News of Interest to Nilson & Company Clients

07-Mar-13

PST is Here

Registration

  • Businesses were mailed a registration package in Dec 2012
  • Required to register if sell or lease taxable goods or services in BC
  • In particular, click on the link “What’s Taxable and What’s Not”
  • On-line registration is encouraged
  • Must register prior to making taxable sales on or after April 1, 2013
  • Registration package provides detailed info re above

Administrative Changes

  • Electronic filing mandatory for registrants with annual sales > $1.5 million
  • Filing due date changed to last day of month to correspond with GST due date
  • Filing frequency based on levels of tax collected per year
  • New online access including filing and payments
  • Businesses can register with federal Business Number
  • 8% hotel room tax incorporated into PST instead of requiring separate registration, remittances, and payments

Exemptions and non taxable sales

  • Previous PST exemptions and non taxable sales will be reinstated
  • This includes PST exemption on purchases by businesses for ultimate resale
  • The software and telecommunications sections of the PST Act have been updated to reflect modern technology

Transitional Rules

  • General rule: new PST regime applies if consideration for goods and services is due on or after April 1, 2013
  • There are specific rules for goods brought into BC, goods used in improvements to real property, software, accommodation, telecommunication services, and passenger vehicle rentals
  • A wealth of information is available on the Ministry of Finance website www.gov.bc.ca/fin

Dec 18, 2012

T4 Preparation – 2012

The government, through its “P.I.E.R.” program, audits the correctness of the T4 filings. If you have made a mistake, they will be after you for amounts owing. If the employee has left your firm, you will be stuck with having to pay both the employee and employer portions. The trick is to apply the same tests to your payroll records that the government does before you issue the T4s.

  • CPP TEST (Gross earnings – $3,500) times .0495 Maximum gross earnings are $50,100
  • EI TEST Gross earnings times .0183 Maximum gross earnings are $45,900

The amount that you enter in the CPP box on the T4 must be greater than or equal to the test amount. The maximum CPP for the year is $2,306.70

The amount that you enter in the EI box must be greater than or equal to the test amount. The maximum EI for the year is $839.97

Don’t forget to include in gross earnings any taxable benefits such as MSP premiums, life insurance premiums, personal automobile use plus imputed HST, and interest on employee loans.

If you maintain your records on “Simply Accounting”, the payroll data can be exported to a spreadsheet, wherein the above tests can be programmed and, thus, automated.

Remember to consider whether you need to be issuing any T4As or T5s as well.

We are now filing T slips magnetically on behalf of some clients and would be pleased to be of assistance in doing yours.

Dec 23, 2011

Important CPP changes for employers and employees over 60

Please see the updated article on CPP changes for those aged 60 to 69 who presently are collecting CPP Benefits and still working, as of January 1, 2012.

Dec 1, 2010

Preparing T5018s – Subcontractor Reporting Information Returns – 2010

Please see the new article on preparing Subcontractor Reporting Information Returns (T5018).

Dec 28, 2009

We are pleased to announce that Jacqueline Russell successfully completed her national exam and experience requirements and now is a member of the international financial planning community, carrying the CFP designation.

Jan 1, 2008

Changing & Creating New GST Codes

If you are registered for GST, you will need to create new GST codes in your Simply Accounting Data file in response to the new 5% GST rate being implemented on January 1, 2008.

If you have more than one company setup in Simply Accounting, the process will have to be completed in each data file.

There will be a transition period where you will need to process transactions with both the 5% and 6% rates. Two of the default codes in Simply Accounting are “I” GST 6% included and “G” GST @ 6%. The best procedure to follow is to change the current Codes “G” to “G6” @ 6% and “I” to “I6” @ 6%. The second part of this procedure is to create new “I” and “G” codes at 5%.

If you are working in Simply Accounting Pro, Premium or Enterprise make sure to sign in as “Sysadmin” and in “single-user” mode.

Close all open windows except the Home Window.

Go to Set-up – Settings… Choose Company, Sales Taxes, Tax Codes.

A Settings window will open displaying the current Tax Codes.

To change the “G” code to “G6” click on the “G” under Code and add a 6.

To change the “I” code to “I6” click on the “I” under Code and add a 6.

To create the new “G” code at 5%, click the blank space under the last entry in the Code column- enter the letter “G”. Double click this cell and the Tax Code Details window will open. In the Tax column click the magnifying glass- this opens the Select Tax window. Choose GST and then click Select. In the Status column click the magnifying glass to open the Select Tax Status window. Choose Taxable and then click Select. Enter “5” in the Rate column, “No” in the Included in Price column, and “Yes” in the Is Refundable column. Click OK. The description field should read “GST @ 5%”, but if not, you can click in the field and type it in yourself.

