Tax News And Information

Top 500 Delinquent Taxpayer List We updated our website with the current lists of taxpayers owing the top 500 delinquencies of personal income tax or the top 500 delinquencies of business entity tax. The White House and progressive groups reject all of this, saying that boosting taxes on corporations and the wealthy is necessary to make long-term economic investments.

This one-time, separate refund (up to $110 as an individual filer or up to $220 as a Married Filing Jointly filer) from the one received when filing a Virginia return is the result of the state tax agency passing legislation in response to the new federal tax law. Though the state law requires Tax Relief Refund checks to be mailed out by October 15, 2019, the state will withhold all or part of these refunds to pay off state, local, and/or IRS debts. We have received several questions from members related to the new T4 reporting requirements and the basis in which remuneration in boxes 57 to 60 needs to be reported. Although Canada Emergency Wage Subsidy claims are generally based on eligible remuneration paid to eligible employees that relates to a particular period, T4 boxes 57 to 60 require remuneration be reported on a “when paid” basis. We had suggested to the CRA that they provide more guidance on this issue, as many were assuming that the T4 amounts would be calculated on the same basis as the CEWS. However, it appears that the recently published Employers’ Guide – Filing the T4 Slip and Summary T4 contains wording similar to the original announcement.

As an authorized representative, you will be asked to enroll in MFA before gaining access to your client’s online services such as Represent a Client and Auto-Fill T1 and T2 functionality, plus My Account and My Business Account for your own personal tax information. Many employers have reimbursed employees for office supplies and other costs, and in some cases, only to a limit. On the T777S, the CRA states that “You cannot claim any expenses that were or will be reimbursed by your employer.” We asked the CRA to confirm that a deduction can be claimed when the expense was not fully reimbursed. ” on the Declaration of Conditions of Employment for Working at Home Due to COVID-19 . On February 12, the CRA posted their deadline summary for 2021 filing dates, and unfortunately, there were no references to any deadline extensions despite the fact that the pandemic continues.

Cra Provides Examples For Their Guidance On International Income Tax Issues

Although the short form will be easier to complete and will provide better information on who can claim pandemic-related home office expenses when compared with the existing T2200 form, the federal government’s proposed process does not deal with our key concerns. We have raised the issue of tax deadline extensions, especially for T1 returns, with the CRA and our discussions continue. If you have any comments or concerns as they relate to upcoming tax deadlines, please forward them to Bruce Ball, vice-president, Tax, CPA Canada. The viewpoints received will help shape our ongoing discussions with the federal government. The government will also provide interest relief to Canadians who received COVID-related income support benefits. Once individuals have filed their 2020 income tax and benefit return, they will not be required to pay interest on any outstanding income tax debt for the 2020 tax year until April 30, 2022. According to the news release , Revenu Quebec will provide flexibility and, in particular, returns can now be filed on or before May 31 without the application of a late filing penalty.

The government also proposes to allow self-employed workers, who have opted in to the EI program to access special benefits by using a 2020 earnings threshold of $5,000, compared to the previous threshold of $7,555. This change would be retroactive to claims established as Tax News of January 3, 2021 and would apply until September 25, 2021. The CRA notes however, to be considered a qualifying rent expense, the lease must require the payment; a lease that is silent with respect to a particular item does not, in the CRA’s view, satisfy this condition.

We have been engaged with both Finance Canada and the CRA for several months, providing feedback, advice and expertise to the government on this specific issue. Payments under a supplementary unemployment benefit plan (“SUBP”) (Question 17-8) – CRA has added this new question to deal with SUBP payments and when they may be considered eligible remuneration. One of the difficult issues in developing a flat rate method for all employees was that renters can generally claim a higher amount than homeowners under existing rules.

Businesses hiring people aged 16 to 35 will be able to claim up to $200 a week under the Federal Government’s JobMaker program announced in tonight’s budget. Personal income and business tax cuts unveiled in this week’s Budget have passed Parliament, with the money to start reaching millions of Australians within weeks. Under the new law, families claiming the credit will receive up to $3,000 per qualifying children between ages 6-17 or $3,600 for each child younger than 6. The IRS provided for penalty relief under Sec. 6656 for an employer’s failure to timely deposit certain employment taxes with the IRS to allow employers to immediately take advantage of various credits enacted in response to the COVID-19 pandemic. Dependent care assistance program benefits carried over or available during an extended claims period under special temporary COVID-19 relief provisions retain their status as excludable from employees’ gross income and wages, the IRS explains in a notice.

Discussions With The Cra On Tax Deadline Relief Continues

As stated on its website, the CRA intends to charge taxpayers a late-filing penalty if they file their 2020 tax return after April 30, 2021 and there is unpaid tax at that time. The penalty is five per cent of the balance owing for 2020, plus one per cent of the balance owing for each full month the return was filed after April 30, 2021, to a maximum of 12 months. Interest will also be charged on unpaid amounts subject to the one-year relief program available to certain taxpayers. As the website for that program states, this relief does not apply to late-filing penalties. We understand that the penalty and interest assessment process is automated for the most part. Virginia tax officials warned Virginia taxpayers who still have not filed their 2018 Virginia State Income Tax Returns that they have until July 1 to e-File Their Returns and claim the State’s Tax Relief Refund.

