What are the Northern Resident Tax Deductions? Northern Resident Tax Deductions involve the following two deductions. There is a residency deduction which applies if you lived in a prescribed zone and a deduction for travel benefits. This refers to whether you are employed in a prescribed zone that is a part of your income. How to Qualify for this Deduction To qualify as a northern resident, you must have permanently lived in a prescribed northern or intermediate zone for at least 6 months in a row. The period can end in the tax year being filed for or start within, either way you qualify for the deduction. Moving within a prescribed zone does and absences do not affect your qualification as long as you permanently live in a prescribed zone. Calculating Your Residency Deduction There are two parts to calculating the residency deduction, the basic residency amount and the additional residency amount. Prescribed Northern Zone (Zone A) Prescribed Intermediate Zone (Zone B) Special work sites may also qualify you for this deduction even if it is not in any prescribed zone. You must live there for at least six months consecutively unless the site is 30 kilometres or less from the nearest boundary point from a population centre with at least 40,000 people. Northern Resident Tax Deduction for Travel Benefits If you are an employee that deals at arm’s length with your employer and included the taxable benefits in your income from employment in a prescribed zone, then you are eligible to make this claim. The taxable benefits include travel assistance such as airline tickets and a travel allowance received from the employer from travel expenses incurred. Your maximum claimable deduction for each trip is the lowest from the following: You cannot claim a travel deduction if you or anyone in your household received non-taxable amounts for travel assistance, such as a travel allowance or reimbursement for travel expenses. Additionally, if someone else has already claimed the deduction for the same trip, you cannot claim it as well. You can claim up to two trips for non-medical reasons and up to two trips for each eligible family member. For medical services, if they were not available in your area, there is no limit on the number of medical trips you can claim. To ensure you’re following the correct guidelines, consider consulting an accounting company in Canada for professional advice on your travel deductions and other financial matters. Recently, the government has updated the travel deduction to be available even if there was no taxable travel benefit received for the trip. Find out more information by clicking here and accessing the CRA’s website section about the Northern Resident Tax Deduction.
Author Archives: Advanced Tax
What are the SR&ED Tax Incentives? The Scientific Research and Experimental Development (SR&ED) tax incentives are the largest program by the Government of Canada to support research and development. It provides more than $3 billion Canadian dollars in tax incentives every year to over 16,000 businesses. This incentive comes in three forms: Non-Refundable Investment Tax Credit (ITC) to reduce taxes owed in the year. If the tax payable is reduced to $0, the remainder of the non-refundable ITC can be used to recover taxes paid in the last three years or to reduce tax that may be owed over the next 20 years. Refundable ITC that can fund expenditures relating to Research and Development (R&D). How You Receive these Tax Incentives Your tax incentives under the SR&ED program will look like one of the following: Deductions against income. Investment tax credits (ITCs) Refundable Non-Refundable The value of these ITCs can range from at least 15% to a max of 35% on qualified SR&ED expenditures. Excess ITCs in the current year may result in a refund and unused ones can be used for the prior 3 years or future 20 years. Eligibility for the SR&ED Tax Incentives The work must meet the following criteria: The work is conducted for the advancement of scientific knowledge or to acheive a technological advancement. Systematic investigations or searches in science/technology via experiment/analysis. Work Categories that are Eligible basic research applied research experimental development Work that Directly Corresponds or Supports Eligible Work Categories engineering design operations research mathematical analysis computer programming data collection testing psychological research Work that is Excluded from SR&ED Tax Incentives market research or sales promotion quality control or routine testing of materials, devices, products or processes research in the social sciences or the humanities prospecting, exploring or drilling for, or producing, minerals, petroleum or natural gas commercial production of a new or improved material, device or product the commercial use of a new or improved process style changes routine data collection Check Your Eligibility and Start Filing Your SR&ED Claim Here Find out more information on the Government of Canada’s website under the CRA’s section about Scientific Research and Experimental Development (SR&ED) tax incentives by clicking here.
