“It's better to look ahead and prepare than to look back and regret”

Jackie Joyner-Kersee

“Though no one can go back and make a brand-new start, anyone can start from now and make a brand-new ending.”

Carl Bard

“Nothing is impossible, the word itself says 'I'm possible'! ”

Audrey Hepburn

Business Advisory, Personal and Corporate Taxes, Business Start-Up, Bookkeeping

News You Need to Know

View All

Now viewing: June 2018

Tax Changes to Employee Benefits

Posted June 22, 2018

Employees, spouses of employees, and children of employees can receive benefits of a personal nature from an employer. These benefits may be taxable if they meet specific criteria set out by the Canada Revenue Agency (CRA). If the benefits are taxable, they must be included in the income for the employee.

There was a media storm over some proposed changes from the CRA in 2017—they intended to tax all employee discounts as income; that has since been clarified by the federal government to assure taxpayers that the CRA will NOT be taxing all employee discounts. Employee discounts will be taxed as income as they have been in the past—i.e. they need to meet the criteria for being taxable benefits.

From Canada Revenue Agency

If you provide benefits to your employees, you always have to go through the same steps. If a step does not apply to you, skip it and go on to the next step:

  • determine if the benefit is taxable
  • calculate the value of the benefit
  • calculate payroll deductions
  • file an information return

There are, however, some changes to how employee benefits will be taxed. Again, from the CRA website: 

What's new?

We list the service enhancements and major changes below, including announced income tax changes that are not yet law at the time this guide was published. If they become law as proposed, they will be effective for 2017 or as of the dates given. 

Group term life insurance policies - Employer paid premiums

The CRA established a threshold ($50) for reporting Group Term Life Insurance premiums paid on behalf of retirees when it’s the only income reported on the T4A slip. For more information, go to Group term life insurance policies – Employer-paid premiums.

Home relocation loan deduction

Effective January 1, 2018 and later years, the home relocation loan deduction will be eliminated. For more information, go to Home-relocation loans.

Municipal officer’s expense allowance

For 2019 and later tax years, the full amount of the non‑accountable allowances paid to elected officers will be included in their income. For more information, go to Municipal officer's expense allowance.

Social events

Beginning in 2018, the threshold for reporting employee benefits derived from employer-sponsored social events will be increased to $150. For information, go to Social events. 

Transit passes

As of July 1, 2017 the public transit tax credit has been eliminated. For more information, go to Transit passes.

Still not sure if you’re eligible for a deduction under the new rules? It might be time to give your accountant a call.

Contact Shaw & Associates Chartered Accountants to help you out with your financial needs and tax planning and to give you the advice and services that will take you from where you are to where you want to be with your business. One complimentary meeting with us will put you and your business on a more profitable and positive path.


Dividends Versus Wages For Business Owners

Posted June 5, 2018

One of the more complicated questions for incorporated business owners is the wages versus dividends question. The best advice here is, “Talk to your accountant!” 

Your accountant can examine different scenarios with you and help you decide which plan results in your best results, for what you are trying to accomplish. You might want to maximize your CPP and RRSP contributions for this year, or you might be trying to maximize dividends to re-invest in the company or give you more flexible income—these would be two different ways of handling wages versus dividends.

Paying salaries can be more complicated than paying dividends, since you will need to set up payroll accounts with Canada Revenue Agency and keep them current. On the other hand, paying dividends can make your income hard to prove for things like mortgages and loans. Paying wages will give you RRSP room; if you pay yourself dividends, you can use that money for investment for the future in any way you choose.

For some extra info on this subject, have a look at this article from Advisor.ca. But remember that each situation is unique and should include some discussion with your accountant.

As a spouse of a business owner, you would also probably want to talk to an accountant to decide how to handle any potential income from the company. If the spouse is made a shareholder of the company, the spouse can receive a reasonable amount of dividends from the company with some newly introduced requirements that need to be met.

Alternatively, a spouse can be employed by the company and have benefits like CPP paid into, but there are requirements for the spouse to do necessary work for the company and be paid a reasonable salary for work performed. This is an area where Canada Revenue Agency is likely to take a close look at spouses employed by companies, to make sure they aren’t just employees on paper for tax savings.

Bottom line—this is a multi-faceted question, that can be answered best by an expert in tax planning.

Contact Shaw & Associates Chartered Accountants to help you out with your financial needs and tax planning and to give you the advice and services that will take you from where you are to where you want to be with your business. One complimentary meeting with us will put you and your business on a more profitable and positive path.