The following information is now available on the CRA Web site:

Did you know?

If you were an employed tradesperson in 2012 (including an eligible apprentice mechanic), you may be able to deduct up to $500 of the cost of eligible tools bought to earn your employment income.

Important facts

An eligible tool is a tool (including associated equipment such as a toolbox) that:

* you bought to use in your job as a tradesperson and was not used for any purpose before you bought it;

* your employer certified as being necessary for you to provide as a condition of, and for use in, your job as a tradesperson; and

* is not an electronic communication device (like a cell phone) or electronic data processing equipment (unless the device or equipment can be used only for the purpose of measuring, locating, or calculating).

For more details on how to calculate the deduction for tools, go to www.cra.gc.ca/trades.

If you are an eligible apprentice mechanic, you may be able to claim an additional tools deduction. To be eligible, you must be registered in a program that leads to a designation as a mechanic licensed to repair self-propelled motorized vehicles, and you have to be employed as an apprentice mechanic. To see if you qualify, go to the Employed apprentice mechanics page at www.cra.gc.ca/trades.

The Canada Revenue Agency’s (CRA) online services make filing even easier and getting your refund faster

The CRA’s online services are fast, easy, and secure. You can use them to file your income tax and benefit return, make a payment, track your refund and more. Sign up for direct deposit too! Your refund and any benefit or credit payments owed to you will be deposited directly into your account, putting your money into your pocket faster. For more information, go to www.cra.gc.ca/getready.

Source: CRA Newsroom

The following information is now available on the CRA Web site:

Did you know?

The Government of Canada has extended the Hiring Credit for Small Business (HCSB) for 2012. The 2011 federal budget created the HCSB to create jobs, grow the economy and support small businesses.

If you are self-employed, you may be eligible for the hiring credit for small business. This credit gives small businesses relief from the employer’s share of employment insurance premiums paid in 2012. The credit of up to $1,000 will be automatically credited to your payroll account.

Facts about the HCSB

* The HCSB is a credit of up to $1,000.

* The actual amount credited (up to $1,000) is equal to the increase in the Employment Insurance (EI) premiums paid by a business in 2012 over those paid for 2011.

* The HCSB is available to employers whose total employer EI premiums were $10,000 or less in 2011. Employers who created a new business in 2012 may also be eligible.

* The credit is automatically applied when a business files a 2012 T4 information return. To be eligible, the 2012 T4 return must be received prior to January 1, 2016.

* Eligible employers who have outstanding debt are still eligible for the HCSB. The Canada Revenue Agency (CRA) applies the amount of the credit to reduce any outstanding debt owed.

* For more information, go to www.cra.gc.ca/hiringcredit.

How do I apply for the credit?

You don’t need to apply for the HCSB. If you are eligible, the CRA will automatically calculate the credit using the EI information from the T4 slips you file—no added paperwork or red tape!

Try the CRA’s online services for businesses

With CRA online services for businesses, you can file, pay, and manage your tax affairs online at your convenience. For more information, go to www.cra.gc.ca/businessonline.

Source: CRA Newsroom

The 2013 Automobile Benefits Online Calculator is now available on the Canada Revenue Agency Web site.

Automobile Benefits Online Calculator – Disclaimer

The Automobile Benefits Online Calculator allows you to calculate the estimated automobile benefit for employees (including shareholders) based on the information you provide. The Canada Revenue Agency (CRA) does not keep any of the data you provide to complete your calculation.

The CRA suggests that you clear your browser cache after you have completed your calculations. That is because information may be stored in the browser cache and could be compromised by others if you do not clear it.

Use the calculator to determine the automobile benefit amount you should prorate to the employee’s pay periods. Add the resulting amount to the employee’s salary and other benefits/allowances, if applicable, to determine the total amount subject to Canada Pension Plan (CPP) / Quebec Pension Plan (QPP) contributions and income tax. The automobile benefit is not insurable and therefore not subject to employment insurance (EI) premiums.

CLICK HERE TO TO USE THE ONLINE CALCULATOR

The following information is now available on the CRA Web site:

Did you know?

You may be eligible for new or improved tax relief measures and services when filing your 2012 income tax and benefit return.

