Canadian Tax Blog

Budget 2010: Leading the Way on Jobs and Growth

The Government of Canada released its Budget 2010 on March 4, 2010. Following is an excerpt from the Budget in Brief highlights.

For the full text of the budget, see the Finance Canada web site at:
http://www.budget.gc.ca/2010/

Budget in Brief -- Highlights

Canada has returned to economic growth following the deepest global economic recession since the 1930s. The global recovery, however, remains fragile.

Budget 2010 aims to contribute to this recovery and sustain Canada's economic advantage now and for the future. The budget plan has three broad aims.

First, it confirms $19 billion in new federal stimulus under Year 2 of Canada's Economic Action Plan to create and maintain jobs, complemented by $6 billion from provinces, territories, municipalities and other partners.

Second, it invests in a limited number of new, targeted initiatives to build jobs and growth for the economy of tomorrow, strengthen Canadian innovation, and make Canada a destination of choice for new business investment.

Third, Budget 2010 charts a course to bring Canada's finances back to balance over the medium term and well before any other Group of Seven (G7) country.

By making timely investments that fit firmly within the Government's long-term economic vision for Canada, and thanks to the resilience and ingenuity of Canadians, our country will emerge from the recession with a stronger economic advantage than before.

The Canadian brand will be based on competitive taxes, renewed infrastructure and skills, a strong head start in clean energy, a tariff advantage, less red tape, and a more prominent voice as a global financial sector leader.

Together, we will create a stronger Canada and a stronger economy, now and for the future.

Construction Contract Payment Reporting: Tax Tip

Did you know...

Payments made to subcontractors for construction services must be reported to the Canada Revenue Agency (CRA) using a reporting system called the Contract Payment Reporting System.

Who needs to report?

Individuals, partnerships, trusts, or corporations who earn more than 50% of their business income from construction activities.

What needs to be reported?

Payments totaling $500 or more (including GST/HST) per reporting period made to subcontractors for construction services or for mixed goods and services if there is a service component of $500 or more. Goods-only payments do not have to be reported.

When do I report?

Businesses can report payments on either a calendar- or fiscal-year basis. They must file the return within six months after the end of the reporting period to which it pertains.

How do I report?

Contractors can report payments made to subcontractors by completing the T5018 Information Return, which includes the T5018, Statement of Contract Payments, and the T5018SUM, Summary of Contracts Payments. These are available online in a format that allows a contractor to enter the required data, and which can then be printed for submission to the CRA. Contractors can also submit their own form, provided it includes all of the information required along with a list of the total payments made to each subcontractor.

Where do I send my report?

Send the completed information to the following address:

Ottawa Technology Centre
875 Heron Road
Ottawa ON K1A 1A2

For more information on the Contract Payment Reporting System, go to:
www.cra-arc.gc.ca/tx/bsnss/cntrct/menu-eng.html

CRA Tax Tip: Homeowners - claim your credits!

New on the Canada Revenue Agency web site is the following tax tip reminding you to take advantage of all available credits.

From January until the end of March 2010, the Canada Revenue Agency (CRA) is issuing weekly tax tips with information geared towards specific groups that are most affected by new and existing credits, deductions, and benefits in the 2009 tax-filing season. This tax tip focuses on homeowners.

Own a home? If so, you may be able to benefit from certain credits, including:

First-Time Home Buyers' Tax Credit: If you are a first-time homebuyer, a person with a disability, or an individual buying a home on behalf of a related person with a disability, you may be able to claim a non-refundable tax credit of up to $750 for the acquisition of a qualifying home acquired after January 27, 2009 (closing after this date).

Home Renovation Tax Credit: If you are a homeowner, you may be able to claim a non-refundable tax credit of up to $1,350, based on eligible expenses incurred for work performed or goods acquired after January 27, 2009, and before February 1, 2010, in respect of a renovation or alteration to an eligible dwelling. The credit applies to expenses of more than $1,000, but not more than $10,000.

It is important to note that non-refundable tax credits can only be used to reduce your federal income tax payable. If the total of your non-refundable tax credits is more than your federal income tax payable, you will not receive a refund for the difference.

In addition to these, other credits and deductions may be available to you. For more information, go to www.cra.gc.ca/myhome.