To create the new “I” code at 5%, click the blank space under “G” in the Code column- enter the letter “I”. Double click this cell and the Tax Code Details window will open. In the Tax column click the magnifying glass to open the Select Tax window. Choose GST and Select. In the Status column click the magnifying glass to open the Select Tax Status window. Choose Taxable and Select. Enter “5” in the Rate column, “Yes” in the Included in Price column, and “Yes” in the Is Refundable column. Click OK. The description filed should read “GST @ 5%, included”, but if not, you can click in the field and type it in yourself. When you are done click OK.

ALWAYS test your tax codes in the Payables Journal before posting.

December 13, 2007

T4 Preparation

The government, through its “P.I.E.R.” program, audits the correctness of the T4 filings. If you have made a mistake, they will be after you for amounts owing. If the employee has left your firm, you will be stuck with having to pay both the employee and employer portions. The trick is to apply the same tests to your payroll records that the government does before you issue the T4s.

  • CPP TEST (Gross earnings – $3,500) times .0495 Maximum gross earnings are $43,700
  • EI TEST Gross earnings times .0180 Maximum gross earnings are $40,000

The amount that you enter in the CPP box on the T4 must be greater than or equal to the test amount. The maximum CPP for the year is $1,989.90

The amount that you enter in the EI box must be greater than or equal to the test amount. The maximum EI for the year is $720.00

Don’t forget to include in gross earnings any taxable benefits such as MSP premiums, life insurance premiums, personal automobile use plus imputed GST, and interest on employee loans.

If you maintain your records on “Simply Accounting”, the payroll data can be exported to a spreadsheet, wherein the above tests can be programmed and, thus, automated.

Remember to consider whether you need to be issuing any T4As or T5s as well.

We are now filing T slips magnetically on behalf of some clients and would be pleased to be of assistance in doing yours.

March 20, 2007

Please have a look at the latest editions of our Insight and Foresight newsletters for tax and investment tips, stories of interest and more…

January 16, 2007

Getting a Grip on GRIP and LRIP

A return to a world of dual taxation of Canadian-source dividends paid to individuals: read the article

November 3, 2006

Proposed Legislation for Income Trusts

The taxation of trust units became high profile in the Fall of 2005, when the out-going Liberal government decided that something had to be done. They left their mark, before losing power, with legislative changes in November 2005. While their approach did address the “problem”, it did not completely fix it. Each of the provinces had to buy into the problem and the solution, which, today, most of them have not. Also, there remained a more complex problem with foreign ownership of Canadian trust units.

A year later, the Canadian financial market finds itself mired in the same mess. It took the recent statements by Telus and BCE to force the Ottawa mandarins to accelerate their deliberations.

The Conservative Government’s version of a solution took a different tack and proposed to tax income trusts directly (with the exception of Real Estate Investment Trusts) and this tax would commence in 4 years time. For investors that hold the Income Trusts in their non-registered accounts, the after-tax distributions from these income trusts would be taxed as dividend income, resulting in a similar taxation situation as if the income trust were a corporation.

Since October 31st, a significant amount of “paper wealth” has been shaved from the falling unit values of Canadians’ trust holdings.

There is a tremendous amount of misinformation and vested interest posturing appearing in the Press. Our firm wrote on the subject and made a submission to the Finance Minister a year ago. That article can be found in our investoru.ca website in the trust unit section. In there we wrote about the premium attached to trust unit holdings, which is directly correlated with the tax preference enjoyed by trusts over regular share holdings:

Trust mania is the current era’s investment flavour of the month. Do you remember the last one: it was called the tech bubble. The trust premium is no more nor no less than a tax shelter, like all of the tax shelters that we have had over the decades, including thoroughbreds and feature films, etc. Recall that most of those were bludgeoned out of existence many years ago. Nature abhors the proverbial vacuum and seeks rebalancing. It was entirely obvious that the trust premium could not continue forever. It is lunacy to have and keep a business environment in which every company is forced to draw into this trust phenomenon to preserve shareholder value. To do nothing merely promises that, with the passing of enough time, there will be no shares on the TSX anymore, only trust units.”

In conclusion, while we sympathize with mourning investors right now, we support the current government for “facing the music” and making an unpopular decision.

October 5, 2006

Life Income Funds

Vested funds from a Registered Pension Plan may be transferred to a Locked-in Retirement Account which is a locked-in RRSP.

Upon reaching age 69, the plan holder must convert this locked-in account to a Life Income Fund (LIF) rather than to a RRIF.

Withdrawing money from this account is subject to both a minimum and maximum amount. The formula for calculating the maximum withdrawal allowed has been revised.

In a BC regulated plan, the maximum annual withdrawal is the greater of the application of the relevant prescribed factor and the previous year’s investment returns under that LIF contract.

100% of funds in a federally regulated plan may be withdrawn at age 90.

