Income from Rental of seasonal, storage of RVs taxed at over 50%. 20.67% may be refunded when dividends are paid.
Where the 20-hour test is not met, the ongoing nature and labour requirements must be considered and still not be subject to TOSI.
CRA comments on whether a CPP/EI ruling triggers follow-up assessing and review.
A deduction can be claimed for salary paid to an assistant. Any deduction must be for salary, requiring it be paid to an employee.
A November 5, 2019 Tax Court of Canada case reviewed the deductibility of employment expenses by a manager overseeing the Canadian sales force and operations of a multinational manufacturer of dental instruments and products. The taxpayer’s employer had no Canadian office, and she travelled extensively to meet with sales representatives, dealers and customers throughout Canada.
Expense of assistant
Almost half of the taxpayer’s claimed expenses, which exceeded $80,000, related to her husband’s role as her assistant. The Court noted that a deduction can be claimed for salary paid to an assistant, but that there were several problems with her claim, including the following:
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The taxpayer’s husband was treated as self-employed and not as an employee. Any deduction must be for salary, requiring it be paid to an employee. This alone was fatal to the deduction claim.
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The amount was not paid to her husband. Rather, they simply had a single joint bank account through which they both transacted. Lack of payment alone would prevent any deduction.
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The taxpayer’s employer indicated it was the taxpayer’s decision whether she required an assistant. As her employer didnot require her to hire an assistant, no deduction was available. This item alone would also prevent any deduction.
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The husband’s services described were largely clerical, administrative, secretarial or driving, for which his hourly fee of $75 was not “anywhere close to the range of reasonable”.
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The husband’s hours set out in quarterly billings were not supported – he could only account for a small fraction of the hours invoiced.
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The husband claimed business expenses of almost 75% of his fees; however, the couple could not describe what expenses he incurred. The taxpayer “was sure this was a mistake”.
No deduction was allowed for these costs.
ACTION ITEM: Support and documents are often requested by CRA when deductions against employment income are claimed. Ensure to retain all such support. If no T2200 has been provided for the current year, enquire with your employer as to whether one is available for the next.
PROTECTING YOUR TAX INFORMATION, CRA guidelines, identity theft protection, CRA suggestions to safeguard tax information
CRA released a Tax Tip (Protecting your personal information) on August 6, 2019 which provided various suggestions to safeguard tax information, including the following:
1. Signing up for My Account or My Business Account and registering for email notifications. Notifications will be sent when paper mail is returned to CRA, or when certain other changes are made on one’s account.
2. Using CRA protocols to authenticate a caller’s identity. An option is being introduced to set a unique Personal Identification Number which must be provided before a call centre agent can access the individual’s accounts.
3. Verifying a purported CRA caller by requesting their badge number and calling the individual or business enquiries line for confirmation.
The Tip also provides guidance on steps individuals who may be victims of identity theft should take, including contacting CRA to request enhanced security measures be placed on their accounts.
ACTION ITEM: Review the above suggestions and adopt those that are appropriate.
Criterion for identifying individuals who have significant control over a corporation
Over the past few years there has been much discussion at both the federal and provincial levels in respect of increased disclosure and tracking requirements of beneficial owners (those who may be considered owners even if not on title) of various types of property.
Recent changes to the Canada Business Corporations Act , which came into force on June 13, 2019, incorporated these discussions. The legislation sets out a criterion for identifying individuals who have significant control over a corporation and also requires certain corporations to keep a register of these individuals.
For these purposes an individual may have significant control over a corporation if the individual has any of the following interests or rights, or any combination of them, in respect of a significant number of shares (more than 25% of voting rights or value) of the corporation:
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the individual is the registered holder;
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the individual is the beneficial owner; or
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the individual has direct or indirect control or direction over.
A group of two or more individuals whose joint holdings meet these criteria are considered to be an individual with significant control.
Also, an individual who has any direct or indirect influence that, if exercised, would result in control in fact of the corporation, would be considered to have significant control. The legislation also provides that other prescribed situations may result in an individual having significant control.
