income to a low income spouse very inexpensive.
  2. Leave earnings in a corporation rather than paying out bonuses or dividends.
  3. Transferring investments into a corporation.
  4. If your income is temporarily over $500,000, consider purchasing flow-through shares in that year to create a tax deduction.

2012 Federal and Ontario Combined Corporate Income Tax Rates

Canadian Controlled
Private Corporations

Other Corporations

Small Business Income
(up to $500,000)

Investment Income

General Manufacturing and Processing

General Active Business Income

15.5%

46.17%*

25%

26.5%**

*26.667% of investment income is eligible for refund at a rate of $1 for every $3 of dividends paid.

2011 Tax Tips and Reminders

2011 Employment Insurance Rates
Employment Insurance (EI) rates for 2011 have increased to 1.78% of earnings for employees (from 1.73% in 2010) as has the maximum annual premium of $786.76 (from $747.36 in 2010). The rate for employers is 1.4 times the employee rate or 2.492%. The maximum insurable earnings for 2011 increased to $44,200 from $43,200 in 2010.

2011 Canada Pension Plan Rates
The maximum pensionable earnings under the Canada Pension Plan (CPP) for 2011 will be $48,300 - up from $47,200 in 2010. Contributors who earn more than $48,300 in 2011 are not required or permitted to make additional contributions to the CPP.

The basic exemption amount for 2011 remains $3,500. Individuals who earn less than that amount do not need to contribute to the CPP.

The employee and employer contribution rates for 2011 will remain unchanged at 4.95%, and the self-employed contribution rate will remain unchanged at 9.9%.

The maximum employer and employee contribution to the plan for 2011 will be $2,217.60, and the maximum self-employed contribution will be $4,435.20. The maximums in 2010 were $2,163.15 and $4,326.30.

Prescribed Interest Rates For First Quarter 2011
The CRA announced December 8th, the prescribed interest rates for the first calendar quarter of 2011:

  • The interest rate charged on overdue taxes, Canada Pension Plan contributions, and Employment Insurance premiums will be 5%.
  • The interest rate paid on overpayments will be 3%.
  • The interest rate used to calculate taxable benefits for employees and shareholders from interest-free and low-interest loans will be 1%.

For more information please see the news release.


2011 RRSP and Pension Limits

The RRSP contribution limit increases to $22,450 in 2011. The RRSP contribution limit was $22,000 in 2010. Please see the news release.

Please note: this material is general in nature and should not be relied upon to replace the requirement for specific professional advice.

2011 Combined Federal and Ontario Tax Brackets for Individuals and Corporations

2011 Combined Federal and Ontario Tax Brackets for Individuals

Taxable Income

Regular Income %

Ineligible (Private Corporation) Dividends %

Eligible Canadian Dividends %

Capital Gains %

$0 to $37,774

0 - 20.05

0 - 2.77

0.00

0 - 10.03

$37,774 to $41,544

24.15

7.90

3.88

12.08

$41,544 to $66,514

31.15

16.65

11.72

15.58

$66,514 to $75,550

32.98

17.81

12.50

16.49

$75,550 to $78,361

35.39

20.82

15.90

17.70

$78,361 to $83,088

39.41

23.82

18.32

19.71

$83,088 to $128,800

43.41

28.82

23.96

21.71

$128,800 and over

46.41

32.57

28.19

23.21

(This table does not include the Ontario Health Premium)

2011 Federal and Ontario Combined Corporate Income Tax Rates

Canadian Controlled
Private Corporations

Other Corporations

Active Business Income
(up to $500,000)

Investment Income

Manufacturing and Processing

General

15.50%

46.42%*

26.5%

28.25%**

*26.667% of investment income is eligible for refund at a rate of $1 for every $3 of dividends paid.

** The general corporate tax rate is scheduled to be reduced to 25% by 2014.

2010 Tax Tips and Reminders

2010 Employment Insurance Rates
Employment Insurance (EI) rates for 2010 remain unchanged at 1.73% of earnings for employees as does the maximum annual premium of $747.36. The rate for employers is 1.4 times the employee rate or 2.422%. The maximum insurable earnings for 2010 increased to $43,200 from $42,300 in 2009.

2010 Canada Pension Plan Rates
The maximum pensionable earnings under the Canada Pension Plan (CPP) for 2010 will be $47,200 - up from $46,300 in 2009. Contributors who earn more than $47,200 in 2010 are not required or permitted to make additional contributions to the CPP.

The basic exemption amount for 2010 remains $3,500. Individuals who earn less than that amount do not need to contribute to the CPP.

The employee and employer contribution rates for 2010 will remain unchanged at 4.95%, and the self-employed contribution rate will remain unchanged at 9.9%.

The maximum employer and employee contribution to the plan for 2010 will be $2,163.15, and the maximum self-employed contribution will be $4,326.30. The maximums in 2009 were $2,118.60 and $4,237.20.

