February 2006 Archives

What to do when you hire a contractor

The Canada Revenue Agency has issued a Taxpayer Alert reminding Canadians to protect themselves when hiring a contractor, to be aware of cash deals without contracts or receipts, and avoid contributing to the underground economy.

"Without a contract, you could lose any deposit or advance payment given to the contractor, or find yourself charged far more than you expected. There is little you can do about poor quality or incomplete work and no assurance that you will get warranty coverage and after-sales service.

If you participate in the underground economy, you affect the government's ability to provide services such as health care, pensions and employment insurance. The CRA takes this problem seriously, and has over 1200 employees involved on identification, audit and enforcement initiatives aimed at addressing the underground economy."

For more information on this Taxpayer Alert, see the CRA web site at:
http://www.cra-arc.gc.ca/newsroom/alerts/2006/a060220-e.html

CRA Tax Tip: Signing up to be a rep

The Canada Revenue Agency (CRA) has released a new tax tip on signing up to be a representative.

Through the CRA web site you can now register the new "Represent a client service". Upon registering you will receive a representative identifier (RepID) which you can then give family and friends so that they can authorize you to deal with the Canada Revenue Agency online on their behalf. The service also applies to small businesses with no Business Number (BN).

For more information about this tax tip and the representative service, please refer to the CRA web site at:
http://www.cra-arc.gc.ca/newsroom/taxtips/2006/tt060220-e.html

Business tax help on Saturdays

In a recent news release, the Canada Revenue Agency has announced that it is now offering business tax help on Saturdays.

"The Canada Revenue Agency (CRA) will provide service on its business enquiries telephone lines on two Saturdays, February 18 and February 25, 2006, from 10:00 a.m. to 4:00 p.m. (local time). This extended service will assist employers who need help preparing T4 slips for employees.

The business enquiry telephone service operates year round with agent-assisted service available from Monday to Friday between 8:15 a.m. and 8:00 p.m. Automated service is available the rest of the time.

The business enquiry telephone number is 1-800-959-5525."

For more information on this news release, visit the CRA web site at:
http://www.cra-arc.gc.ca/newsroom/releases/2006/feb/nr060216b-e.html

New multiple format service for visually impaired persons

The Canada Revenue Agency and the Canadian Human Rights Commission jointly announced today that the CRA will now offer a new multiple format service for visually impaired individuals.

"The new multiple format service will allow visually impaired Canadians to self-identify to receive CRA printed material in the alternate format of their choice by making a one-time alternate format request to the CRA.

Once an individual has self-identified, the CRA will send all subsequent material that is specific to the individual, such as a Notice of Assessment, in the alternate format of choice. To obtain publications that are not client-specific, such as generic tax information publications, visually impaired individuals will be required to make a separate request."

For more information on this News Release, see the CRA web site at:
http://www.cra-arc.gc.ca/newsroom/releases/2006/feb/nr060216-e.html

CRA Tax Tip: RRSP Deadline

The Canada Revenue Agency has issued a tax tip reminding Canadians you have until until March 1, 2006 to make contributions to your RRSP for your 2005 income tax return.

For more information on this tax tip or to use the My Account online service to see how much contribution room you have for your 2005 limit, visit the CRA web site at:
http://www.cra-arc.gc.ca/newsroom/taxtips/2006/tt060209-e.html

You can also call the Tax Information Phone Service (T.I.P.S) at: 1-800-267-6999.

UPDATE: Check TAXES.CA for current the RRSP Deadline.

THE SR&ED PROGRAM

The Scientific Research and Experimental Development (SR&ED) program is a federal tax incentive program to encourage Canadian businesses of all sizes and in all sectors to conduct research and development (R&D) in Canada. The program has been designed to encourage the development of new, improved, or technologically advanced products or processes by Canadians and Canadian businesses.

According to the CRA web site, the SR&ED program is the largest single source of federal government support for industrial research and development in Canada. You may be eligible to apply for SR&ED investment tax credits for expenditures such as wages, materials, machinery, equipment, some overhead, and SR&ED contracts.

