canada revenue agency americas’ sap users group (asug) conference montreal, october 2010
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Canada Revenue AgencyCanada Revenue AgencyAmericas’ SAP Users Group (ASUG) Conference
Montreal, October 2010
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PresentersPresenters
Susan Sparling-McGinley
Dian Hardiman
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Today’s Topics - SusanToday’s Topics - Susan
Information Returns Program Update Changes to T4 Web Forms Pensionable and Insurable Earnings Review
Program Update T4A Redesign
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Information Returns Program Update Information Returns Program Update (General)(General)
Filing method Information slips filed in 2009
Information slips filed in 2010
Internet 10% (13.9 million) 65% (94.7 million)
DVD / CD 83% (121.5 million) 30% (43.4 million)
Paper 7% (10.4 million) 5% (8.1 million)
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Information Returns Program Update Information Returns Program Update (T4 and T4A Internet Filed)(T4 and T4A Internet Filed)
Tax Year 2009 2010 Increase T4 slips 6.7 million 13.1 million 96%
T4A slips 1.2 million 6.4 million 426%
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T4 Web FormsT4 Web Forms
Online, interactive session
No software required
File 1 to 6 original, amended or cancelled T4 slips and summary
T4 Web forms: Validates data in real-time Calculates totals for T4
summary
Print T4s for employees
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Pensionable and Insurable Earnings Pensionable and Insurable Earnings Review (PIER)Review (PIER)
2010 Program Results 119,848 PIER cases were generated containing
456,802 slips. 21,362 cases were intercepted through the
merge process containing 199,470 slips. 3,539 cases with 91,129 slips were removed
from the deficient listings without employer contact as a result of the PIER merge macro.
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Pensionable and Insurable Earnings Pensionable and Insurable Earnings Review (PIER)Review (PIER)Development Update PIER on My Business Account
• For January 2012 we are planning to allow employers with up to ten slips on their PIER report to view and respond to their PIER report online
Pensionable and Insurable Earnings• Beginning January 2012 employers should complete
the pensionable earnings (box 26) and insurable earnings (box 24) on the T4 slip at all times.
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T4A RedesignT4A Redesign
The 2010 version of the T4A slip is now available on the CRA Publications page.
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T4A RedesignT4A Redesign (Continued)
When to use the new slip You can now use the new slip to report T4A information. You may still use the 2009 version of the slip until the end
of 2010, however, it is only available electronically.
Retiring allowance amounts Moving the reporting from the T4A slip to the T4 slip
Electronic filing XML amount tags currently in use will continue to be valid
during 2011
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T4A RedesignT4A Redesign (Continued)
Amendments You can use the current or the new version of the T4A slip to
complete an Amendment As of January 2011, the new slip and codes should be used
New T4A codes for 2011 Our data capture systems will be modified and fully
operational January 2011 You can use the current or the new version of the T4A slip For 2011 and going forward, use the 2011 codes
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QuestionsQuestions
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Today’s Topics – Dian Today’s Topics – Dian
Transit Passes Non-Cash Gifts and Awards Policy Overtime Meals or Allowances Municipality or Metropolitan Area Education Benefits – Family Members
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Transit PassesTransit Passes
Policy: (effective January 1, 2010)
No taxable benefit when:
Transit passes are provided to employees (or retired employees) working directly in transit operations for their personal and exclusive use.
Taxable benefit when:
Free or discounted passes are provided to:
• Employees’ family members.• Municipal employees (and retired employees) not working
directly for transit operations.
• Pass is other than ferry passenger (walk-on) fares.
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Transit PassesTransit Passes
Example:
Loretta works as a secretary in the mayor’s office in Victoria.
Her employer provides her with a free vehicle transit pass for the local ferry.
Is it a taxable benefit?
Which is correct?
a) No. This pass is for her personal use and not for a family member.
b) Yes. She does not work for the transit authority.
c) Yes. It is a vehicle pass.
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Correct answersCorrect answers
There are two correct answers b) and c). The pass would be a taxable benefit for Loretta
because she does not work directly for the transit company.
