Reminder: T4’s and T4 Summaries are due February 28th to the Canada Revenue Agency (CRA)

I’m worried.

Not for me, but worried for you. I’m worried that you have forgotten to prepare the T4 for your employee, or nanny, and that you will not be able to submit the T4 with the T4 summary to the Canada Revenue Agency (CRA) by the February 28th deadline.

If you have not completed the T4 or T4 summary yet and are weighing your options, I have some information you need to consider.

First, provided you have been making regular remittances to the CRA, you already have the information you need to submit to the CRA.

Secondly, if you have been making regular remittances the CRA will have sent you a code which allows you to complete the T4 and T4 summary online and which allows you to file online.

Third, if you let the deadline slide by, you are going to pay a penalty.

Say what you will about the Canada Revenue Agency, but they ask and they listen. If you have had the opportunity to attend a CRA information session (or be on a panel as I have) you know that the CRA wants to know what bothers people and how they can improve things. They really do.

In the good old days, when I worked at the CRA, late filing of a T4 was a minimum $100 penalty (plus interest) and late filing of a T4 summary was a minimum $400 penalty to a maximum of $2500.

The CRA has instituted a new administrative policy that applies to certain information returns to ensure that late-filing penalties are charged in a manner that is both fair and reasonable for small businesses. The penalty is the greater of $100 or a penalty determined as follows:

Relieving administrative policy – penalties
Number of information
returns (slips)
Penalty (per day) Maximum penalty
(100 days)
1 – 5 Not applicable $100 flat penalty
6 – 10 $5 $500
11 – 50 $10 $1,000
51 – 500 $15 $1,500
501 – 2,500 $25 $2,500
2,501 – 10,000 $50 $5,000
10,001 or more $75 $7,500

Of course, if you have to get it done by the 28th and you are close on figures, you can always send them your best estimation and amend the return at a later date.  You won’t get hit with the late filing penalties unless your figures are WAY off from the real figures and the CRA feels you sent these numbers to in some way circumvent the rules.  Interest will continue to apply.

Hope you filed on time.

Happy Halloween!

Happy Halloween from Intaxicating Tax Services.

Is there anything scarier than taxes?!?

Possibly the taxing authorities and some of the people that work there…

Death and Taxes
Death and Taxes (Photo credit: Thomas Hawk)

Boo!

We’re not afraid of Halloween, taxes OR the government!

#IntaxicatingTaxServices

Is It Possible To Raise A Child In Canada On $3000-$4000 Per Year? Use Your Tax Credits.

I had a nice conversation the other day with a representative from the CBC regarding the findings made public  by The Fraser Institute, stating that it has never been easier financially, to raise a child in Canada.

My immediate thoughts were that it was absolutely not possible to do this.  I even tried to convince the reporter that the figures being tossed around of $10,000-$12,000 per year were low.   How could this be possible?  I mean once you take into consideration child care (daycare or a nanny), you’re at the high-end of that estimation.  Taking out of the equation that a major city in Canada – such as Toronto – has certain added costs, I pictured a rural community, handed-down clothing, one-parent working and home-grown veggies in the summer and I still came in over $4000.

Then I learned that this figure did not take into consideration child care.

Okay, so it might be possible…  Might.

A couple of hours after speaking with the CBC, I heard Dr. Sarlow (who prepared this report), explain on AM640 that these figures represented the low-end of the scale.  $3000-$4000 are what parents can expect to spend for the necessary expenses such as food, fitness, clothing, personal care and school supplies.  All of this, of course, takes into consideration that the parents are being as fiscally responsible as possible and buying only what is absolutely necessary.

Even in cases where a parent stays home to look after the child(ren) or if there are parents or grandparents available to do this, there is still an opportunity cost of the lost income from that parent not working and earning income instead.  I do not agree that through the omitting of childcare expenses there is a belief that the majority of Canadian families have zero child-care costs.  In fact, the report states that childcare expenses are “best treated as a special expense for families for whom it applies.”