For more information on the Scientific Research and Experimental Development (SR&ED) Tax Incentive Program, including eligibility and the application process, see the CRA web site at:
http://www.cra-arc.gc.ca/taxcredit/sred/menu-e.html

Final Gomery Report Fails to Impress Taxpayers

Narrow Recommendations Insufficient to Thwart Future Scandals

Conservative & NDP Accountability Measures More Encompassing

Ottawa – The Canadian Taxpayers Federation (CTF) reacted to Judge John Gomery’s report on the sponsorship scandal, released yesterday, and its recommendations to restore accountability in our nation’s capital. The first Gomery report, released in November, revealed to Canadians that of the $355-million spent on the Quebec sponsorship program approximately $150-million went to Liberal-friendly ad agencies, many of whom charged the federal government for work of little or no value.

“Judge Gomery first volume did a good job detailing the mechanics of Adscam to Canadians, but his second is disappointingly narrow in its sweep,” said CTF federal director John Williamson. “There certainly are some good recommendations. Yet in some cases he identifies real problems, but fails to make specific reform measures. Elsewhere, he simply ignores longstanding troubles altogether, as he did with Ottawa’s dysfunctional Access to Information Act.”

In Restoring Accountability – Recommendations Judge Gomery writes, “I have become convinced that we need to rebalance the relationship between Parliament and the Government in order to attain better accountability within government.” (Emphasis added.) “Unfortunately, the Gomery Commission addressed only one specific scandal and suggested narrow recommendations related to it,” observed Williamson. “But taxpayers expect reforms that will change Ottawa’s culture of secrecy, entitlement and lawbreaking that rarely results in penalties or sanctions being imposed. Yes, such a change will require greater accountability within government. But it also mandates accountability outside government, between public servants and citizens.”

Prime Minister-designate Stephen Harper re-affirmed his promise to pass the Conservatives’ own Federal Accountability Act. The proposals include specific measures to reform how political parties and candidates are financed, strengthen the Lobbyist Registration Act, ensure appointments are merit-based, reform the government’s procurement process so it is free from political interference, legislate an effective whistleblower law, increase the powers of the auditor-general as well as those of the ethics and information commissioners, dramatically expand Ottawa’s freedom of information law, improve government auditing, and establish an independent director of public prosecutions. Similarly, The New Democratic Party proposes reforms to fix government and make it more transparent to Canadians.

“If voters had to choose between Judge Gomery’s recommends and the Conservative and New Democratic accountability packages, the choice is an easy one. If the goal is to clean up Ottawa, taxpayers are further ahead with what was promised on the campaign trail. That’s the measuring stick the CTF will be applying in the months and years before us,” concluded Williamson.

John Williamson
Canadian Taxpayers Federation

Taxpayers’ Agenda for the New Government

Prime Minister-designate Stephen Harper was not sent to Ottawa to revolutionize the federal government. Nonetheless, the election outcome is good news and Canadians expect him to deliver much-needed reform once the new government is sworn in on Monday.

Even with a minority of seats in the House of Commons, Mr. Harper has an opportunity to transform federal-provincial relations, modernize Ottawa’s democratic institutions, and reform how tax dollars are spent and collected. As prime minister, he can ensure the priorities of taxpayers are those of the federal government’s. There is much to be done. To track progress, or lack thereof, the Canadian Taxpayers Federation has sketched out its priorities.

Because the Conservatives will be judged the moment they are out the gate, Mr. Harper should limit his Cabinet to 24 members and not overload the executive with an excessive number of parliamentary secretaries. The Cabinet’s first task will be determining what to do with Judge John Gomery’s accountability recommendations. More responsibility and transparency is the top issue for Canadians. The Gomery reforms should be quickly passed into law along with the Conservatives’ own Federal Accountability Act. An additional step to undo Ottawa’s culture of entitlement is reducing pension and severance entitlements paid to Members of Parliament so they are in line with public expectations.

Next up is the 2006 budget. Enacting a legislated debt repayment schedule and eliminating the over-taxation fuelling Ottawa’s multi-year, multi-billion dollar surpluses will be welcomed by taxpayers. As promised, the new government should lower the GST. It should also reduce Employment Insurance tax premiums and preserve the Liberal’s personal income tax reduction. The Conservatives say they plan to increase the lowest income tax rate from 15 per cent to 16 per cent. Such a change will incur the wrath of taxpayers and peg Mr. Harper as a tax hiker.