The VISA / Mastercard Class Action Settlement In Canada, there were several class actions against a multitude of banks along with Visa and Mastercard. This credit card class action claimed that they conspired in order to set higher interchange fees and imposed rules that restricted merchants’ capacity in adding surcharges or to refuse higher cost Visa and Mastercard credit cards. Interchange Fees “Interchange Fees” are fees paid by merchants and collected by banks for transactions involving Visa and/or Mastercard credit cards in Canada. Retrieved from https://creditcardsettlements.ca/ The Settlement from the Credit Card Class Action The total settlement was $188 million Canadian dollars and made Visa and Mastercard to agree to modifying their no-surchage rules. This way, merchange can add a surchage up to a camp for the next five years minimum. Court approval has been received and $131 million Canadian dollars is ready to be distributed to class members after deductions even though the “Defendants” (Visa and Mastercard) have not admitted to any wrongdoing or liability. The settlement resolved this action and involved the following financial institutions: Capital One Citigroup Bank of America Desjardins National Bank Visa Mastercard CIBC Royal Bank Bank of Montreal TD Bank Bank of Nova Scotia Eligibility for the Credit Card Class Action Settlement If you accepted Visa or Mastercard payments for payments towards goods or services in Canada between March 23, 2001 and September 2, 2021, you are eligible for a part of the settlement. Claims must be submitted before September 30, 2022 to participate. To submit a claim, click here for more information or visit the website at creditcardsettlements.ca. Here’s How the Settlement Will Be Distributed Small Merchants 40% of the settlement will be distributed for Small Merchant Settlement Class Members. These members collect less than $5 million Canadian dollars in average yearly revenue throughout the Class Action period. The claim may be undocumented but will provide $30 Canadian dollars per year of the claim period applicable. Medium Merchants 10% of the settlement will be distributed for Medium Merchant Settlement Class Members. These members collect between $5 million and $20 million Canadian dollars in average yearly revenue throughout the Class Action period. The claim will be simplified but will provide $250 Canadian dollars per year of the claim period applicable. Large Merchants 50% of the settlement will be distributed for Large Merchant Settlement Class Members. These members collect more than $20 million Canadian dollars in average yearly revenue throughout the Class Action period. The claim may be undocumented but will provide $250 Canadian dollars per year of the claim period applicable. Start your claim by clicking the link below and submitting a claim for by September 30, 2022: Start Your Canadian Credit Card Class Action Settlement Claim Here To find out more information, check out the following link to the Credit Card Settlement website: Click Here to Read More About the Canadian Credit Card Class Action Settlement
Freight Transportation Carriers You may be wondering, what are freight transportation carriers? This refers to services that transport goods including mail delivery and courier services. Additionally, it includes the services that are “incidental” to a freight transportation service like warehouse, packing and loading services that are provided by the carrier. This carrier supplies the freight service to the recipient. When it comes to passenger transportation, the incidental service does not include the transportation of individual’s baggage even if it is part of the passenger transportation service. Types of Freight Transportation Carriers: Driving Services This includes driver services where the driver uses their own vehicle and assumes responsibility for the supply of the freight transportation service. Freight Forwarder’s Services These are freight forwarders that not only act as agents for their clients by assisting shippers with the preparation and booking of freight transportation services, but also assumes responsibility for the transportation of goods. Pilot Car Services This refers to the service of providing marker vehicles for carriers when the load is oversized for travel on roads and highways but must be provided by the carrier themselves. Reload Centre Services When transporting goods to a facility by rail or truck that need to be unloaded and reloaded within 30 days, it is considered a freight transportation service. The goods cannot be altered while being held until it is reloaded to be considered in this category. Repositioning a Conveyance If the conveyance is repositioned for the facilitation of a freight transportation service and an empty-mile charge is applied, then this is considered a freight transportation service. Shunting Services Transferring trailers from a yard to a loading dock is usually a freight transportation service. Stevedoring Services Loading and unloading ships is a freight transportation service in general as it is provided by a carrier service. Towing Services Towing vehicles from accidents or breakdowns are freight transportation services but this does not include roadside services unless it is part of the service to tow a vehicle. Tax Obligations for Freight Transportation Services Taxable Supplies That are Not Zero-Rated GST/HST is charged and collected