Small Business Archives

Construction Contract Payment Reporting: Tax Tip

Did you know...

Payments made to subcontractors for construction services must be reported to the Canada Revenue Agency (CRA) using a reporting system called the Contract Payment Reporting System.

Who needs to report?

Individuals, partnerships, trusts, or corporations who earn more than 50% of their business income from construction activities.

What needs to be reported?

Payments totaling $500 or more (including GST/HST) per reporting period made to subcontractors for construction services or for mixed goods and services if there is a service component of $500 or more. Goods-only payments do not have to be reported.

When do I report?

Businesses can report payments on either a calendar- or fiscal-year basis. They must file the return within six months after the end of the reporting period to which it pertains.

How do I report?

Contractors can report payments made to subcontractors by completing the T5018 Information Return, which includes the T5018, Statement of Contract Payments, and the T5018SUM, Summary of Contracts Payments. These are available online in a format that allows a contractor to enter the required data, and which can then be printed for submission to the CRA. Contractors can also submit their own form, provided it includes all of the information required along with a list of the total payments made to each subcontractor.

Where do I send my report?

Send the completed information to the following address:

Ottawa Technology Centre
875 Heron Road
Ottawa ON K1A 1A2

For more information on the Contract Payment Reporting System, go to:
www.cra-arc.gc.ca/tx/bsnss/cntrct/menu-eng.html

2010 Tax Deadline

As we turn the pages of our calendars to the new year, and the new decade, another tax filing year is almost upon us.

Remember to check out our list of Important Dates and Deadlines for tax filing, including the Canadian 2010 Tax Filing Deadline and the 2010 RRSP Contribution Deadline (for the 2009 tax year).

CRA News Release: CRA succeeds in reducing the Paperwork Burden for Businesses

According to a news release available on the Canada Revenue Agency web site, the CRA is making it easier on business by reducing paperwork burden on busineses.

In 2007, the Government announced the 20 percent Paperwork Burden Reduction Initiative as part of a coordinated plan across the federal government. Through this initiative, the CRA has identified over 8,000 obsolete or non-essential information obligations imposed on business. The elimination of these obligations, when implemented, will reduce the paperwork burden on business by 24.2 percent.

The CRA has committed to making it easier to do business by reducing the frequency of tax remittance and filing requirements and by allowing Ontario corporate taxpayers to file harmonized federal and provincial corporation tax returns. As part of this continued commitment, CRA introduced My Business Account to allow business owners secure and convenient online access to their accounts, and developed indicators to measure the small business compliance burden.

Through its own burden reduction measures and in support of the Paper Burden Reduction Initiative, the CRA continues to liaise with key stakeholders to continue to find innovative ways of making complying with Income‑ and Excise‑related legislation easier for businesses.

For more information on this news release, please see:
http://www.cra-arc.gc.ca/nwsrm/rlss/2009/m03/nr090331-eng.html

CRA Tax tip: T4 filing - think green, act green

The following tax tip is available from the Canada Revenue Agency and is available in full on the CRA web site.

Did you know…

That you can file your T4 information return electronically from the convenience of your computer?

Be part of the paperless filing solution and eliminate the need to send paper copies of your T4 slips and summary to the Canada Revenue Agency (CRA). File online and receive electronic confirmation that your return has been received by the CRA, and save on printing and mailing costs.

For more information, see:
http://www.cra-arc.gc.ca/nwsrm/txtps/2009/tt090130-eng.html

SRED Tax Incentives - What's New

The Canada Revenue Agency has prepared a What's New page on its web site for information on the Scientific Research and Experimental Development (SR&ED) Tax Incentive Program Support for scientific Research and Development (R&D) in Canada.

The SR&ED program is a federal tax incentive program, administered by the Canada Revenue Agency (CRA), that encourages Canadian businesses of all sizes, and in all sectors to conduct research and development (R&D) in Canada. It is the largest single source of federal government support for industrial R&D.

The SR&ED program gives claimants cash refunds and/or tax credits for their expenditures on eligible R&D work done in Canada.

For information on what's new with the SRED program, please see:
http://www.cra-arc.gc.ca/txcrdt/sred-rsde/menu-eng.html

Tax Alert: Tax cheating software?