Important facts

* Family caregiver amount – If you have a dependant with a physical or mental impairment, you may be able to claim up to an additional $2,000 in the calculation of certain non-refundable tax credits. Go to www.cra.gc.ca/familycaregiver for more information.

* Medical expenses – Prescribed blood coagulation monitors for individuals who need anti-coagulation therapy are now eligible as medical expenses. Go to www.cra.gc.ca/medical for more information.

* Investment credit – Eligibility for the mineral exploration tax credit has been extended to flow-through share agreements entered into before April 1, 2013.

Other changes for 2012

* Employees profit-sharing (EPSP) – You may have to pay a new tax if you are a specified employee and contributions that your employer made to an EPSP and allocated to you for the year are more than the threshold.

* Canada Pension Plan (CPP) working beneficiaries — On January 1, 2012, the rules for contributing to the Canada Pension Plan changed. The changes apply to you if you are an employee or self-employed, you are 60 to 70 years of age, and you are receiving a CPP or Quebec Pension Plan retirement pension. For more information, go to www.cra.gc.ca/cpp.

* The Canada Revenue Agency (CRA) is now offering more options for logging in to My Account, My Business Account, and Represent A Client online services. In addition to the CRA user ID and password, you may now also be able to use your online banking information to log in to these services if you bank with TD Bank Group, Scotiabank and BMO Financial Group. That means one less username and password to remember. For more information about logging in using your banking information or the registration process, go to www.cra.gc.ca/loginservices.

The Canada Revenue Agency’s (CRA) online services make filing even easier and getting your refund faster

The CRA’s online services are fast, easy, and secure. You can use them to file your income tax and benefit return, make a payment, track your refund and more. Sign up for direct deposit too! Your refund and any benefit or credit payments owed to you will be deposited directly into your account, putting your money into your pocket faster. For more information, go to www.cra.gc.ca/getready.

Source: CRA Newsroom

IRS Announces Simplified Option for Claiming Home Office Deduction Starting This Year; Eligible Home-Based Businesses May Deduct up to $1,500; Saves Taxpayers 1.6 Million Hours A Year

IR-2013-5, Jan. 15, 2013

WASHINGTON — The Internal Revenue Service today announced a simplified option that many owners of home-based businesses and some home-based workers may use to figure their deductions for the business use of their homes.

In tax year 2010, the most recent year for which figures are available, nearly 3.4 million taxpayers claimed deductions for business use of a home (commonly referred to as the home office deduction).

The new optional deduction, capped at $1,500 per year based on $5 a square foot for up to 300 square feet, will reduce the paperwork and recordkeeping burden on small businesses by an estimated 1.6 million hours annually.

“This is a common-sense rule to provide taxpayers an easier way to calculate and claim the home office deduction,” said Acting IRS Commissioner Steven T. Miller. “The IRS continues to look for similar ways to combat complexity and encourages people to look at this option as they consider tax planning in 2013.”

The new option provides eligible taxpayers an easier path to claiming the home office deduction. Currently, they are generally required to fill out a 43-line form (Form 8829) often with complex calculations of allocated expenses, depreciation and carryovers of unused deductions. Taxpayers claiming the optional deduction will complete a significantly simplified form.

Though homeowners using the new option cannot depreciate the portion of their home used in a trade or business, they can claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions on Schedule A. These deductions need not be allocated between personal and business use, as is required under the regular method.

Business expenses unrelated to the home, such as advertising, supplies and wages paid to employees are still fully deductible.

Current restrictions on the home office deduction, such as the requirement that a home office must be used regularly and exclusively for business and the limit tied to the income derived from the particular business, still apply under the new option.

The new simplified option is available starting with the 2013 return most taxpayers file early in 2014. Further details on the new option can be found in Revenue Procedure 2013-13, posted today on IRS.gov. Revenue Procedure 2013-13 is effective for taxable years beginning on or after Jan. 1, 2013, and the IRS welcomes public comment on this new option to improve it for tax year 2014 and later years.

There are three ways to submit comments.

* E-mail to: Notice.Comments@irscounsel.treas.gov. Include “Rev. Proc. 2013-13” in the subject line.
* Mail to: Internal Revenue Service, CC:PA:LPD:PR (Rev. Proc. 2013-13), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.
* Hand deliver to: CC:PA:LPD:PR (Rev. Proc. 2013-13), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue NW, Washington, DC, between 8 a.m. and 4 p.m., Monday through Friday.