on supplies made in Canada but carriers are eligible to claim ITCs and recover the GST/HST paid on purchases made to provide the supplies. Zero-Rated Supplies of Goods & Services This is when GST/HST is charged at 0% and no GST/HST is collected but ITCs can be claimed to recover the GST/HST paid on purchases made for this supply. Exempt Supplies of Goods & Services Exempt supplies are when GST/HST is not charged or collected on the supplies. Additionally, ITCs can’t be claimed for the GST/HST paid on these expenses. Zero-Rated Freight Transportation Services Keep in mind that the following criteria applies for zero-rated transportation services: International freight transportation services are zero-rated when: The goods come from a place in Canada to a place outside Canada and have a freight charge of $5 or more. If the goods are from a place outside Canada to a place in Canada. When the goods come from a place outside Canada to another place outside Canada, even if the goods go through Canada. Freight transportation services that take place partly outside Canada but have an origin and destination within Canada are considered domestic services and so it is not zero-rated. If the goods are part of a continuous inbound or outbound freight movement, then it will be zero-rated even if the service is domestic. Goods that are supplied to another carrier which are under an interlining agreement and also part of a continuous freight movement are zero-rated. Interlining Agreements An interlining agreement occurs when multiple carriers are part of the supply of a freight transportation service during a continuous freight movement from the shipper to the consignee. Only one carrier invoices the customer and so they are responsible for charging and collecting any applicable GST/HST. The services between the carriers in the freight movement are zero-rated even if the invoicing carrier is an agent for other carriers. Other Services or Property Provided for Freight Transportation Services If the freight transportation service incldues other services or property that are necessary for the transportation of goods, they may be considered part of the freight transportation service. The tax status of the freight transportation service that is supported is the same for these services or property. This includes the following: Storage and Warehousing Loading and Unloading Refrigeration Packing To find out more information, access the CRA website’s section on GST/HST Information for Freight Carriers by clicking here.
The Obligations Regarding Your Not-For-Profit Tax Return Filing If you manage a registered NPO and are wondering about your Not-For-Profit Tax Return Filing as well as any obligations that you may have, we’ve compiled a summary of any information that you will need to do so. All the information provided is sourced from the Government of Canada’s website and information section for corporations. What Do You Need to File Your Return To file this annual return, your corporation must have an active status with Corporation’s Canada. This means that it is not dissolved, discontinued or amalgamated with another corporation. To find out the status of your corporation, you can use the following link to the Corporations Canada Online Database. This is actually separate from your income tax or registered charity annual information return and is a requirement of corporate law. It also does not involve your filing obligations with the Canada Revenue Agency (CRA). You will need the following information for this filing: The Date of Your Last Annual Meeting Your Corporation Type – Soliciting or Non-Soliciting If you receive more than $10,000 in income from public sources in a single financial year, then you are considered soliciting. This includes gifts or donations from non-members, government grants and funds from another corporation that receives income from public sources. To be a director, officer or any authorized individual that has relevant knowledge of the corporation and has been authorized by the directors. Not-For-Profit Tax Return Filing Deadline Your Not-For-Profit Return Filing is due within 60 days of your anniversary date. The anniversary date refers to when your corporation was incorporated, amalgamated or continued. This is not required for the year of incorporation, amalgamation or continuation. To find this information, check your corporation’s Certificate of Incorporation, Amalgamation or Continuation. Alternatively, you can check the Corporations Canada Online Database for this information as well. The Annual Meeting of Members It is required for all Not-For-Profit organizations regardless of size to hold at least one annual meeting of members. This has to be done every year and does the following: Consider the Financial Statements Consider the Public Accountant’s Report Appoint the Public Accountant Elect Directors if Necessary Written Resolution Preparation for NPOs Alternatively, if there is only one or a few members in your organization, a written resolution is also accepted. This involves a written record of the decisions listed above and is signed by all of the members that are able to vote. If using this method instead of the annual meeting, the date the resolution was signed is required for the annual return. For more information, visit the Government of Canada’s website via the following link: Information on Annual Return Filings for Not-For-Profit Corporations