The Canada Revenue Agency has released a Tax Alert warning businesses against using tax cheating software.

According to the CRA, electronic sales suppression software is currently being marketed and sold to Canadian businesses allowing business to hide income and evade taxes. CRA reminds Canadian businesses that tax evasion is against the law and could result in severe penalties.

"Electronic sales suppression software is designed to work with point-of-sale systems and electronic cash registers. Businesses use the software to delete a portion of sales from their computer records to evade payment of income and sales taxes. In some cases, restaurant owners who suppressed sales using this software have collected taxes from patrons and not remitted them to the CRA as required by law.

The CRA has over 5,000 employees dedicated to finding unreported business income and ensuring that the proper amount of taxes is paid, even when sales records are missing.

The CRA is working to identify those who develop, sell, or use the software. Businesses that have used electronic sales suppression software are suspected of having hidden thousands of transactions and millions of dollars in sales. Once caught, these tax cheaters will face penalties, court fines, and possibly even jail. They will also have to pay the taxes they tried to evade, plus interest.

Although customers may not notice if a business is using electronic sales suppression software, they can do their part to ensure tax compliance by always requesting a copy of their receipt. Businesses which evade taxes are placing an unfair burden on the individuals and other businesses that accurately report their income and pay the taxes they owe."

For more information on this CRA Tax Alert, please see:
http://www.cra-arc.gc.ca/nwsrm/lrts/2008/l081210-eng.html

CRA Tax Tip: More services to simplify your business taxes

The following tax tip is provided by the Canada Revenue Agency:

Did you know...

That you now have additional options to help manage your business taxes through our My Business Account service?

Business owners can now use this secure online service to:

check the status of goods and services tax/harmonized sales tax (GST/HST)* returns and see when Notices of Assessment were issued; and
access a variety of business tax information and services, including account balances and activities.

Starting in November 2008, you will be able to transfer payments and credits within your GST/HST,* corporation income tax, or other levies account. This service will allow you to transfer amounts not yet applied to an assessed period and view the results immediately, including updated interest amounts and account balances. If the amount you wish to transfer has already been applied to an assessed period, you can request a transfer through our Make online requests service in My Business Account.

Business owners can authorize their employees and representatives to view or change their tax information online. Once authorized, the employees and representatives would access the services through Represent a client at www.cra.gc.ca/representatives.

For more information on this tax tip and others, visit the CRA web site at:
http://www.cra-arc.gc.ca/nwsrm/txtps/2008/tt081022-eng.html

CRA Tax Tip: Cool cash for your tools!

Did you know…

That if you are a tradesperson (including an apprentice mechanic) you may be able to deduct part of your tool expenses? The tradesperson’s tools deduction provides employed tradespersons with an annual deduction of up to $500 to help cover the cost of new tools necessary to their trade. The deduction to be claimed on the 2007 tax return applies to the total cost of eligible tools in excess of $1,000 acquired by an employed tradesperson during 2007.

For more information on the tradesperson’s tools deduction, visit www.cra.gc.ca/individuals and select “T” from the drop-down menu for “Tradesperson’s tools deduction.”

For more information on this or other CRA Tax Tips, see:
http://www.cra-arc.gc.ca/newsroom/taxtips/2008/tt080128-e.html

CRA Tax Tip: Apprenticeship job creation tax credit

Did you know...

That businesses with an eligible apprentice may be able to claim the apprenticeship job creation tax credit? This is a non-refundable tax credit equal to 10% of the eligible salaries and wages payable to eligible apprentices for employment after May 1, 2006. The maximum credit is $2,000 per year for each eligible apprentice.

For more information about the credit, visit cra.gc.ca/individuals and select "A" from the drop-down menu for "Apprenticeship job creation tax credit."

For more information on this or other CRA Tax Tips, see:
http://www.cra-arc.gc.ca/newsroom/taxtips/2008/tt080128a-e.html

CRA informs Canadians on tax relief measures

The Canada Revenue Agency has provided a news release informing Canadians on tax relief measures.

According to the CRA, the Minister of National Revenue Gordon O'Connor assured Canadians that the CRA "is ready to support taxpayers to ensure that they understand the new tax measures passed by Parliament [Friday December 14, 2007] and are able to take full advantage of them."