As a tax professional and a father of 3 young children in one of Canada’s most expensive cities, I can say that it takes more than “income” to be able to “afford” my children.    The Canadian government (CRA)  has made many benefits and credits available to help families with their expenses throughout the year and reduce the amount that they owe at tax time, including;

  • Working income tax benefit (WITB) – Working individuals and families with low-income may be able to claim this refundable tax credit. The WITB includes a supplement for individuals who qualify for the disability amount.
  • Children’s fitness tax credit – Children who played soccer, took ballet classes, or participated in a  program of physical activity in 2012 may be eligible for a tax credit up to $500, per child, of the cost of these activities for a non-refundable tax credit of up to $75 for each child.  An additional $500 for each eligible child who qualifies for the disability amount and for whom parents have paid a minimum of $100 in eligible expenses is also available.
  • Children’s arts tax credit – Parents of children who participated in a program of artistic, cultural, recreational, or developmental activity in 2012 may be able to claim up to $500 of the money spent per child on these activities for a non-refundable tax credit of up to $75 for each child.  An additional $500 for each eligible child who qualifies for the disability amount and for whom parents have paid a minimum of $100 on registration or membership fees for an eligible program.
  • Child care expenses – Did your children attend daycare or a program such as a summer day camp in 2012? You or your spouse or common-law partner may be able to claim what you spent on eligible child care in 2012.
  • Family caregiver amount – If you have a dependant with a physical or mental impairment, you may be able to claim up to an additional $2,000 when you claim certain non-refundable tax credits.
  • Goods and services tax/harmonized sales tax credit – The GST/HST credit is a tax-free quarterly payment that helps individuals and families with low and modest incomes offset all or part of the GST or HST that they pay.
  • Public transit amount – Did you or your eligible dependant use public transit in 2012? You may be able to claim the cost of certain public transit passes or electronic payment cards under this non-refundable tax credit.
  • Child disability benefit – Parents may be eligible for this tax-free benefit if they cared for a child under the age of 18 who is eligible for the disability tax credit.
  • Canada child tax benefit – A tax-free monthly payment that helps eligible families with the cost of raising children under the age of 18.
  • Universal child care benefit – If you have children under the age of six years, you may be eligible for this taxable benefit, which supports child care choices for families.
  • Medical expenses – You may be able to claim a non-refundable tax credit based on the medical expenses paid for you, your spouse or common-law partner, or your children for any 12-month period ending in 2012.
  • Disability amount – If you or a family member has a severe and prolonged impairment in physical or mental functions, you may be able to claim this non-refundable tax credit.
  • Registered disability savings plan (RDSP) – A RDSP is a savings plan to help Canadians with disabilities and their families save for the long-term financial security of a person who is eligible for the disability tax credit.

In addition, in situations where parents or grand parents look after children, the family is missing out on the childcare tax credit where parents can claim payments for childcare expenses made to; caregivers, nursery schools, daycare centres, educational institutions for the part of the fee relating to childcare services, boarding schools, day camps and day sports schools.

These expenses cannot be claimed if the child care is provided by an individual who is the child’s father or mother, another individual, a related person under the age of 18-years-old, or a blood relative, or someone connected through marriage, common law partnership or adoption.

So is it better to spend the least amount of money possible when raising children, or to be aware and take advantage of the benefits and credits available to assist with raising the next generation of public policy analysts?

In today’s hyper-competitive, global economy, parents need to find ways to give their children the edge against their future competition and the best way to do this is to take advantage the credit and benefits available.

If you are now checking you prior-year tax returns to see if you claimed any of these tax credit and you did not, do not worry.  In-TAX_icating Tax Services will review your previously filed tax-returns and correct them for you.

http://www.intaxicating.ca

Canadian Live-in Caregiver Program Services: Why using Service Canada’s Contract makes sense

With Canada’s Temporary Foreign Worker Program under attack again as a result of RBC’s announced plan to lay off Canadian employees and hire employees overseas, it’s important to understand that this program also has the Canadian Live-in Caregiver Program (LICP) as a part of it, and that program is essential to working Canadian parents who need to hire a Live-in Caregiver (nanny) from overseas for cost efficient reasons.  The LICP provides opportunity for parents to sponsor and bring trained, educated nannies from overseas, who live in their homes and work for them at a wage very close to the minimum wage.

At the outset, many feel that these nannies are being taken advantage of, however, I see it differently.  Yes, there are employers who ask their employees to work long hours, and do tasks which are outside of the normal requrements of the program, but there are also opportunities for these nannies to speak up and have this addressed, and the outcome is that the employer is banned from using the program.  Times have changed and thankfully this government has also changed the program to make it harder for employers to scam the system and also more difficult for employees to scam their employers.  Of course, there are exceptions…

One big way that employers and employees can start this relationship on the right foot is by following the rules of the LICP, and making sure that the employer and the employee know exactly what they are required to be doing during their time in the program and also to make sure that the employee and employer are also moving forward with plan for once the program ends so that the employee is making smart decisions about their future and the employer is able to assist and know where they stand regarding their caregiver.