If Loretta worked directly for the ferry company, the vehicle pass would still be a taxable benefit to her because it is not a passenger or walk on pass.
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Non-Cash Gifts and AwardsNon-Cash Gifts and Awards
Policy: (effective January 1, 2010)
An employer can give tax free:
1. An unlimited number of non-cash gifts and awards per year.
• total Fair Market Value (FMV) of $500 or less.
2. One anniversary/long service award once every 5 years.
• total FMV of $500 or less.
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Non-Cash Gifts and AwardsNon-Cash Gifts and Awards
Applies to both categories: There is a $500 exemption. Only the amount above $500 will be taxable. FMV will determine whether exemption has been
exceeded. Items that have a small or nominal value are not
included when calculating the gifts and awards benefit.
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Non-Cash Gifts and AwardsNon-Cash Gifts and Awards
What is not included in the policy: Cash or near cash gifts and awards (i.e., gift certificates)
Performance-related rewards (i.e., sales targets)
Employer-provided social/special events
Loyalty points
Reimbursements
Hospitality rewards
Disguised remuneration
Manufacturer provided gifts and awards
Gifts or awards provided by a social committee that is not controlled or funded by the employer
Gifts or awards given to non-arm’s length employees or related persons
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Non-Cash Gifts and AwardsNon-Cash Gifts and Awards
Example:1. Your employees receive an annual anniversary
award valued at $150. 2. Every five years, employees receive a long
service award, valued at $750.
What is the tax treatment of these awards?
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Correct answerCorrect answer
The annual awards in 1. are all taxable because an employee may only receive one anniversary award once every 5 years.
$500 in 2. is exempt under the Long Service Awards policy and the remaining $250 is a taxable benefit and should be e remaining $250 is included in the employee's income.
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QuestionsQuestions
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Did you know …Did you know …
The CRA has developed an interactive questionnaire to help employers determine how items they give their employees should be treated under our Gifts and Awards and Long Service/Anniversary Awards policies.
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Overtime Meals or AllowancesOvertime Meals or Allowances
Policy:
No taxable benefit if:
The employee works two or more hours of overtime before or after his shift; and
The overtime is infrequent or occasional in nature:
Generally less than three times a week.
We will allow more on occasional basis to meet workload demands.
The value of the meal or allowance is reasonable.
Up to $17.
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Overtime Meals or AllowancesOvertime Meals or Allowances
Update:
In the fall (2009), we changed our position in one example:
Example 2 - Meal allowance is not a taxable benefit
Phillip works in the shipping department of a mail order company. The last two weeks in each month, a predicted increase in orders causes him to work two nights of overtime at the end of his regularly scheduled hours. Phillip’s employer provides him with a meal allowance on those evenings.
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Overtime Meals or AllowancesOvertime Meals or Allowances
Which is correct?
a) No. The allowance is reasonable and the employee only works overtime once a week.
b) No. Because the allowance is paid under a collective agreement.
c) Yes. The employee receives cash and no requirement to purchase a meal.
Example: An employee works 3
hours of overtime once a week for 3 weeks.
Per his collective agreement, the employee is paid a $15 meal allowance.
The employee brings a meal from home.
Is the allowance taxable?
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Correct answerCorrect answer
The correct answer is a) No. The allowance is reasonable and the employee
only works overtime once a week. Since the conditions in the policy are met, the $45 does not have to be included in the employee’s income as a taxable benefit.
Nothing in the policy says the allowance has to be used to purchase a meal on that evening. That being said, there is sometimes a fine line between a non-taxable allowance and additional remuneration.
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Municipality or Metropolitan AreaMunicipality or Metropolitan Area
Policy:
A meal allowance for travel within the municipality or metropolitan area is not taxable if:
The allowance is reasonable; The purpose of the allowance is to ensure the efficient
performance of the employee’s duties, and It is not an alternate form of remuneration.