For both federally and BC regulated pension plans, it is no longer a requirement to use all the funds in the plan at age 80 to buy a life annuity.

October, 2006

Nilson & Co. welcomes Jessica Thomson-Toth

We would like to welcome Jessica to our Client Accounting Services department as the newest member of our team. Jessica is a North Shore native who is currently working on her BBA.

August, 2006

Revised remittance rates for GST Quick method

Effective July 1, 2006, the rate of GST charged on goods and services has been reduced to 6%.

The revised calculation for remitting GST by the Quick Method is 3.3% on the first $30,000 of sales including GST and 4.3% on sales including GST above $30,000.

For retailers and wholesalers, the above remittance rates are 1.2% on the first $30,000 and 2.2% on the remainder.

Example:
Total sales =
$50,000
GST charged $50,000 x 6% =
$3,000
GST remitted $30,000 x 3.3% =
$ 990
$23,000 x 4.3% =
$ 989
Total remittance =
$ 1,979

February, 2006

Don will participate in the Press lockup in Victoria on Feb 21st for the BC Budget. He, his colleagues and other participants will spend the morning “locked up” in a room in the Empress Hotel analyzing the budget’s content and direction prior to it being released by the Finance Minister in the legislature in the afternoon.

December, 2005

T4 Preparation

The government, through its “P.I.E.R.” program, audits the correctness of the T4 filings. If you have made a mistake, they will be after you for amounts owing. If the employee has left your firm, you will be stuck with having to pay both the employee and employer portions. The trick is to apply the same tests to your payroll records that the government does before you issue the T4s.

  • CPP TEST (Gross earnings – $3,500) times .0495 Maximum gross earnings are $41,100
  • EI TEST Gross earnings times .0195 Maximum gross earnings are $39,000

The amount that you enter in the CPP box on the T4 must be greater than or equal to the test amount. The maximum CPP for the year is $1,861.20

The amount that you enter in the EI box must be greater than or equal to the test amount. The maximum EI for the year is $760.50.

Don’t forget to include in gross earnings any taxable benefits such as MSP premiums, life insurance premiums, personal automobile use plus imputed GST, and interest on employee loans.

If you maintain your records on “Simply Accounting”, the payroll data can be exported to a spreadsheet, wherein the above tests can be programmed and, thus, automated.

Remember to consider whether you need to be issuing any T4As or T5s as well.

We are now filing T slips magnetically on behalf of some clients and would be pleased to be of assistance in doing yours.

Kelowna, October, 2005

Don Nilson receiving CGA-BC President's Ward for EducationDon was recognized in the Fall of 2005 as the winner of the CGA-BC President’s Award for Education, in recognition of his 25 years lecturing to CGA students.

“This award recognizes distinguished service to CGA-BC in the role as an educator in our student program or in our continuing professional development program.

This year’s recipient has taught an entire generation of CGAs in British Columbia and he is one of the few instructors whose name consistently comes up in conversations amongst CGA students and members, regarding instructors that have made a difference.

Through his teaching and work, he demonstrates a vast and consistently current knowledge of tax, wealth accumulation and people. His course material is delivered with enthusiasm, patience, humour and encouragement. His signature opening line, “It’s a great day to study tax,” underscores that enthusiasm.

His commitment to the profession extends beyond being an excellent mentor – this year’s President’s award winner mixes sound advice with his usual wit and an overwhelming commitment to his students’ success.”

October 27, 2005

BC Mini-Budget

The BC government recently delivered a mini-budget.

Of particular note, the general corporate income tax rate is reduced to 12% (from 13.5%), effective July 1, 2005.

The general corporate income tax rate applies to investment income, income of public and non-Canadian controlled private corporations (CCPCs), income of CCPCs with paid-up capital exceeding $10 million, and active business income of CCPCs exceeding $400,000.

July 20th

Don was named a Fellow (FCMA) of the Society of Management Accountants of Canada in recognition of his career achievements in professional accounting.

July 4th

Summer student

Emily McCance

We welcome Emily McCance as our summer student. Emily is a Commerce student at McGill. She will be helping us with various admin projects during July and August.

April 20th

Tax deadline

Consistent with prior practice, CRA will extend the personal tax filing deadline to midnight May 2nd due to the normal deadline falling on a weekend.

April 19th

An addition to the firm

Associate Jacqueline Russell started her maternity leave just in time, delivering her baby one week after her last day at work. Robert Tyler Russell and his Mom will be taking a year off and returning to us next Spring.

March 14, 2005

Tax season

We commence personal tax season today. Visit the website version of Insight to learn the particulars.

February 4, 2005

Our staff will be contributing various advice to the online RRSP Clinic at the National Post.

January 11, 2005

2005 BC personal tax rates

The marginal tax scale for individuals for 2005 has been posted.