Changes to the rules for deducting CPP contributions
On January 1, 2012, changes to the rules for deducting CPP contributions come into effect.
Under the new rules, an employee who works and receives a CPP retirement pension now has to contribute to the CPP if he or she is:
- 60 to 75 years of age; previously you stopped deducting once an employee was 60 to 70 years of age
- 65 to 70 years of age, unless the employee has filed and election with you or another employer to stop paying CPP contributions; previously you stopped deducting once an employee gave you proof that he or she was receiving a CPP pension plan
- 65 to 70 years of age, if the employee revoked his or her election to stop paying CPP contributions in 2013 or later.
Note: Canada Revenue can assess you for failing to deduct CPP contributions or for failing to remit the CPP contributions to CRA as required. The assessment may also include penalty and interest charges. For more information, go to Penalties, interest, and other consequences.
All information was obtained from Canada Revenue Website at www.cra.gc.ca. For more information regarding CPP contributions please visit CRA's website.
New Debit Machine
We are making it easier for you to pay your accounting fees. Our office has now added a debit machine for your convenience. However, at this time we are not accepting credit card payments.
Checklists
This year end checklist will help you to assemble the information our office will need to prepare your corporate financial statements and tax return.
EcoEnergy Retrofit program
The 2011 Federal Budget extended the previous EcoEnergy program to March 31, 2012 with two main changes:
- Before any work is done, you must first register for the program and have an pre-retrofit energy evaluation performed; and
- during the post-retrofit evaluation, you must provide receipts to the energy adviser to ensure the work was done in the allowable period.
The purpose of the EcoEnergy program is to improve the energy efficiency of existing homes and reduce energy costs. Grants of up to $5,000 per property are available. If you own multiple properties, such as vacation cottages, rental units, etc., you can apply for up to $5,000 for each property. Further information is available on the NRCan website.
Keep in mind that the EcoEnergy Retrofit program only has a budget of $4 million. The program may end early if the grants paid out reach this maximum. So, if you intend to take advantage of the program, start making plans now.
Tax Tips & Traps
The latest Tax Tips & Traps issue includes helpful information on the following topics (and many more).
- Personal Tax - Medical expenses, moving expenses, & Childrens Art Tax Credit.
- Hiring Credit - The 2011 federal budget created a one-time hiring credit for small business. It gives small business relief from the employer's share of Employment Insurance (EI) by paying up to $1,000.
- CPP Changes - A person who delays receiving CPP until after age 65 will receive a larger increase that was available prior to 2012. From 2011 to 2013 the percentage will increase from .5% to .7% per month. Individuals that elect to receive their CPP before age of 65 will have a larger reduction. The change is a phased-in reduction that will increase the early CPP reduction to .6% per month.
- Tax-Free Savings Accounts (TFSA) - Taxpayers may receive a TFSA over-contribution package concerning their TFSA contributions. Over contributions may result in a 1% per month penalty.
- Personal Tax - Do you have to file a return? Provides you reasons on why you should be filing a tax return.
- Estate Planning - CPP post retirement benefit is a new lifetime benefit that increases you retirement income and rises with increases in the cost of living.
- Life Events - Service Canada has set up a website that provides a guide to the different government programs, requirements and other considerations to be processed when a major life event occurs. For example: buying a home, having a baby, getting married, retirement etc.
- Canadian Retirement Calculator - Service Canada calculator has been updated for 2012. The calculator is a tool to estimate ongoing retirement income generated through OAS, CPP, employer pensions, RRSP's and other sources.
Please note that the Tax Tips & Traps link will open in Acrobat.com and may take a few seconds to load. To view previous Tax Tips & Traps issues, visit the Newsletter section of our website.
Accounting Standards for Private Enterprises
There have been significant changes to accounting standards for private enterprises with fiscal years beginning on or after January 1, 2011. Corporations requiring assurance engagements (reviews or audits) will need to choose between adopting the new Canadian accounting standards for private enterprises (ASPE) or International Financial Reporting Standards.
The article Conversion to Accounting Standards for Private Enterprises, published by the Canadian Institute of Chartered Accountants, discusses the purpose of the new ASPE, some important considerations for transitioning into the new accounting standards and the options available to private corporations.
Auditing Standards
There have also been some important changes in Canadian Auditing Standards (CASs) that will take effect for financial statement audit for periods ending on or after December 14, 2010.
The article New Canadian Auditing Standards, published by the Canadian Institute of Chartered Accountants, discusses the new CASs and the impact on the way the audit report will be presented, as well as some questions the board of directors should be asking.
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