The deadline for comment is April 15, 2013.

Source: IRS Newsroom

Note: This affects me …

Did you know?

If you are an individual, a corporation, or a partnership, and you accept payment to prepare more than 10 income tax returns per year, you are considered a tax preparer and you have to file those returns electronically.

T1 and T2 returns

Effective January 1, 2013, mandatory electronic filing applies to both T1 General (income tax and benefit returns) and T2 corporation income tax returns for 2012 and later tax years.

To file T1 returns electronically, you must first register with the Canada Revenue Agency (CRA) through its Web site. If you haven’t already done so, you can register for electronic filing now. Tax preparers who have an EFILE number have to renew through the Web site each year.

Electronic filing is easy and allows the CRA to process returns more quickly, which means a faster refund for your clients.
There may be penalties for those who don’t comply with mandatory electronic filing requirements.

To file T2 corporation returns electronically, you must use approved commercial software and transmit returns using the CRA’s Corporation Internet Filing service or the available service in Represent a Client.

More information

For more information on mandatory electronic filing, go to www.cra.gc.ca/mandatoryelectronicfiling.

Source: CRA Newsroom

The following is now available on the CRA Web site:

Ottawa, Ontario, January 2, 2013… The Honourable Gail Shea, Minister of National Revenue, today highlighted the tax relief measures that the Harper Government has made available to Canadians through Canada’s Economic Action Plan. As Canadians prepare to file their 2012 taxes, they will be able to claim the Family Caregiver Tax Credit for the first time. This new tax relief measure is only one of many introduced since 2006 to keep taxes low for Canadian families and businesses.

“Our Government is committed to supporting hardworking Canadians and their families,” said Minister Shea. “We will continue to provide tax relief so that Canadians can keep more of their hard-earned dollars and invest in the economy.”

Claiming these credits by filing online and using direct deposit will, in most cases, help individuals receive a refund in as little as eight days, compared to four to six weeks for a paper return.

The Harper Government has introduced or improved a number of tax relief measures for Canadians, including:

* The Family Caregiver Tax Credit – Is a 15 per cent non-refundable tax credit on an amount of $2,000 that provides tax relief to caregivers of infirm dependant relatives. This includes, for the first time, infirm spouses, common-law partners, and minor children. Canadians can claim this new, non-refundable tax credit for the first time when filing their 2012 taxes.

* The Medical Expense Tax Credit – In order to fully recognize the medical and disability-related costs incurred by caregivers, the Harper Government has removed the $10,000 limit on the amount of eligible expenses a caregiver can claim in respect of financially dependent relatives.

* The First-Time Home Buyers’ Tax Credit – Assists first-time home buyers with the costs associated with the purchase of a home, such as legal fees. More than 550,000 Canadians have taken advantage of the First-Time Home Buyers’ Tax Credit.

* The Children’s Fitness Tax Credit – Canadian families can claim a 15 per cent non-refundable tax credit on an amount up to $500 for the cost of registering a child in eligible physical activity programs, such as soccer or hockey teams. For the 2011 tax year, over 1.5 million families took advantage of the Children’s Fitness Tax Credit.

* The Hiring Credit for Small Business – Small businesses that meet certain criteria and paid more in Employment Insurance premiums in 2012 over 2011 are eligible for the credit, which puts up to $1,000 back into the accounts of job creators. As of September 30, 2012, over $200 million has been credited to over 500,000 eligible employers.

* The Children’s Arts Tax Credit – Canadian families can claim a 15 per cent non-refundable tax credit on an amount up to $500 for the cost of registering a child in eligible artistic, cultural, or other programs, such as music lessons or tutoring. Over 460,000 families claimed the Children’s Arts Tax Credit in the 2011 tax year.

* The Apprenticeship Job Creation Tax Credit – Provides employers with a tax credit of up to 10 per cent of the eligible wages payable to eligible apprentices. The maximum credit an employer can claim is $2,000 per year for each eligible apprentice. For the 2011 tax year, more than 10,000 employers across Canada used the Apprenticeship Job Creation Tax Credit.

* The Tradesperson’s Tool Deduction – Allows tradespeople to deduct from their income part of the cost of tools purchased throughout the year.