"Canadians will start to see the impact of these tax cuts on January 1, 2008 because of the proactive steps being taken by the Canada Revenue Agency to implement rate reductions", said Minister O'Connor. “The CRA is taking action to ensure all businesses have the information they need to implement the rate reductions so that Canadians can start benefiting from the GST/HST tax cut on January 1, 2008."

The CRA has set up a toll-free GST/HST rate reduction line for businesses and consumers at 1-866-959-7797 (1-866-959-7798 in French), which is available from 8:15 a.m. to 8:00 p.m. (local time), Monday to Friday, across Canada.

For more information on this news release, see:
http://www.cra-arc.gc.ca/newsroom/releases/2007/dec/nr071217-e.html

AGREEMENT REACHED FOR HARMONIZATION OF ONTARIO CORPORATIONS TAX WITH FEDERAL REGIME

The following news release is avaialable on the Canada Revenue Agency web site:

HUMAN RESOURCES AGREEMENT REACHED FOR HARMONIZATION OF ONTARIO CORPORATIONS TAX WITH FEDERAL REGIME Streamlining will save Ontario businesses up to $190 million a year

Ottawa, Ontario, July 31, 2007…The Canada Revenue Agency (CRA) and the Ontario Ministry of Revenue have signed a Human Resources Agreement that represents a significant step in the move to federal administration of Ontario's corporate taxes.

The agreement outlines employment opportunities at the CRA for Ontario staff currently involved in corporation tax audit, appeals and advisory roles, and describes how the two organizations will manage the movement of employees who accept job offers from the CRA. It provides for these employees to begin working at the Agency on April 3, 2008.

“In Budget 2007, the Government of Canada made a commitment to reduce the federal paper burden and tax compliance costs for small businesses,” said the Honourable Carol Skelton, Minister of National Revenue. “Single administration of Ontario's corporate tax will reduce the compliance burden on the province's businesses by an estimated $100 million a year in administrative costs alone.”

“Ontario's business community will begin to experience the tangible benefits of CRA administration in February of 2008, when they start to remit single instalment payments to the Agency,” added Minister Skelton. “The hiring of the Ontario employees at the CRA means that corporations will see integrated audit and objections processes in April of next year. The single return will follow in 2009 for tax years ending after December 31, 2008.”

“This is a good deal for Ontario and it protects Ontario revenues,” said Ontario Minister of Revenue Michael Chan. “This agreement recognizes that Ontario's corporate tax professionals are skilled and experienced and the CRA has recognized their value.”

“This agreement also demonstrates the ongoing commitment to the partnership between our province and the federal government,” added Minister Chan. “The streamlining of tax administration will improve efficiency and help businesses free up resources that can be invested in new jobs and help build a stronger, more productive economy for all Ontarians.”

The single administration of Ontario's corporate tax by the CRA will lead to one set of rules, one form, one audit, one appeals process and one point of contact. For tax years ending after December 31, 2008, businesses will also save $90 million a year in lower Ontario corporate income taxes as a result of harmonization with the federal corporate income tax base.

For more information, see:
http://www.cra-arc.gc.ca/newsroom/releases/2007/july/nr070731-e.html

Helping Small Businesses by Reducing the Compliance Burden

CRA News Release

The Minister of National Revenue announced the Canada Revenue Agency's Action Task Force on Small Business Issues Report: Helping Small Businesses by Reducing the Compliance Burden http://www.cra-arc.gc.ca/newsroom/releases/2007/april/nr070411-e.html

Fact sheet: Canada Revenue Agency's Action Task Force on Small Business Issues
http://www.cra-arc.gc.ca/newsroom/factsheets/2007/april/fs070411-e.html

CRA Tax tip: Apprenticeship job creation tax credit

The Canada Revenue Agency (CRA) has issued a tax tip pertaining to a tax credit for apprenticeship job creation:

"Did you know...

That businesses with an eligible apprentice may be able to claim the apprenticeship job creation tax credit? This is a non-refundable tax credit equal to 10% of the eligible salaries and wages payable to eligible apprentices for employment after May 1, 2006. The maximum credit is $2,000 per year for each eligible apprentice."

