CRA Announces 2010 Automobile Deduction Limits and Expense Benefit Rates for Business

The CRA / Department of Finance has announced automobile expense deduction limits and the prescribed rates for the automobile operating expense benefit that will apply in 2010.  All of the limits and rates in effect in 2009 will continue to apply in 2010.  Specifically:

  • The ceiling on the capital cost of passenger vehicles for capital cost allowance (CCA) purposes will remain at $30,000 (plus applicable federal and provincial sales taxes) for purchases after 2009. This ceiling restricts the cost of a vehicle on which CCA may be claimed for business purposes.
  • The maximum allowable interest deduction for amounts borrowed to purchase an automobile will remain at $300 per month for loans related to vehicles acquired after 2009.
  • The limit on deductible leasing costs will remain at $800 per month (plus applicable federal and provincial sales taxes) for leases entered into after 2009. This limit is one of two restrictions on the deduction of automobile lease payments. A separate restriction prorates deductible lease costs where the value of the vehicle exceeds the capital cost ceiling.
  • The limit on the deduction of tax-exempt allowances paid by employers to employees using their personal vehicle for business purposes for 2010 will remain at 52 cents per kilometre for the first 5,000 kilometres driven and 46 cents for each additional kilometre. For Yukon, the Northwest Territories and Nunavut, the tax-exempt allowance will remain at 56 cents for the first 5,000 kilometres driven and 50 cents for each additional kilometre.
  • The general prescribed rate used to determine the taxable benefit relating to the personal portion of automobile operating expenses paid by employers for 2010 will remain at 24 cents per kilometre. For taxpayers employed principally in selling or leasing automobiles, the prescribed rate will remain at 21 cents per kilometre. The additional benefit of having an employer-provided vehicle available for personal use (i.e., the automobile standby charge) is calculated separately and is also included in the employee’s income.
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The Canada Revenue Agency is actively looking for Offshore Accounts too…

I have received confirmation from a senior official at the Canada Revenue Agency that the CRA is in fact actively investigating individuals suspected of being involved in the recent offshore account problem overseas.  Thus far, no one has been named publicly and my source at the CRA has confirmed that each person contact thus far has willingly come forward to pay amounts owing in full and that the number of people thus far targeted by the CRA totals less than 100.

The list remains private because the CRA does not want to tip-off those involved that they are coming for them, nor do they want to admit that they are severely short of qualified staff needed to make arrangements with these taxpayers and their numerous numbers of representatives.

The CRA suspects that the list is available elsewhere and that it might be coming to light sooner than many wish which could hurt the CRA and will certainly shame those involved.

The CRA will certainly be looking for additional offshore funds with speculation abound that there will be incentives down the road for taxpayers and financial organizations to disclose to the CRA situations where an individual or organization is placing it’s assets out of the reach of the CRA for tax evasion purposes.

Stay tuned!

CRA Electronic Filing Guidelines for 2009

The majority of common information returns (original and additional) must be filed electronically in 2009 if there are more than 50 information returns for each type—such as;

  • T4 Statement of Remuneration Paid
  • T5 Statement of Investment Income
  • T3 Statement of Trust Income Allocations and Designations

The following information returns must be filed electronically using the Internet;

  • T3 Statement of Trust Income Allocations and Designations
  • T4 Statement of Remuneration Paid
  • T4A Statement of Pension, Retirement, Annuity, and Other Income
  • T4A-NR Statement of Fees, Commissions, or Other Amounts Paid to Non-Residents for Services Rendered in Canada
  • T4E Statement of Employment Insurance Benefits
  • T4RIF Statement of Income From a Registered Retirement Income Fund
  • T4RSP Statement of Registered Retirement Savings Plan Income
  • T5 Statement of Investment Income
  • T5007 Statement of Benefits
  • T5008 Statement of Securities Transactions
  • T5018 Statement of Contract Payments
  • NR4 Statement of Amounts Paid or Credited to Non-Residents of Canada

The following information returns must be filed electronically as this is the only way they can be accepted by the CRA:

Originals only:

  • AGR-1 Statement of Farm-Support Payments
  • SAFER Manitoba Shelter Benefits
  • T4A(OAS) Statement of Old Age Security
  • T4A(P) Statement of Canada Pension Plan Benefits

Originals and amended:

  • T4E Statement of Employment Insurance Benefits
  • T1204 Government Service Contract Payments
  • RRSP Contribution Receipt Filing
  • TFSA, Tax Free Savings Account

Information returns can be filed electronically using Internet File Transfer (XML). The CRA can accept files of up to 150 megabytes. If your file is more than 150 megabytes, you can still file using the Internet File Transfer application by either compressing or dividing each submission so that it is no more than 150 megabytes. For T4 returns, this means that filers can send approximately 160,000 returns in an uncompressed file and 1.6 million returns in a compressed file. For T5 returns, this means that filers can send approximately 260,000 returns in an uncompressed file and 2.6 million returns in a compressed file. For T4 returns, filers can use T4 Web forms (up to 3 returns) and T4 Desktop Application (up to 70 returns), in addition to Internet file transfer (XML). For more information on Internet filing, go to Filing T4/T5 information returns electronically.

Beneficial Owner – CRA Clarification

Beneficial owner – Regarding proper amount of withholding, the CRA bases it on name of address, UNLESS, there is a “care of” address or the mailing address and permanent address are different.  If there is a care of address, or difference in permanent address, the CRA requires a certificate to be completed by the holder. 

“In any doubtful case, a certificate, as described in ¶ 5(b), is required to be completed and forwarded to the payer by the payee in order that a lower rate of withholding tax, in accordance with a tax convention, can be applied. Otherwise the 25% rate will apply.

The Canada Revenue Agency (CRA) will accept the payee as beneficial owner of amounts paid to non-residents if the payee is an insurance corporation or pension trust that invests solely on its own behalf and includes such amounts in computing its revenue.”

Examples of the certificates are available in this CRA Information circular, pages 2 and 3.  http://www.cra-arc.gc.ca/E/pub/tp/ic76-12r6/ic76-12r6-e.pdf

CRA to finally accept payments via Interac Online

Monday 5 October 2009

 

The Canada Revenue Agency (CRA) has integrated Interac Online, an internet payment method which enables Canadians to make income tax payments directly from their bank accounts, without disclosing personal financial data.

As a result of the initiative, starting October 5th 2009, taxpayers and businesses will be able to pay online for various types of taxes, including income taxes, corporate taxes, payroll taxes, and GST, as well as make one-time payments and instalments.  Interac Online works with existing online banking services of participating Canadian financial institutions.

Public Works and Government Services Canada, which establishes banking services for the Government of Canada, has made it possible for the CRA to implement this new service.

Finally!

CRA Filing changes coming down the pipe… Potentially…

A couple items are coming down the pipeline at the CRA – so say my sources in Headquarters in Ottawa.  Since They are a couple years off at best, here are the main 2 which will have a significant impact on the general public, especially in industries where there is a lot of filing of slips and returns to be done. 

These items were announced in the 2009 budget on January 27, 2009.

1) Mandatory Electronic Filing for Information Returns – The CRA is tired of getting paper, loads and loads of paper which they then haev to key into their systems which is why they began converting systems about 10 years ago, so they could accomodate the vast amounts of informatin tehy expect to be receiving electronically.

Yes, a lot can be filed with the CRA electronically, on CD rom, or directly through the website, but going forward the CRA will charge a penalty to those filing in any way other than electronically through their website or via XML filing.  A smart move!

2) The CRA is in the process of developing a Canadian equivalent to the US W8 / W9 forms which require residents and non-residets of the US o complete valid forms and submit them to transfer agents in order to qualify for a reduced amount of tax withholding, if applicable. 

From what I’m told these forms will go hand in hand with the NR4 form and will be a Canadian version, so light on the requirements for now, but used by the CRA going forward.    Actually, my sources tell me that these forms will only need to be completed by people whose actual residential address is unknown since the CRA uses that address (domicile) for determining the treaty rate.

Sounds like good times are coming…  Tell you friends.