* The Textbook Tax Credit – In order to better recognize the cost of textbooks, this credit provides increased tax relief to students in addition to the Tuition and Education Tax Credits. Students must first claim their credit on their own returns, but may be able to transfer unused amounts to a parent, grandparent, spouse or common-law partner.

* The Universal Child Care Benefit (UCCB) – Gives families with young children more choice in child care by providing $100 per month for each child under age six. Canadians received almost $2.7 billion in UCCB payments in 2011.

* The Tax-Free Savings Account (TFSA) – Allows all Canadians to earn tax-free income through a range of investment products. TFSAs have become increasingly popular, with approximately 8.2 million Canadians having opened an account and roughly 2.5 million Canadians contributing the maximum in 2011. Starting on January 1, 2013, Canadians will be able to contribute $5,500 to their TFSAs annually.

* The Registered Disability Savings Plan – A long-term savings plan to help Canadians with disabilities and their families save for the future. Since being introduced by the Harper Government in 2008, over 60,000 plans have been opened.

* The Canada Employment Credit (CEC) – A 15 per cent non-refundable tax credit on an amount of $1,095 in employment income, the CEC was introduced by the Harper Government to recognize employees’ work expenses for items such as home computers, uniforms and supplies.

* The Public Transit Tax Credit – Allows Canadians to claim the full amount they spend on eligible transit passes for the year. In 2011, more than 1.6 million Canadians claimed this credit.

* The Volunteer Firefighters’ Tax Credit – Available to any volunteer firefighter who serves at least 200 hours per year at one or more fire departments in their community. In 2011, more than 37,000 Canadian volunteer firefighters took advantage of this new tax credit.

“Our Government is proud of the tax relief we have put in place over the last number of years to reduce the tax burden on Canadians families and businesses,” said Minister Shea. “We encourage all Canadians to claim the credits to which they are entitled when they file their 2012 taxes.”

As a direct result of the Harper Government’s strong record of providing tax relief to Canadians, the average family of four now receives more than $3,100 in extra tax savings. The federal tax burden for all Canadians is now the lowest it has been in half a century.

For more information on the various tax measures supporting working Canadians and their families, go to www.cra-arc.gc.ca/taxsavings/.

The Canada Revenue Agency encourages Canadians to take advantage of its fast, easy, and secure online services to file their tax and benefit returns.

Source: CRA Newsroom

The following information is now available on the CRA Web site:

Each year, certain personal income tax and benefit amounts are indexed to inflation using the Consumer Price Index data as reported by Statistics Canada.

Increases to tax bracket thresholds, amounts relating to non‑refundable credits, the annual TFSA dollar limit, and most other amounts will take effect on January 1, 2013. However, increases to the Canada child tax benefit (including the national child benefit supplement and the child disability benefit) and the goods and services tax credit will take effect on July 1, 2013, to coincide with the beginning of the program year for payment of these benefits.

The following chart compares the indexed amounts for the 2012 and 2013 tax years. It reflects an indexation increase of 2.0% for 2013.

