Claim amount increased to $23 from $17 per meal, for a total of $69/day
Ensure that allowances paid are reasonable. If they are determined unreasonable, the full allowance could be taxable
In a May 15, 2020 Federal Court of Appeal case, the Court reviewed whether various allowances paid to employees of the taxpayer were subject to CPP and EI. This required determining whether the allowances were taxable. The Tax Court of Canada had previously ruled that some of the allowances were partially taxable, while others were either fully taxable or fully non-taxable. At issue in this case was whether an allowance could be partially taxable or whether being in excess of a “reasonable amount” resulted in the allowance being entirely taxable.
Taxpayer loses
After reviewing the exclusion of reasonable travel allowances from income rules, the Court concluded that the entire allowance is excluded from income if it is reasonable, or fully included in income if it is unreasonable. It cannot be partially taxable. As the allowances in question exceeded a reasonable amount, they were entirely taxable.
ACTION ITEM: It is extremely important to ensure that allowances paid are reasonable. If they are determined to be unreasonable, even if by the thinnest of margins, the full allowance could go from non-taxable to taxable. Consult with a specialist to ensure that they are comfortably reasonable.
Up to $500 reimbursement to employees for the personal purchase of equipment for working remotely
In an April 14, 2020 French Technical Interpretation, CRA was asked whether amounts paid to an employee for costs of equipment for working remotely would be a taxable benefit.
Generally, a reimbursement for a personal purchase of equipment used for working remotely would be a taxable benefit. However, CRA noted that in the context of the COVID-19 pandemic, which has required many employees to work remotely, acquisition of computer equipment may be primarily for the employer’s benefit. In that context, CRA indicated that no taxable benefit would arise for a reimbursement, supported by actual invoices or receipts, of no more than $500 towards such equipment.
CRA also stated that a non-accountable allowance would always be taxable, as no provision would provide for an exclusion of such amounts.
CRA did not comment on the consequences if the equipment were used exclusively for employment and was owned by the employer, not the employee. CRA has indicated in the past that, where equipment is property of the employer, and any personal use is incidental, there would be no taxable benefit to the employee.
ACTION ITEM: Consider providing a reimbursement to employees for the personal purchase of equipment for working remotely of up to $500.
A webpage, was launched to help manage one’s business during COVID-19; Canada Emergency Wage Subsidy estimator 2.0.
As of August 9, 2020, the Government has approved 813,570 Canada Emergency Wage Subsidies (CEWS), with a total value exceeding $26 billion.
To estimate your CEWS entitlement, consider using the CEWS 2.0 Estimator at WageSubsidyCalculator.ca, or CRA’s more complete calculator at https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy.html.
The Government has launched a webpage, https://www.canada.ca/en/services/business/maintaining-your-business.html, to help manage one’s business during COVID-19. It provides links to government financial supports and loans, reopening guidance and rules, employee issues, industry-specific assistance, tax issues, and a support phone line.
Transport Canada released details on the purchase incentive of up to $5,000 for zero-emission vehicles as originally proposed in the 2019 Budget
On April 17, 2019, Transport Canada released details on the purchase incentive of up to $5,000 for zero-emission vehicles as originally proposed in the 2019 Budget.
The incentive will apply to new purchases or leases on or after May 1, 2019. To receive the incentive, the manufacturer’s suggested retail price must be less than $45,000 for vehicles with six or fewer seats, while a vehicle with seven or more seats must have a suggested retail price of less than $55,000. Higher priced versions (trims) up to $55,000 (six or fewer seats) or $60,000 (seven or more seats) will also qualify. Delivery, freight and other fees, such as vehicle colour and add-on accessories, which push the actual purchase price over these limits will not result in the incentive being lost.
The full $5,000 incentive will be available for eligible battery electric, hydrogen fuel cell, or longer range plug-in hybrid vehicles (battery capacity of 15 kWh or more), while shorter range plug-in hybrid vehicles will be eligible for a $2,500 incentive.
Leases of 48 months or more qualify for the full incentive, with reduced amounts available for shorter leases. It will be reduced to 75% for a minimum 36-month lease, 50% for a minimum 24-month lease, or 25% for a minimum 12-month lease.
The purchase incentive will be applied at the point of sale (i.e. at dealerships or online) directly on the bill of sale or lease agreement of eligible vehicles.
The dealership is responsible for completing the documentation required to receive the incentive. Claims can be submitted through the Transport Canada online portal. Funding will be provided on a first-come, first-serve basis.
Individuals can only get one incentive per year. Businesses (including NPOs and provincial, territorial and municipal governments) can get up to ten incentives per year.
As an alternative to receiving the cash incentive, a temporary enhanced first-year capital cost allowance (CCA) rate of 100% may be claimed by those using the vehicle for income earning purposes. Specific restrictions and conditions apply. The deduction may be restricted to the first $55,000 in cost depending on the size, seating, and use of the vehicle.
ACTION ITEM: Review the Transport Canada website to determine if a future vehicle purchase would be eligible. The website includes a list of eligible vehicles and responses to frequently asked questions. https://www.tc.gc.ca/en/services/road/innovative-technologies/zero-emission-vehicles.html