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Tuesday, February 27, 2007

Eligible banks for CRA on-line payments

Bank of Montreal Online Tax Filing Services
Contact your local Bank of Montreal branch; or
Contact your cash management sales representative
National Bank of CanadaCorporate Electronic Services
Telephone: (514) 394-2057 option 3
Fax : (514) 394-6341
Email : info@sibn.bnc.ca
Royal Bank of Canada Payment Filing Service, On-line Tax Filing
Visit www.rbcroyalbank.com and select "24 hour access"; or
Contact your local branch of the Royal Bank of Canada; or
Lyn Lunsted (416) 974-5937 ; or
Royal Direct1- 800 -769-2570
HSBC Bank CanadaPayment Filing Service
Contact your local HSBC Bank Canada Branch
CIBC Government Payment & Filing Service
Contact your CIBC account manager; or
PC Banking Support 1 888 872-2422 ; or
Email: feedback@cibc.com
TD Canada TrustTax Payment & Filing Service
Contact your local TD Canada Trust Branch
Scotiabank Government Tax Payment & Filing Service
Visit www.scotiabank.com/taxpayments/
ATB FinancialPayment Filing Service, Online Tax Filing
Contact your local ATB Financial Branch
Laurentian Bank of Canada Commercial Banking Centre
Contact your LBC account manager; or
Louise Vervais 514-227-2766 , or 1-877-866-5916

Friday, February 2, 2007

2007 Automobile Deduction Limits and Expense Benefit Rates for Business

The 2007 Automobile Deduction Limits remain the same as the rates in year 2006.

The limit on the deduction of tax-exempt allowances paid by employers to employees using their personal vehicle for business purposes for 2007 will remain at 50 cents per kilometre for the first 5,000 kilometres driven and 44 cents for each additional kilometre. For the Yukon Territory, Northwest Territories and Nunavut, the tax-exempt allowance will remain at 54 cents for the first 5,000 kilometres driven and 48 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 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 2006. 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 2006.

The general prescribed rate used to determine the taxable benefit relating to the personal portion of automobile operating expenses paid by employers for 2007 will remain at 22 cents per kilometre.

For further details you may click on this link: http://www.fin.gc.ca/news06/06-089e.html

Department of Finance personal tax relief updates

* Increasing the basic personal amount-the amount that an individual can earn without paying federal personal income tax-so that it grows each and every year and remains above previously legislated levels in 2006 and 2007. The basic personal amount will be $8,929 in 2007 and will continue to increase incrementally, reaching at least $10,000 in 2009.
* Permanently reducing the lowest personal income tax rate from 16 per cent to 15.5 per cent effective July 1, 2006.
* Providing all Canadians a break on work-related expenses under the new Canada Employment Credit. This measure took effect July 1, 2006, and recognizes the cost of work-related expenditures such as home computers, bus passes, uniforms and supplies.
* Creating a Children’s Fitness Tax Credit to cover eligible fees up to $500 for enrolment in a physical activity program, effective January 1, 2007.
This tax incentive Encourages Parents to Take Advantage of the Children's Fitness Tax Credit http://www.fin.gc.ca/news07/06-002e.html
* Providing students with a new textbook tax credit, effective January 1, 2006, to provide better tax recognition for the cost of textbooks for students.
Canada’s Tax Fairness Plan, announced on October 31, 2006, built on the tax cuts announced in the budget by proposing significant positive measures to help Canadian seniors by:
*Increasing the age credit amount by $1,000 retroactive to January 1, 2006.
* Introducing income splitting for pensioners to increase the rewards from retirement saving effective as of the 2007 taxation year.

These tax relief excerpts are from the Department of Finance. If you’d like more details you can select the following link: http://www.fin.gc.ca/news06/06-088e.html

Private Health Services Plan (PHSP)

This plan recognized by CRA under bulletin IT-339R2 was introduced as a cost efficient and tax effective means of providing health and dental benefits for small and medium sized busineses. This plan is an inexpensive way for incorporated employers and sole proprietors to provide tax free health and dental services for themselves and their dependents, their employees and their dependents. These services are 100% tax deductible to the corporation or the sole proprietor, but not taxable as benefits to the individuals.

We have an alliance with a Benefit Plan company that offers our clients a special rate due to the referrals that we are providing to this company. If you are currently under a plan (i.e. Shield, London Life, etc.), they will waive his $150 one-time signup fee. If you are not with an existing plan, your sign up fee will be reduced to $75. A 5% admin fee will be charged, rather than the 10% admin fee that you may be used to for medical/dental claims put through your plan. Those of you that are sole proprietors, you should talk to our associate company about eligibility. If you have employees, you may still be able to use this.

Canada Revenue Agency on-line banking payment types:

Alberta corporate tax – Alberta Finance ABCIT (use Alberta Access number 20...)
Federal Corporate tax – TXINS (use Business number)
Federal GST/HST return – GST34
Federal GST/HST remittance – GST58
Federal Payroll Deductions Monthly – 0013 EMPTX

CRA GST Quick Method

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 4.3%
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 6% GST or 14% HST in each fiscal year.


Example:
Qwik Dry Cleaners' services are all performed in Calgary, Alberta, where its permanent establishment is located. It used the Quick Method in 2005 and used the 5% remittance rate in effect at that time. Now it has to determine if it can continue to use the Quick Method in 2006.
Qwik Dry's annual worldwide taxable sales (including GST) were not more than $200,000 in 2005. Therefore, Qwik Dry can continue to use the Quick Method. Qwik Dry's new remittance rate when filing its GST/HST return for the calendar third quarter of 2006 is now 4.3%. This new rate has been in effect since July 1, 2006.


Example:
Quick Method calculation for Qwik Dry Cleaners Calgary, Alberta
Calculation of GST remittance in third quarter of 2006(4.3% remittance rate)
Total eligible sales for the third quarter (including GST) ..................... $22,000


Multiply the total eligible sales by the

remittance rate ($22,000 × 4.3%) .................... $946

Deduct 1% for the first $30,000
of eligible sales ($22,000 × 1%) ..................... $(220)

Third quarter remittance ..................... $726

For further details on the GST Quick method go to:
http://www.cra-c.gc.ca/E/pub/gp/rc4058/rc4058-e.html