Prescribed Interest Rates For First Quarter 2010
The CRA announced December 3rd, the prescribed interest rates for the first calendar quarter of 2010:

  • The interest rate charged on overdue taxes, Canada Pension Plan contributions, and Employment Insurance premiums will be 5%.
  • The interest rate paid on overpayments will be 3%.
  • The interest rate used to calculate taxable benefits for employees and shareholders from interest-free and low-interest loans will be 1%.

For more information please see the news release.


2010 RRSP and Pension Limits

The RRSP contribution limit increases in 2010 to $22,000. Please see the news release.

2010 Combined Federal and Ontario Tax Brackets for Individuals and Corporations

2010 Combined Federal and Ontario Tax Brackets for Individuals

Taxable Income

Regular Income %

Ineligible (Private Corporation) Dividends %

Eligible Canadian Dividends %

Capital Gains %

$0 to $37,106

0 - 20.05

0 - 2.77

0.00

0 - 10.03

$37,107 to $40,970

24.15

7.89

3.96

12.08

$40,971 to $65,344

31.15 16.64 9.76 15.58

$65,345 to $74,214

32.98

17.81

10.55

16.49

$74,215 to $76,986

35.39

20.82

14.03

17.70

$76,987 to $81,941

39.41

23.82

16.49

19.70

$81,942 to $127,021

43.41 28.82 22.25 21.70

$127,022 and over

46.41

32.57

26.57

23.20

(This table does not include the Ontario Health Premium)

2010 Federal and Ontario Combined Corporate Income Tax Rates

Canadian Controlled
Private Corporations
Other Corporations

Active Business Income
(up to $500,000)

Investment Income

Manufacturing and Processing

General

16.00%*

47.67%**

29.00%

31.00%***

*Ontario decreased the small business corporate tax rate from 5.5% to 4.5%, effective July 1, 2010.

**26.667% of investment income is eligible for refund at a rate of $1 for every $3 of dividends paid.

***The general federal corporate tax rate was decreased from 19% to 18%, effective January 1, 2010. The general Ontario corporate tax rate was decreased from 14% to 12% effective July 1, 2010.

Note that the general corporate tax rate will be reduced from 31% in 2010 to 25% by July 1, 2013.

2009 Tax Tips and Reminders

  • Automobiles - The automotive rates for 2009 are $0.52 per kilometre for the first 5,000 km and $0.46 per kilometre for each additional kilometre in excess of 5,000 kilometres. The taxable operating benefit for company-owned vehicles is $0.24 per kilometre per personal use kilometre. See FAQ for details on allowed automobile amounts.
  • CRA prescribed interest rates for the first quarter of 2009 are 2% for calculating taxable benefits, 4% on refunds of income tax overpayments and 6% on payments of overdue accounts.
  • Maximum Employment Insurance premiums for 2009 are: employee $731.79; employer $1,024.51 for a total of $1,756.30 ($1,706.47 in 2008).
  • Maximum Canada Pension Plan pensionable earnings for 2009 are $46,300 with an exemption of $3,500, leaving a maximum contributory earnings of $42,800 at 4.95% equalling $2,118.60. The employer (or self-employed person) matches this amount for a total of $4,237.20 ($4,098.60 in 2008).
  • Effective March 31, 2009, the general minimum wage will increase from $8.75 to $9.50 per hour. The minimum wage for students under 18 who do not work more than 28 hours a week will rise from $8.20 per hour to $8.90 per hour. For more information on minimum wage, including the upcoming increases to the rates, visit the Ontario Ministry of Labour website.

October 30, 2007 Economic Statement's Tax Reductions

Here are the highlights of the October 30, 2007 Economic Statement's Tax Reductions:

  • The general federal corporate tax rate will be reduced from 22.12% in 2007 to 15% by 2012
  • The small business tax rate will be reduced to 11% effective January 1, 2008 instead of 2009 as previously proposed
  • The GST rate will be reduced to 5% effective January 1, 2008
  • The lowest personal income tax rate will be reduced retroactively to January 1, 2007
  • The basic personal amount tax credit for 2007 will be increased to $9,600 and to $10,100 in 2009
  • The employer and employee Employment Insurance (EI) contributions will be reduced in 2008
  • The national debt will be reduced by $10 billion this fiscal year

To read full details on the Department of Finance Canada's website, please click here.

2007 Tax Tips and Reminders

  • Automobiles - The automotive rates for 2007 are $0.50 per kilometre for the first 5,000 km and $0.44 per kilometre for each additional kilometre in excess of 5,000 kilometres. The taxable operating benefit for company-owned vehicles is $0.22 per kilometre per personal use kilometre. See FAQ for details on allowed automobile amounts.
  • CRA prescribed interest rates for the fourth quarter of 2007 are 5% for calculating taxable benefits, 7% on refunds of income tax overpayments and 9% on payments of overdue accounts.
  • Maximum Employment Insurance premiums for 2007 are: employee $720.00; employer $1,008.00 for a total of $1,728.00 ($1,750.32 in 2006).
  • Maximum Canada Pension Plan pensionable earnings for 2007 are $43,700 with an exemption of $3,500, leaving a maximum contributory earnings of $40,200 at 4.95% equalling $1,989.90. The employer (or self-employed person) matches this amount for a total of $3,979.80 ($3,821.40 in 2006).
  • Effective February 1, 2007, the general minimum wage increased from $7.75 to $8.00 per hour. The minimum wage for students under 18 who do not work more than 28 hours a week rose from $7.25 per hour to $7.50 per hour. The minimum wage for liquor servers rose from $6.75 per hour to $6.95 per hour. For more information on minimum wage visit the Ontario Ministry of Labour website.