At Intaxicating Tax Solutions, we are on the leading edge around requirements and changes to this program as we offer assistance at every stage of the process – from deciding whether to sponsor a nanny through this program, or hiring a live-out caregiver already in Canada, to the setting up and payroll account with the Canada Revenue Agency (CRA), networking, course suggestions for caregivers and dispute resolution surrounding tasks, requirements and working hours.  Our website is www.intaxicating.ca and you can find plenty of materials written by us around the program on the web.

With all that being said, I thought it might be useful to post the link to Service Canada‘s Live-In Caregiver contract.

The best way to get a working arrangement off on the right foot is by making sure that the employer and employee are both clear around requirements and what happens if these requirements need to be adjusted.  As a contract is a requiremt of the program for sponsoring a live-in caregiver, those hiring live-out caregivers and those nannies who are living in, but not through a formal program like the LICP, also benefit from having a formal contract in place to keep requirements clear.

The contact forms the basis of a legal agreement between employer and employee as to what is expected and agreed upon by both sides and is used in case of disagreement to support the previously agreed upon terms.  Before employment begins both parties have to agree to all the work arrangements in the contract which should outline every detail from hours worked, to amounts renumerated to specific tasks and vacation pay.  It’s like going to get a job anywhere else in the world, where you sign the contact before your employer agrees to hire you and having a formalized contract as part of this program helps prevent employers from taking advantage of nannies and allows nannies to understand what they are getting into to before they agree to start work.

Too often I hear and read about employers who think their live-in nannies are on call 24/7 at their disposal to take care of them and their kids, and their house and their pets…  I also hear and read in parenting groups about employers placing curfews on their nannies, or making them address you as Mr. or Mrs. like they are a servant. Most of it is not allowed and some of it is just not right. If you accepted a job working at a top law firm, or in the warehouse of WalMart would you allow for them to treat you like that?  I suspect that answer is no.

Now that the contract is part of the application process – prospective nannies who come to apply to the program here, http://www.cic.gc.ca/english/work/caregiver/apply-how.asp, now understand that there are tight guidelines governing their requirements and rights, as well as the employers.  Nannies MUST sign a written contract with their future employer, and the employer must also sign the contact which is them submitted together with the positive Labour Market Opinion (LMO).

The positive LMO is issued to the employer by the government after a lengthy review of the submitted documents where the information is verified, a phone interview is conducted, and if everything checks out, the employer is deemed to be a suitable employer who has followed all the government requirements and regulations for the LICP.  Employers must also provide to the government their payroll BN number with the CRA, and have available suitable space in their home for a nanny to live, and prove that they have children in need of caring for and the financial capabilities to support a nanny.

The contract must be the same employment contract submitted to HRSDC/SC by your employer, unless you provide an explanation of any changes (for example, a new start date).

The written employment contract will ensure there is a fair working arrangement between you and your employer. The employment contract must demonstrate that the Live-in Caregiver Program requirements are met by including a description of:

•mandatory employer-paid benefits, including:

◦transportation to Canada from your country of permanent residence or the country of habitual residence to the location of work in Canada

◦medical insurance coverage provided from the date of your arrival until you are eligible for provincial health insurance

◦workplace safety insurance coverage for the duration of the employment

◦all recruitment fees, including any amount payable to a third-party recruiter or agents hired by the employer that would otherwise have been charged to you

•job duties

•hours of work

•wages

•accommodation arrangements (including room and board)

•holiday and sick leave entitlements

•termination and resignation terms

The contract the government is expecting to see does not have to look exactly like the one provided for in the link – that one is merely a template – but it must contain all the information and clauses indicated as mandatory and the use of an alternate contract format may cause delays to the processing of the LMO application as HRSDC and Service Canada officers will need to determine if the contract complies with LCP requirements.  A copy of that contract can be found here.

Before you jump into hiring an employee through the Canadian Live-in Caregiver program, or someone already in Canada, make sure that you have all the requirements covered and that you and your employer are on the same page.  If you would like further information or have questions, please feel free to post them in the comment section, or contact us at info@intaxicatingtaxservices.ca.  You can find details around our T4/T4 summary services, our payroll services or our consultation services on our website or by contacting us.

In-TAX-icating

In-TAX-icating.

Definition:

a: To excite or stupefy by taxation to the point where physical and mental control is markedly diminished

b: to excite or elate to the point of enthusiasm or frenzy… about taxation.

Passionate about Taxation.  Passionate about helping you!