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Banka: Dealing with Canada Pension Plan deductions
Welcome to 2014 and the month of New Year’s Resolutions.
Apparently, less than 25 per cent of resolutions made on New Year’s Day are actually carried on past the first week of the new year.
This year, one of your resolutions could be to get your income tax receipts organized early.
If you have a sole proprietorship/partnership, you may require someone to do the bookkeeping for you.
It would be a good idea to begin early because bookkeepers are extremely busy for the first three to five months of the year.
Just like there are different kinds of accountants specializing in different areas of accounting, there are also different kinds of bookkeepers.
Sometimes, the accounting/ tax firm that prepares your annual taxes can recommend someone.
What you need to look for is a bookkeeper that also has some tax experience.
From a tax perspective, there is nothing more frustrating than receiving something prepared by a bookkeeper that doesn’t follow the tax act.
The reason being is that it will all need to be reclassified in order to put it into the format required by the tax act.
The file will take extra time to correct and you will have paid for the work twice.
Once to the bookkeeper and once to have it corrected and then you need to pay for the tax preparation on top of that.
This is also the first season after the CPP contribution changes.
You need to have deducted CPP for all employees that are 60 to 65 years old, even if they are currently receiving their CPP and have not had CPP deducted in the past.
If you are self employed, the CPP owing will be calculated when you have your tax return completed. For the employees aged 66 to 70, deduct the CPP unless they provide to you a completed form CPT30 to elect to stop contributing to the Canada Pension Plan.
As an employer, if you have forgotten to deduct the CPP and the employee is no longer employed by your company, you are required to pay both the employee and the employer’s share and may be charged penalties and interest on the outstanding amount. Anyone who is 70 years old or older cannot contribute to CPP.
The deadline to complete and file the T4s and T4A slips is Friday, Feb. 28.
If you decide that you wish to prepare and file your own slips, the Candad Revenue Agency has provided some comprehensive videos at www.cra-arc.gc.ca/vdgllry/bsnss/srs-prprngt4t4a-eng.html?clp=bsnss/srs-prprngt4t4a5-eng&fmt=mp4.
The CRA is now providing other videos to help you manage your small business.
The topics are such items as manage on-line mail using my business account; GST/HST information for the new small business; keeping records; reporting business income and expenses; starting your business; payroll for the new small business and several more.
These videos can be found at www.cra-arc.gc.ca/vdgllry/bsnss/menu-eng.html?clp=bsnss/hnncngsrvc-eng&fmt=mp4 or by going to the CRA website and choosing the Videos tab half way down the page.
You can claim the ‘First-Time Donor’s Super Credit’ if you or your spouse has not claimed a charitable donation since 2007 up to a donation limit of $1,000.
You can only claim this credit once between 2013 and 2017.
Normally the donation tax credit is 15 per cent of the first $200 and 40 per cent of anything over.
This super credit will give you 40 per cent on the first $200 and 54 per cent on anything over.
The CRA cautions people that this credit is only available if the donation has been made to a registered charity. To check if the organization is registered please go to www.cra.gc.ca/charitylists .
Also, if you have not filed any tax returns for several years, CRA has a voluntary disclosures program whereby you can file up to 10 years of back tax returns to bring you up to date without penalty.
In order to qualify for this program, you need to comply before you receive the ‘Demand to File Letter’ from CRA.
After you file, you may then become eligible for the tax credits that you were not previously receiving because you were not filing your taxes.
CRA is also promoting use of their on-line services at My Business Account and My Account to make any payments and receive any credits to your bank account.
You can also use your bank’s online banking service.
CRA has closed all the reception areas of all its offices across Canada, so the only means of communication is by phone or using the online service.
That being said, there are some phishing schemes occurring using the telephone, mail and email. Always make sure whom you are speaking with and if unsure, ask for a number to call them back, especially if they are asking for personal information.