** This policy does not apply to motor vehicle allowances.
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Municipality or Metropolitan AreaMunicipality or Metropolitan Area
Example 1: Your manager inspects and approves installed
security systems. He works from 8 a.m. until 4 p.m. each day. On Tuesday, he has a late afternoon inspection
and will receive a $15 meal allowance. Is the $15 a taxable benefit?
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Correct answerCorrect answer
The correct answer is YES. It does not appear that the meal allowance is
provided to allow the employee‘s duties of employment to be completed in a more efficient manner in the particular circumstances (which is an important condition in the policy).
It would appear the meal allowance is paid because the employee is not able to get home from work at his usual time.
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Municipality or Metropolitan AreaMunicipality or Metropolitan Area
Example 2: Andy repairs hydro lines. Today he is working an
hour away from the office but within the city limits.
His employer will pay him a $25 meal allowance.
Is this a taxable benefit?
Which is correct?
a) No. Andy uses the money for lunch because it’s too far to go back to the office.
b) Yes. The $25 meal allowance is not reasonable.
c) Yes. He is not travelling outside the city limits to perform his duties.
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Correct answerCorrect answer
The correct answer is b) Yes. It is our opinion that $25 is not a reasonable meal allowance for purposes of this policy.
Income Tax Rulings indicated in 2009-0333541E5 that for the purpose of this administrative policy the CRA will generally consider up to $17 for the meal portion of any travel allowance as reasonable.
This dollar value is taken from the overtime meal / allowances policy.
Even though a) would be correct by itself, it is only one of the conditions that the employee has to meet. Because the employee has to meet ALL conditions and doesn’t, the other conditions no longer need to be considered. The allowance will be a taxable benefit to Andy.
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Education Benefits - Family MembersEducation Benefits - Family Members
Scholarships, bursaries, or tuition fees for employee family members are not taxable to the employee if for post-secondary education.
Employers report the FMV on a T4A slip for the family member.
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Education Benefits - Family MembersEducation Benefits - Family Members
Which is correct?
a) Report the payment on the employee’s T4 slip as a taxable benefit?
b) Report the payment as scholarship income on a T4A slip in the student’s name?
c) Not prepare a slip because the child can claim the scholarship exemption?
Example: Your company offers
educational assistance for your employee’s children.
This money helps the employee pay for private secondary school education for his child.
Do you…
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Correct answerCorrect answer
The correct answer is a) - Include the payments on the employee’s T4 slip as a taxable benefit.
If you provide scholarships, bursaries, or tuition to your employees’ family members who attend elementary or secondary schools, the FMV of these benefits are still a taxable benefit to the employee, and you have to include the amounts in the employee’s income.
The new administrative position only applies to post secondary education.
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QuestionsQuestions
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Did you know …Did you know …
In 2008, employers reported $15.7 billion in taxable benefits on T4 slips.
• $ 480 M - Housing, board and lodging (code 30)• $ 438 M - Travel in Prescribed Zone (code 32)• $ 889 M - Personal Use Employers Auto (code 34)• $ 80 M - Interest free/low interest loans (code 36)• $ 5.9 B - Security/Stock options (code 38)• $ 7.9 B - “Other” (code 40)
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Did you know …Did you know …
In 2012, CPP has to be deducted from employee’s wages up to age 65 even if the employee is receiving a CPP retirement pension.
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Did you know …Did you know …
Benefit payments from a wage-loss replacement plan are no longer pensionable.
This change is based on a Federal Court of Appeal decision for the Toronto Transit Commission in January 2010.
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Simplified logbook for vehicle expensesSimplified logbook for vehicle expenses
On June 28, Minister Ashfield announced a new simplified logbook method that a business can use to keep track of business travel.
Not intended for calculating a taxable benefit for the personal use of an employer provided or employer leased motor vehicle (including automobiles).
It is for business persons who use a vehicle in a business and claim motor vehicle expenses relating to the business travel or commercial activity OR input tax credits on GST/HST.
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True or False?True or False?
Gift certificates and gift cards are ALWAYS taxable.
The correct answer is True.
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Visit Visit Our Our Website!Website!
www.cra.gc.ca
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