Directors, shareholders and creditors of the corporation may, on application, be able to access the register.
Failure to comply with the requirements to maintain a registry may be subject to a $5,000 penalty. A director or corporation who “knowingly authorizes, permits or acquiesces” in not fulfilling this requirement or who provides false or misleading information in the registry may be subject to a fine of up to $200,000 and/or imprisonment of up to six months.
Similar requirements are currently being considered or enacted in respect of corporations governed by various provincial corporations acts.
ACTION ITEM: Consider whether your corporation is subject to this new requirement. If so, ensure that a proper register is being maintained.
Loan from a corporation controlled by family members, personal loans to a shareholder of a corporation, or a family member
In a July 8, 2019 Tax Court of Canada case, CRA had reassessed the taxpayer to add loans received from a corporation controlled by her brother and his wife to her income. Special rules apply to loans advanced from a corporation to a shareholder or a “connected person” (which includes any related person). These rules effectively require an income inclusion in the hands of the borrower if loans are not repaid by the end of the corporation’s year following the year in which the loan was advanced.
Loan from corporation – taxpayer loses
The Court held that the taxpayer had made a misrepresentation by failing to report the loans as income. Her knowledge that she had borrowed $45,000 from a corporation controlled by family members over the period from 2009 to 2012, and her failure to seek advice from anyone, including the corporation’s accountant, regarding the tax implications of such a loan was sufficient neglect or carelessness to permit reassessment of each year in which funds were advanced, even beyond the ordinary three-year reassessment period. As the loans had not been repaid in time, the full amounts were included in income.
ACTION ITEM: Advice should be sought if you currently have, or are considering, personal loans to a shareholder of a corporation, or a family member.
We live in a dynamic world where the pace of change is
speeding up rapidly. It’s getting more complex and competitive. New strategies,
sharpened skills and tactics will be required.
Businesses have to do something to keep afloat, especially
in this period of recession.
Here’s what they have to do: to hire a new generation of
employees. There are no terrible businesses; just management through lack of
vision and leadership that fail to explore the opportunities that lie before
them.
Managers that are accustomed to using specific ways to
engage their old generations of workers are going to have to change their ways
if they hope to engage and retain their new cohorts; the millennials. They
bring an increased number of workers in the workforce and some remarkable
changes.
Given their consistent increase of workers in the office, it
is crucial to understand who these employees are and what they want from your
organization.
Millennials have a significantly different outlook on what
they expect from their employment experience. They are well-educated,
technology-skilled, very self-confident, can multi-task and have plenty of
energy.
They
prefer to work in teams rather than individually.
Some ways to engage the Millennials.
The millennials are very different from the old generation
of workers. This means that (and as stated earlier) creating engagement
strategies and techniques is one of management’s big goals. When trying to find
ways to engage new generation workers, consider these two thoughts; first, are
millennials, and the older generation needs different? Are they different
enough to demand different engagement strategies for each generation? Second,
identify which engagement drives were appropriate for each age. A
millennial-friendly office is not just about beauty; it is more about improving
the overall workplace experience for employees.
Here are some ways of making your office
millennial-friendly:
1. Have a simple home comfort in the workplace. Young
people don’t separate home life from work as much as the previous generation.
When they are at work, they need to be comfortable as they usually are at home.
Employers can accommodate simple home comforts like a kitchen with places that
stores food or snacks, areas with couches for collaborations with coworkers,
quiet spaces for independent work.
2. Creating
spaces for collaboration and creativity. This gives young employees
varieties in the workplace and supports their desire for social interaction
during the day. This means fewer cubicles and private offices and more open spaces
for communications. Now, these spaces are not just another boardroom; but
breakout spaces, lounges. Hallways, kitchens or areas with couches. This kind
of environment has been proven to increase productivity. Employees are likely
to be more productive and stay engaged when they have the freedom to move
around while working.
3. Alter your work environment to keep up with
modern needs. A modernized office environment can inspire and engage young
workers and increase retention. Put their mindset into consideration and create
a work environment in which they will succeed. This will show that you care and
they will work harder and stay longer.