Le crédit d'impôt pour la rénovation domiciliaire (CIRD)

Le crédit d'impôt pour la rénovation domiciliaire (CIRD) s'appliquera aux dépenses admissibles engagées pour des travaux effectués ou des biens acquis après le 27 janvier 2009 et avant le 1e r février 2010, aux termes d'accords conclus après le 27 janvier 2009. Ce crédit temporaire incitera les Canadiens à entreprendre sans délai des travaux de rénovation ou à accélérer les travaux qu'ils avaient prévus.

Le crédit d'impôt peut être demandé pour des travaux de rénovation ou de modification durables, effectués dans un logement ou sur le terrain où est situé celui-ci.

Fonctionnement du CIRD

Le crédit de 15 % peut être demandé à l'égard de la partie des dépenses admissibles qui dépasse 1 000 $ sans excéder 10 000 $. Le montant maximum du crédit est donc de 1 350 $.

Le CIRD peut être demandé à l'égard de dépenses engagées relativement à une ou plusieurs habitations admissibles d'un particulier. Les propriétés admissibles comprennent les maisons, les chalets et les condominiums utilisés à des fins personnelles.

Les coûts de rénovation liés à des projets comme l'aménagement d'un sous-sol ou le réaménagement d'une cuisine donneront droit au crédit, tout comme les dépenses qui s'y rattachent, dont l'obtention d'un permis de construction, les services professionnels, la location de matériel et les frais accessoires.

Les travaux courants de réparation et d'entretien ne donneront pas droit au crédit, pas plus que l'achat de mobilier, d'appareils ménagers, d'appareils audiovisuels ou de matériel de construction.

Nota – Les dépenses de rénovation admissibles demandées au titre du crédit d'impôt pour frais médicaux pourront également être demandées au titre du CIRD.

http://www.fin.gc.ca/act/hrtc-cird/hrtc-cird-fra.asp

compte d’épargne libre d’impôt (CELI)

Le nouveau compte d’épargne libre d’impôt (CELI) est un nouvel instrument d’épargne enregistré, souple et d’usage général, qui permet aux Canadiennes et aux Canadiens de gagner un revenu de placement libre d’impôt afin de combler plus facilement leurs besoins d’épargne tout au long de leur vie. Le CELI s’ajoute aux autres régimes d’épargne comme les régimes enregistrés d’épargne‑retraite (REER) et les régimes enregistrés d’épargne‑études (REEE).

Modalités du compte d’épargne libre d’impôt

• Les résidents canadiens âgés de 18 ans et plus peuvent cotiser jusqu’à 5 000 $ par année dans un CELI.
• Le revenu de placement généré par un CELI n’est pas imposé.
• Les sommes retirées d’un CELI ne sont pas imposées.
• Les droits de cotisation inutilisés des années antérieures sont reportés aux années futures et s’accumulent.
• Le montant complet des retraits peut être remis dans le CELI au cours des années futures.
• Vous pouvez choisir parmi une gamme d’options de placement, telles que des fonds mutuels, des certificats de placement garanti ou des obligations.
• Les sommes cotisées ne sont pas déductibles du revenu.
• Ni le revenu gagné dans un CELI ni les montants qui en sont retirés ne touchent l’admissibilité aux prestations fédérales et aux crédits fédéraux fondés sur le revenu, tels que les prestations de la Sécurité de la vieillesse, le Supplément de revenu garanti et la Prestation fiscale canadienne pour enfants.
• Vous pouvez fournir des fonds à votre époux ou conjoint de fait pour que celui-ci les investisse dans son CELI.
• Au décès, l’actif détenu dans un CELI peut généralement être transféré à l’époux ou au conjoint de fait.

Voyez: http://www.celi.gc.ca/

CRA Tax Tip: Tax savings at your fingertips - your 2009 tax information

The following tax tip is available on the Canada Revenue Agency web site.

Did you know...

... that the Canada Revenue Agency (CRA) has Web pages created specifically to tell you what you need to know about your 2009 income tax and benefit return?

To get information about the credits, deductions, and benefits to which you may be entitled or other information about your specific tax situation and CRA services available to you, go to www.canada.gc.ca/taxinfo.

The CRA will be issuing a series of tax tips to help you determine which credits, deductions, and benefits you may be able to claim. Starting on January 12, 2010, the CRA will publish weekly tips with tax information geared towards homeowners, persons with disabilities, tax preparers, child and family benefit recipients, seniors, students, tradespersons, and the self-employed. If you belong to one of these categories, stay tuned for our upcoming tips!