CPP Changes for 2007

The Canada Revenue Agency recently announced that the maximum pensionable earnings under the Canada Pension Plan (CPP) for 2007 will be $43,700, up from $42,100 in 2006. The new ceiling was calculated according to a CPP legislated formula that takes into account the growth in average weekly wages and salaries in Canada.

Contributors who earn more than $43,700 in 2007 are not required or permitted to make additional contributions to the CPP.

The basic exemption amount for 2007 remains $3,500. Individuals who earn less than that amount do not need to contribute to the CPP.

The employee and employer contribution rates for 2007 will remain unchanged at 4.95%, and the self-employed contribution rate will remain unchanged at 9.9%. The maximum employee and employer contributions to the plan for 2007 will be $1,989.90, and the maximum self-employed contribution will be $3,979.80. The maximums in 2006 were $1,910.70 and $3,821.40.

2006 Federal Budget Highlights

On May 2, 2006, changes that may affect you or your business were announced in the federal budget. Click here for the highlights.

Provincial tax changes effective July 1, 2004

Ontario Health Premium - On May 18, 2004, the Minister of Finance for Ontario announced changes to the Ontario tax for 2004. The Ontario Health Premium will be payable on annual taxable income in excess of $20,000. The Ontario Health Premium is not related to the Employer Health Tax for Ontario. Effective July 1, 2004, the Ontario Health Premium is calculated as follows:

Health Premium Payable (per individual)

Taxable Income 2004 Taxation year 2005 Taxation year
Up to $20,000 Nil Nil
$20,000 to $25,000 3% of income > $20,000 6% of income > $20,000
$25,000 to $36,000 $150 $300
$36,000 to $36,600

$150 + 12.5% of

income > $36,000

$300 + 25% of

income > $36,000

$36,600 to $48,000 $225 $450
$48,000 to $48,600

$225 + 12.5% of

income > $48,000

$450 + 25% of

income > $48,000

$48,600 to $72,000 $300 $600
$72,000 to $72,600

$300 + 12.5% of

income > $72,000

$600 + 25% of

income > $72,000

$72,600 to $200,000 $375 $750
$200,000 to $200,600

$275 + 12.5% of

income > $200,000

$750 + 25% of

income > $200,000

$200,600 and over $450 $900

Click here to access Frequently Asked Questions regarding the Ontario Health Premium on the CRA website

2004 Federal Budget Highlights

Unless otherwise noted the changes are effective March 22, 2004.

  • Fines and Penalties - The Budget proposes that, with exceptions, all fines or penalties imposed by federal, provincial or municipal governments in Canada or by a foreign country are not deductible. This includes any fines or penalties imposed by any person with a statutory authority to levy a fine or penalty. Penalty interest imposed under the Excise Act, the Air Travelers Security Charge Act and the GST/HST portions of the Excise Tax Act will continue to be deductible.
  • Capital Cost Allowance on Computer Equipment - The Budget proposes that the CCA rate for “general purpose electronic data processing and system software” (computer equipment) increase from 30% to 45%. The separate class election provisions for rapidly depreciating electronic equipment will not be available for this new class. As an interim measure, taxpayers may elect to include acquisitions of computer equipment before 2005 in class 10 (30%) and still be eligible for the separate class election.
  • Small Business Deduction - For 2005 and subsequent years, the Small Business Deduction available to Canadian Controlled Private Corporations (CCPCs) has a new proposed business limit of $300,000. Taxpayers with taxation years that are not calendar years will be required to pro-rate the increase to the limit.
  • Carry-forward Periods for Business Losses - For losses and credits that arise in taxation years ending after March 22, 2004, non-capital losses will now be eligible for a ten year carry-forward period. This is an increase from the current seven year carry-forward period.
  • Taxpayer-Request Adjustments - Generally, the Income Tax Act (ITA) prevents the Minister from assessing tax after the “normal reassessment period”, which is three or four years after the day of mailing an original Notice of Assessment. However, the ITA provides the Minister with discretion with respect to any year since 1985 to:
    • accept late, amended or cancelled elections from any taxpayer,
    • waive or cancel interest for any taxpayer,
    • reassess returns to refund taxes beyond the normal reassessment period for individuals and testamentary trusts to correct any error or omission on their return.

The Budget proposes that the discretion will now only apply to requests that are in respect of a taxation year that ended in the previous ten calendar years. This amendment is to be effective in 2005. Therefore, taxpayers have the remainder of 2004 to review their records and make any requests for earlier years.

Please contact us to determine how these measures may affect you or your business.