To temper Ottawa’s overreach into provincial jurisdictions of health care and education, federal tax points should be relinquished to the provinces. This reform will ensure provinces have secure tax revenue for health care, remove Ottawa’s ability to unilaterally reduce them, and provide taxpayers with greater accountability. Further on the health care front, the federal government should respect the Supreme Court of Canada’s Chaoulli v. Quebec decision, and permit provinces to experiment with medicare delivery reform – including the use of private health care.

When it comes to spending, the new government must be cautious and limit program spending increases to inflation and population growth. The Liberals’ bureaucratic daycare plan – with its misguided focus on warehousing children – must be repealed and replaced with a universal tax credit or payment payable to all families with young children.

To increase accountability and transparency within the aboriginal portfolio, an independent ombudsman for the department of Indian and Northern Affairs should be established that reports directly to Parliament. To improve the lives of native Canadians, Ottawa should amend the Indian Act to include matrimonial property rights and the Human Rights Act.

Make gas taxes a user fee and ensure municipalities put these tax revenues into potholes, highways and bridges. Fuel tax revenues not spent on roads and infrastructure ought to be returned to motorists.

Many tax dollars can be saved by cutting off funding for the disastrous federal gun registry and scrapping Ottawa’s $10-billion Kyoto Protocol implementation plan. Canadians want a clean environment and proposals that work. No tax dollar should be sent to developing countries for carbon dioxide emission credits – so-called “hot air” – to meet Kyoto targets. Abolishing corporate welfare programs will save another $2-to-$4-billion each year. These wasteful projects funnel subsidies to businesses and provide handouts to failed regional development projects. Corporate tax relief should be conditional on businesses forgoing subsidies. Lastly, Ottawa’s $22-billion discretionary spending budget is a prime target to reduce waste.

Abroad, our values should be reflected by making our foreign aid contingent on a country’s willingness to practice and promote democracy, respect for human rights and government accountability. Communist China should not be Canada’s largest foreign aid recipient – divert that money elsewhere.

The operations of Parliament must be fixed. With a vacancy on the Supreme Court, Mr. Harper must quickly implement a multi-partisan nomination process that ensures MPs have meaningful input. When naming the heads of Crown corporations, agencies and other top government jobs, similar multi-party support must be secured. A citizens’ assembly on voting reform should be established, and the Senate should either be elected or abolished. Canadians should be empowered to recall promise-breaking politicians from office and petition for the enactment or repeal of laws between elections. And before the next election, it will be necessary to bring tax credits for political parties in line with what is offered for other charitable organizations, and to do away with the subsidy that pays political parties $1.79 per vote received in the last general election.

Depending how well the Harper government fulfills these priorities will determine the level of cheers – or jeers – from many Canadian taxpayers.

John Williamson
Canadian Taxpayers Federation

The Lighter Side of Accounting and Taxes

Need a little accounting and tax humour this time of year? Over the years, The Top Ten featured in "The Late Show with David Letterman" has included a number of lists related to accounting and taxation. While many of the responses may be US-centric, there's still some good humour to be found for Canadians while completing income tax returns.

Here are just a few choice selections from the archives:

Top Ten Accountant Pick-Up Lines
8. Technically, having sex with me is a charitable gift.
2. Lady, you make my pants file for an extension.

Top Ten Signs Your Accountant Is Nuts
10. "Arranged it so you get your refund in cashews"
8. "Brags that 17% of clients have never been convicted of tax evasion"

Top Ten Dumb Accountant Tax Tips
9. Answer every question "Wouldn't you like to know?"
8. Hide all money in mattress, on return write "No money hidden in mattress"
7. If you've just eaten, don't do taxes for at least half an hour

Top Ten Signs You've Hired a Bad Accountant
8. His "short form" looks suspiciously like a cocktail napkin

Search the Top Ten Archives

The Top Ten archives are online and searchable by date or keyword.

- View the Top Ten archives on the keyword "accountant"
- View the Top Ten archives on the keyword "tax"