Indiana Payroll Serv… on EP Accounting Fall Newsle…
I came across a very interesting video from CTV News’ Pat Foran. It is about Ontario’s new tax system, wherein the tax returns will be issued monthly as opposed to being issued in a single lump sum payment. Pat Foran questions the finance minister re. this new policy.
Here is the link to the video. Take a few minutes to watch it and then formulate your own opinion.
Ontario has a tax system: returns will be issued monthly instead of in a lump sum. Pat Foran asks the finance minister, ‘Did the government drop the ball on this?’
The CRA has some changes in store for us this coming year.
As of January 2012, the maximum CPP pension for 2012 will be $986.67 per month. This figure is derived from the average of maximum pensionable earnings for last five years x 25% / 12 months. These figures generate a premium increase which, at the highest level, reaches $2306.70 or $192.23 per month. Both the employer and employee must contribute; proprietors will pay $384.45 per month or, when their contributory earnings reach $50,100, $4613.40 per month.
The basic exemption amount remains unchanged at $3,500, as it has not been indexed to inflation for several years. This means that premiums have actually increased by four per cent. Meanwhile the expected rate of CPI inflation for 2012 has just been announced as well: two per cent. That is quite a hike.
The following is a guest post by a co-author of the iMark Blog, Dee.
Particularly interesting for me was Chapter five, titled Paupery. I will admit, at first I found the conversation in this chapter contrived and stilted, especially compared with the rest of the book which seems to flow so easily. This might have been because the rest of the book was more of a narrative whereas this chapter was almost entirely dialogue. But then again what do I know about writing? Not as much as I know about money, I will say that much. This brings me to why I enjoyed this chapter so much! The subject of this chapter is finances and money…well, sort of.
Dublanica utilizes this chapter to opine that waiting tables is akin to gambling. Waiters can make next to nothing in any given night or they can make half of their month’s rent. These ups and downs can be addicting, claims Dublanica. On top of that, Dublanica explains how waiting on the rich can take its toll on a waiter’s wallet. The susceptibility to gain an appreciation for expensive foods and wine is ever present. Another issue that waiters face, one that I find particularly intriguing, is tipping.
Most tips are given cash in hand. It is up to the waiter to be honest and, come tax time, declare these tips as part of their income. Tips that are not given in cash have a paper trail so the honour system does not come into play. The full amount from tips that are doled out via credit or debit need to be declared. In either case, it is very rare that a waiter is allowed to keep 100% of his or her tips. Often, a portion is given to the host or hostess, dishwashers, etc. This means that wait staff must pay taxes on money that they are not even earning!
So here is how Dublanica was able to avoid this problem. His employer had all employees enter tip amounts in a ledger and then surrender them to management at the end of the shift. This is opposed to taking the tips home every night. The tips were then divvied up as previously agreed and then doled out with the pay cheque every week. This way the wait staff only had to pay the taxes on the actual amount awarded.
This is how some restaurants deal with tax issues. Do you know of any other method? If so, please leave a comment.
I am looking forward to reading Dublanica’s next book, Keep the Change. In this book Dublanica has travelled across the US to interview people who rely on tips. Obviously tipping is a subject that interests most small business accountants very much.
Attention all academic scholars!
Starting in the September 2011 academic year, the CCRW (Canadian Council on Rehabilitation and Work) will be awarding six scholarships in the amount of $2,500.
According to the website, a qualified scholarship applicant must:
- Be a person with a long-term and reoccurring disability that restricts the ability of a person to perform the activities necessary to participate in educational activities. This limitation is expected to remain with the person for life.
- Be a high school student entering the first year of studies in a Canadian post-secondary institution that is recognized by the Association of Universities and Colleges of Canada at the undergraduate level.
- Be a full-time student.
- Not be involved in the selection process or be a close family member of any scholarship selection committee member.
- Not have been awarded one of these CCRW Scholarships in the past. The scholarships are also non-renewable.
Applications will be evaluated on a number of criteria, including, but not limited to: community involvement, extra-curricular participation, overall approach to overcoming barriers, academic performance and educational goals.
About the CCRW
The CCRW is a Canadian network of organizations and individuals, devoted to promoting, developing and supporting “meaningful and equitable employment of persons with disabilities”. This is achieved through strategic partnerships and knowledge sharing.
The CCRW provides employment services for people with disabilities and assists businesses committed to promoting an equity and inclusion-centric workplace.
Learn about tax credits for Canadians with disabilities.
Since the government started the Tax Free Savings Account (TFSA) two years ago, it has been massively popular. However, many people still do not understand the difference between this account and a Registered Retirement Savings Plan (RRSP) or the Registered Education Savings Plans (RESP). Essentially, the TFSA is a flexible, registered general-purpose savings plan that allows Canadians to earn a tax-free investment income more easily than using the other two.
Here’s how it works: Any Canadian resident aged 18 or order can contribute up to $5,000 annually to a TFSA and the investment income earned as well as withdrawals from the account are tax-free. Unlike an RRSP, where a tax deduction is given when it is deposited, but tax is required when it is paid out, a TFSA is a tax free rather than a tax-deferred shelter. One can put money into the account tax free and take it out tax free.
The maximum allowable amount to be put into the account is $5,000 before there are penalty taxes. Unused contributions can be carried forward and accumulated for future years.
The full amount of withdrawals can be placed back into the account in the future, but contributing in the same year can be subject to the penalty tax. For example, if money is withdrawn in January and placed back in December of the same year, the total contribution would be considered $10,000 rather than $5,000 and penalties will apply. Yet if that $5,000 was re-deposited the following year, that would not incur penalty charges.
The contributions are not tax-deductible and the income earned or withdrawals will not affect eligibility for federal benefits and credits such as Old Age Security, Guaranteed Income Supplements and the Canada Child Tax Benefit. Funds can also be given to spouses or common-law partners for investing and assets can normally be transferred to the significant other upon death.
Only residents of Canada can open a TFSA account. If a Canadian resident leaves the country after opening an account, that amount can be maintained, but new funds cannot be added.
There is also wide variety of investment options such as mutual funds, GICS and bonds for the TFSA available.
The above is a video excerpt from The Agenda with Steve Paikin.
Regardless of how meticulous we are with our paperwork and honest we are with the Government, every individual Canadian dreads the thought of an”audit”. But what are your chances of actually being audited? Well, according to the CRA, during the 2008-2009 fiscal year, 87,000 T1 returns were subject to a post assessment targeted review. This resulted in 31% of them being adjusted. 89,000 T1 returns were subject to a random review, resulting in 17% being adjusted.
According to The Canada Revenue Agency (CRA), they review a number of returns to ensure that they were filed correctly. A small percentage of Canadian tax returns are selected for review before they are assessed. These are flagged by the CRA`s computer system because they display characteristics indicationg a higher possibility of non–compliance. This could be because of the size of the refund, the type of deduction or credit claimed, or the taxpayers compliance history. Some returns are also selected at random.
According to CRA, the chances of being selected for review are the same whether you paper file or electronically file your return.
image source: cartoonstock.com