For more information on this or other Canadian tax tips, visit the CRA web site at:
http://www.cra-arc.gc.ca/newsroom/taxtips/2007/tt070201b-e.html

CRA Tax tip: Cool cash for your tools!

The Canada Revenue Agency (CRA) has published the following tax tip:

"Did you know...

That if you are a tradesperson you may be able to deduct your tool expenses? The newly proposed tradesperson's tools deduction provides employed tradespersons with an annual deduction of up to $500 to help cover the cost of new tools necessary to their trade. The deduction applies to the total cost of eligible tools in excess of $1,000 acquired by an employed tradesperson after May 1, 2006."

For more information on this or other CRA tax tips, visit the CRA web site at:
http://www.cra-arc.gc.ca/newsroom/taxtips/2007/tt070201-e.html

Taxes becoming a big election issue

It would appear that Stephen Harper and the Conservatives want to make taxes a big election issue. Last week the Conservatives offered up their plan to chop the GST from 7% down to 5%. You can also find Conservative campaign advertisements where Harper criticizes the Liberals for "over taxing Canadians" over the past twelve years.

This week the Conservative Party released its Opportunity Plan for Small Business, a package that will lower small business taxes and create apprenticeship positions. The plan will raise the threshold for the small business tax rate from $300,000 to $400,000 and reduce the small business tax rate from 12 per cent to 11 per cent over five years.

Meanwhile on the Liberal web site, the party is promoting its success in developing a strong Canadian economy over the past 12 years and in delivering eight consecutive balanced budgets. Yet the tax issue also figures prominently:

"The Liberal government is committed to providing tax relief - putting more money in the hands of Canadians and making Canadian businesses more competitive. To create the right investment for future prosperity, our government recently announced a new tax reduction plan that will deliver more than $30 billion in personal and corporate tax relief over the current year and the next five years. The majority of this, 95 per cent, , will go to individual Canadians – especially low- and modest-income Canadians."

Looks like we can look forward to both parties duking it out over the next month with election promises of both increased spending and tax cuts.

CRA Tax Tip: self-employed filing deadline

The Canada Revenue Agency has released a reminder to self-employed individuals regarding the June 15, 2005 tax filing deadline:

"If you or your spouse or common-law partner operated a business in 2004, you have until midnight on June 15, 2005 to file your income tax return. If you had a balance owing for 2004, it had to have been paid on or before May 2, 2005 to avoid interest. A late-filing penalty on amounts owing will apply to returns received or postmarked after June 15, 2005. You have the choice of filing either electronically or on paper."

For more information, see the CRA web site at:
http://www.cra-arc.gc.ca/newsroom/taxtips/2005/tt050609-e.html

Ontario Small Business Guide

The Government of Ontario has announced an updated Small Business Guide which will guide you through various aspects of Retail Sales Tax, Corporations Tax, and Employer Health Tax.

Information about this guide is available at:
http://www.trd.fin.gov.on.ca/userfiles/HTML/cma_3_24414_1.html

CRA Tax Tip: Home tax deductions for the self-employed

As a self-employed individual running your business out of your home or apartment may allow you to deduct a corresponding part of your operating costs, such as utilities. Furthermore, any specific expenses that are directly related to the business are also deductible.

For more information, including conditions and rates, see the CRA web site:
http://www.cra-arc.gc.ca/newsroom/taxtips/2005/0211home-e.html

Canadian SMEs want new multi-year tax plan

"Canada's small business community strongly supports the implementation of a new multi-year tax relief strategy, and favours reducing personal income taxes in order to stimulate economic growth" states a release on the Canadian Federation of Independent Business (CFIB) web site.

In a report released by the CFIB based on a survey of small businesses three-quarters of business owners want to see a new multi-year tax cut plan implemented by the federal government as a means to lower the tax burden and increase certainty in business planning.

With respect to how the federal surplus should be spent, small business survey respondents opted for spending 82 cents of every surplus dollar to either debt reduction (49 cents) or tax relief (33 cents) and only 18 cents to new program spending.

More information about this report is available on the CFIB web site at: http://www.cfib.ca/mcentre/mwire/releases/nat012605_e.asp.