Business and Personal Tax Updates
Issue 25 – May 2013
This month’s newsletter summarizes some of the highlights from the recent Federal budget.
There’s obviously much more to the Federal budget and how it will impact your business and/or personal financial situation than the summary below can provide.
For additional information, answers and tax-planning for either yourself or your business,I invite you to personally call me at 506-657-4067 or 1-800-650-4067 to see how we can assist in helping you add to your bottom line.
I look forward to hearing from you.
P.S. As a favour to a friend or business colleague, feel free to forward this email to those who you think could benefit from the information below.
2013 FEDERAL BUDGET
Some of the provisions in the 2013 Federal Budget include:
First-Time Donor’s Super Credit (FDSC)
Budget 2013 proposes a temporary FDSC providing an additional 25-per-cent tax credit for a first-time donor on up to $1,000 of donations.
A first-time donor will be entitled to a 40-per-cent federal credit for donations of $200 or less, and a 54-per-cent federal credit for the remaining portion, not exceeding $1,000.
An individual will be considered a first-time donor if neither the individual nor the individual’s spouse or common-law partner has claimed a Charitable Donation Tax Credit in any taxation year after 2007.
The FDSC will be available in respect of donations of cash made on or after Budget Day (March 21, 2013) and may be claimed only once in the 2013 through 2017 tax years.
Taxes in Dispute and Charitable Donation Tax Shelters
Budget 2013 proposes to allow the CRA to collect 50 per cent of the disputed tax,interest or penalties where an objection has been filed with regards to a disallowance of a deduction or tax credit claimed in respect of a tax shelter that involves a charitable donation.Normally,collection action cannot be taken while amounts are under objection or appeal.
This measure will apply in respect of amounts assessed for the 2013 and subsequent taxation years.
Leveraged Insured Annuities (LIA) and 10/8 Arrangements
A LIA involves the use of borrowed funds in connection with a lifetime annuity and a life insurance policy,both of which are issued on the life of an individual.
A 10/8 Arrangement generally involves the borrowing of funds secured by a life insurance policy,or investment account under the policy,whereby the rates on the loan and the investment are tied to each other.
Budget 2013 proposes to eliminate unintended tax benefits by introducing rules for “LIA policies” and “10/8 arrangements”.
Budget 2013 also proposes to alleviate the income tax consequences on a withdrawal, from a policy relating to a 10/8 arrangement,if the withdrawal is made before January 1, 2014.
Restricted Farm Losses (RFL)
Budget 2013 proposes to codify the chief source of income test whereby other income must be subordinate to farming in order for farming losses to be fully deductible against income from those other sources.
Budget 2013 also proposes to increase the RFL limit to $17,500 of deductible farm losses annually, being the first $2,500 loss plus half of the next $30,000.
These measures will apply to taxation years that end on or after Budget Day.
The Canada Job Grant
Businesses with a plan to train Canadians for an existing job or a better job will be eligible to apply for a Canada Job Grant. The Grant will provide access to a maximum $5,000 federal contribution per person towards training at eligible training institutions.
As there are various bodies involved, negotiations must still take place to finalize the detailed design of the Grant.
Extension and Expansion of the Hiring Credit for Small Business
Budget 2013 proposes to expand and extend for one year the temporary Hiring Credit for Small Business.This credit would offset up to $1,000 of the increase in an employer’s 2013 Employment Insurance (EI) premiums over those paid in 2012. Only employers with total EI premiums of $15,000 or less in 2012 qualify.
Stop International Tax Evasion Program
The CRA will pay rewards to individuals providing information on major international tax non-compliance to the CRA of up to 15 per cent of federal tax collected if reassessments exceed $100,000 in federal tax.
Canada – U.S. Information Exchange & FATCA
Budget 2013 confirms the Government is engaged in negotiations with the U.S. for an agreement to enhance reciprocal information exchange under the Canada–United States Tax Treaty.
The agreement would include information exchange provisions in support of the United States Foreign Account Tax Compliance Act provisions.
Donna Mazerolle & Associates provides:
- Strategic Planning
- Business Plans
- Accounting and Bookkeeping
- Growth Strategies
- Budgeting and Forecasting
- Growth Management Strategies
- Turnaround Strategies and Management
- Help with Sourcing Funds
The preceding information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions in a newsletter such as this, a further review should be done by a qualified professional.
Although every reasonable effort has been made to ensure the accuracy of the information contained in this newsletter, no individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortious, or any other form of liability for its contents.