	2013 ($)	2012 ($)
Tax bracket thresholds
Taxable income above which the 22% bracket begins	43,561	42,707
Taxable income above which the 26% bracket begins	87,123	85,414
Taxable income above which the 29% bracket begins	135,054	132,406
Amounts relating to non-refundable tax credits
Basic personal amount	11,038	10,822
Age amount	6,854	6,720
Net income threshold	34,562	33,884
Spouse or common-law partner amount (maximum)	11,038	10,822
Spouse or common-law partner amount (maximum if eligible for the family caregiver amount)	13,078	12,822
Amount for an eligible dependant (maximum)	11,038	10,822
Amount for an eligible dependant (maximum if dependant eligible for the family caregiver amount)	13,078	12,822
Amount for children under age 18 (maximum per child)	2,234	2,191
Amount for children under age 18 (maximum per child eligible for the family caregiver amount)	4,274	4,191
Canada employment amount (maximum)	1,117	1,095
Infirm dependant amount (maximum per dependant)	6,530	6,402
Net income threshold	6,548	6,420
Caregiver amount (maximum per dependant)	4,490	4,402
Caregiver amount (maximum per dependant eligible for the family caregiver amount)	6,530	6,402
Net income threshold	15,334	15,033
Disability amount	7,697	7,546
Supplement for children with disabilities (maximum)	4,490	4,402
Threshold relating to allowable child care and attendant care expenses	2,630	2,578
Adoption expenses (maximum per adoption)	11,669	11,440
Medical expense tax credit—3% of net income ceiling	2,152	2,109
Refundable medical expense supplement
Maximum supplement	1,142	1,119
Minimum earnings threshold	3,333	3,268
Family net income threshold	25,278	24,783
Old age security repayment threshold	70,954	69,562
Certain board and lodging allowances paid to players on sports teams or members of recreation programs
Income exclusion (maximum per month)	335	329
Tradesperson’s tools deduction
Threshold amount relating to cost of eligible tools	1,117	1,095
Goods and services tax/harmonized sales tax credit
Adult maximum	265	260
Child maximum	139	137
Single supplement	139	137
Phase-in threshold for the single supplement	8,608	8,439
Family net income at which credit begins to phase out	34,561	33,884
Canada child tax benefit
Base benefit	1,433	1,405
Additional benefit for third child	100	98
Family net income at which base benefit begins to phase out	43,561	42,707
National child benefit (NCB) supplement
First child	2,221	2,177
Second child	1,964	1,926
Third child	1,869	1,832
Family net income at which NCB supplement begins to phase out	25,356	24,863
Family net income at which NCB supplement phase-out is complete	43,561	42,707
Child disability benefit (CDB)
Maximum benefit	2,626	2,575
Family net income at which CDB supplement begins to phase out	43,561	42,707
Children’s special allowances (CSA)
CSA Base Amount	3,654	3,582
Tax-Free Savings Account (the indexed amount has been rounded to the nearest $500)
Annual TFSA dollar limit	5,500	5,000

Source: CRA Newsroom

Ottawa, Ontario, December 6, 2012… The Canada Revenue Agency (CRA) today announced the prescribed annual interest rates that will apply to any amounts owed to the CRA and to any amounts the CRA owes to individuals and corporations. These rates are calculated quarterly in accordance with applicable legislation and will be in effect from January 1, 2013 to March 31, 2013. The rates below remain unchanged from the previous quarter.

Income tax

The interest rate charged on overdue taxes, Canada Pension Plan contributions, and Employment Insurance premiums will be 5%.
The interest rate to be paid on corporate taxpayer overpayments will be 1%.
The interest rate to be paid on non-corporate taxpayer overpayments will be 3%.
The interest rate used to calculate taxable benefits for employees and shareholders from interest-free and low-interest loans will be 1%.
Other taxes, duties, or charges

The interest rates on overdue and overpaid remittances are as follows:

Tax and Duty	Overdue remittances	Overpaid remittances
		Corporate taxpayers	Non corporate taxpayers
Goods and Services Tax (GST)	5%	1%	3%
Harmonized Sales Tax	5%	1%	3%
Air Travellers Security Charge	5%	1%	3%
Excise Tax (non GST)	5%	1%	3%
Excise Duty (except Brewer Licensees)	5%	1%	3%
Excise Duty (Brewer Licensees)	3%	N/A	N/A
Softwood Lumber Products Export Charge	5%	1%	3%

For information on the prescribed interest rates of previous calendar quarters, go to www.cra.gc.ca/interestrates

Source: CRA Newsroom

The following information is now available on the CRA Web site:

Ottawa, Ontario, November 1, 2012… The Canada Revenue Agency announced today that the maximum pensionable earnings under the Canada Pension Plan (CPP) for 2013 will be $51,100—up from $50,100 in 2012. The new ceiling was calculated according to a CPP legislated formula that takes into account the growth in average weekly wages and salaries in Canada.

Contributors who earn more than $51,100 in 2013 are not required or permitted to make additional contributions to the CPP.

The basic exemption amount for 2013 remains $3,500.

The employee and employer contribution rates for 2013 will remain unchanged at 4.95%, and the self-employed contribution rate will remain unchanged at 9.9%.

The maximum employer and employee contribution to the plan for 2013 will be $2,356.20, and the maximum self-employed contribution will be $4,712.40. The maximums in 2012 were $2,306.70 and $4,613.40.

Source: CRA Newsroom