Donations for victims of earthquake in Haiti

Canada Revenue Agency News Release regarding Donations for the victims of the earthquake in Haiti:

In the wake of an earthquake that devasted the country of Haiti earlier this week, the Honourable Jean-Pierre Blackburn, Minister of National Revenue and Minister of State (Agriculture and Agri-Food), has a message for Canadians who plan to donate: be an informed donor. The Canada Revenue Agency (CRA) is encouraging potential donors to go to www.cra.gc.ca/donors and consult the CRA's charities listing to confirm a charity's registered status.

"Canadians have opened their hearts and their wallets in the wake of the terrible tragedy in Haiti," said Minister Blackburn. "When Canadians decide to donate, they do so with the best of intentions. Sadly, there are some who would exploit the generosity of Canadians. I would like to remind Canadians that there are resources on the CRA Web site that may be of assistance, including a listing of all registered charities. Recognizing the contributions that individual Canadians have started making and will continue to make in the days ahead, I encourage all Canadians to be informed donors and donate wisely."

The CRA is reminding Canadians who plan to give to a registered charity to go to www.cra.gc.ca/donors or call 1-800-267-2384 for tips on how to be an informed donor.

For more information, go to www.cra.gc.ca.

Scientific Research and Experimental Development: Changes

The following news release regarding Scientific Research and Experimental Development (SR&ED) is available on the Canada Revenue Agency web site.

"Changes will be made to improve the program," declares Minister Blackburn

Hamilton, Ontario, January 13, 2010... Today, while addressing the 13th Annual Tax Practitioner Information Session, the Honourable Jean-Pierre Blackburn, Minister of National Revenue and Minister of State (Agriculture and Agri-Food), announced improvements to the Scientific Research and Experimental Development (SR&ED) Tax Incentive Program.

"Our Government understands the importance of research and innovation to our country's present and future economic prosperity. By offering generous investment tax credits, we are encouraging Canadian corporations to invest in innovation and to develop new products, services, and technologies," said Minister Blackburn.

"I am pleased to announce that the Canada Revenue Agency (CRA) will soon be implementing a number of improvements to the program. This July, the CRA will begin to report quarterly, through its Web site, on the time it takes to review an SR&ED claim from start to finish. It will improve on accuracy and on the mutual goal of achieving the timely resolution of a claim," indicated Minister Blackburn.

"CRA officials will also spend more time better explaining the SR&ED program requirements, process, and decisions to the claimants and their representatives. The emphasis on working with claimants is reflected in the new manual, which will become effective on April 1, 2010.

In addition, I am pleased to announce that when, in the course of their review, CRA officials discover that a company has not claimed work that appears to be eligible for the credit, they will now inform the claimant of their finding so that companies can resubmit their claim if within the reporting deadline. This is also reflected in the SR&ED claim review manual and will be effective as of April 1, 2010.

2010 Tax Deadline

As we turn the pages of our calendars to the new year, and the new decade, another tax filing year is almost upon us.

Remember to check out our list of Important Dates and Deadlines for tax filing, including the Canadian 2010 Tax Filing Deadline and the 2010 RRSP Contribution Deadline (for the 2009 tax year).

Global tax information exchange peer review

Canada ready for review by Global Forum tax information exchange peers

The followiing news release is available from the Canada Revenue Agency:

Paris, France, January 7, 2010 ... Today, after a meeting with the director of the Centre for Tax Policy and Administration of the Organisation for Economic Co-operation and Development (OECD), Mr. Jeffrey Owens, the Honourable Jean-Pierre Blackburn, Minister of National Revenue and Minister of State (Agriculture and Agri-Food), announced that Canada has volunteered to be among the first countries to participate in a tax information exchange peer review process as part of the Global Forum on Transparency and Exchange of Information.

"Canada recognizes that the advancement of transparency and exchange of information is critical to tax fairness and the integrity of the tax system, not only for Canada, but for countries around the world," said Minister Blackburn. "Today, I confirmed Canada's continued commitment to the work of the OECD in the area of tax administration, in particular regarding the establishment of international standards for transparency and the effective exchange of information."

Under international treaties, Canada cooperates with a large number of countries by exchanging information about foreign investments for tax purposes. To this end, Canada is working hard to increase the flow of information by negotiating Tax Information Exchange Agreements (TIEAs). The work of Global Forum on Transparency and Exchange of Information and initiatives in Canada's 2007 Budget have created a strong incentive for jurisdictions to enter into these TIEAs.