In addition, the CRA responds to some of the top questions that CPA Canada received from members on the CERS. After enrollment, a passcode will be sent each time you log on to a CRA service which will have to be entered and re-authentication will be needed if your session times out. The CRA will automatically apply the interest relief measure for individuals who meet these criteria. We highlighted to the CRA that calculating the utility portion of maintenance fees will be difficult for most taxpayers as they will need to obtain and extract information from the condo corporation’s financial statements. To assist with this, the CRA has indicated to us that they will accept that the administrator of the condominium building provide the information from either the current or previous fiscal year, whichever is available at the time of the request.

One common observation is that many have trained their clients not to provide details over the phone when called on an unannounced basis by anyone due to the current high level of phone fraud. The CRA recently announced on the Represent a Client main page that all electronic authorization requests made by representatives for individuals and business clients will not be activated until the representative has been verified. normal balance And more specifically, clients may be contacted by the CRA to verify the representative’s authorization request. Please note that the first deadline for the CERS program is Thursday April 22 for period 1 of that program. Unfortunately, it appears that our efforts to obtain generalized deadline relief will be unsuccessful despite what we believe is a clear need for many firms and the taxpayers they serve.

Provide applicants with more flexibility in determining the revenue decline for the wage and rent subsidies for the qualifying period from December 20, 2020 to January 16, 2021. An additional elective alternative baseline remuneration computation for March 14 to June 5, 2021 is proposed to ensure that the baseline remuneration comparator remains appropriate. In particular, an eligible employer would be allowed to elect, for qualifying periods from March 14 to June 5, 2021, to use the period of March 1, 2019 to June 30, 2019, or July 1 to December 31, 2019 to calculate baseline remuneration. The CRA will administer this measure on the basis of draft legislative proposals released with the announcement. On March 22, the federal government announced that the deadline for new Canada Emergency Business Account applications is being extended from March 31 to June 30, 2021. This deadline extension applies to any new applications for CEBA loans of $60,000 or to new applications from businesses that have already received the $40,000 loan and intend to apply for the additional $20,000.

Update On Tax Deadlines

These taxpayers must paper file a 2015 Tax Return (previous year tax returns can no longer be e-filed) by April 15, to claim the refunds. Many taxpayers filed their 2020 return early, millions of whom reported their unemployment benefits on Form 1099-G for the first time in their life. The recently passed stimulus bill made a portion of these benefits tax exempt and taxpayers who already filed did not get to take advantage of this.

There may even be situations where an individual receives a T4A, but they did not apply for COVID-19 emergency and recovery benefits. On the personal tax deadline for Canada, we are continuing to discuss the issue with the CRA.

Although there is a light at the end of the tunnel with the rollout of vaccines, it does appear clear that the country will still be in the midst of a crisis throughout the upcoming tax filing season. The CRA has sent out a communication reminding practitioners of their Dedicated Telephone Service for small and medium income tax service providers. The service connects income tax professionals with experienced CRA officers from the Income Tax Rulings Directorate who will be able to help with general, interpretative issues of the Income Tax Act. The CRA has published some guidance on what to do if there is an error found on a 2020 T4A slip issued to you or your client. These errors could include repayments made in 2020 for a COVID-19 benefit that is not reflected on the slip, or a repayment has not been made but the income reported on the slip has been reduced by some other amount.

And they note that such tax hikes — including raising the capital gains rate and returning private equity taxes to the regular income rate — are politically popular. “It’s going to be very tough on them to do anything on the personal side,” said a senior Washington lobbyist who works on tax issues.

The CRA is encouraging individuals to contact the CRA immediately about any errors on T4As and indicates that CRA agents are prioritizing the resolution of such issues. If needed, the CRA will reassess these returns after the T4A is corrected and an amended or cancelled T4A is issued. The U.S. Treasury Department and Internal Revenue Service announced on March 17 that the U.S. federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. First, the impact of tax deadlines are obviously much different when you are working to help a large group of clients meet their tax obligations compared to a taxpayer meeting their own.

Eligible families will receive a payment of up to $300 per month for each child under age 6 and up to $250 per month for each child age 6 and older. The payments will continue on a monthly basis through December, and most eligible families will receive them via direct deposit, senior administration officials said Sunday. Families that don’t have direct deposit will receive the payment either as a paper check or a debit card. Keeping up with the constant flow of international tax developments worldwide can be a real challenge. International Tax News provides a succinct monthly analysis of select legislative changes, case law and treaty news from around the globe.

However, because such payments are not considered to have been paid in respect of a week, they are not eligible for CEWS. For the purposes of computing baseline remuneration, a bonus amount must be paid during a relevant baseline remuneration period to be considered . Then, an employer may need to do a manual calculation to determine the amount of bonus that was paid in respect of each week in the claim period. The CRA has published more details on employer-provided benefits and allowances, including commuting costs, employer-provided parking, computer and home office equipment, meal costs, and cell phone and internet service plans. The CRA has indicated that these positions are effective from March 15, 2020 to December 31, 2020. We will continue to work with the CRA to address questions and concerns we receive and will communicate anything new as soon as we get more information.

The IRS has confirmed that those who already filed will be issued a refund for the tax they paid on this income. For employers, the fact that many of their employees will want to do a detailed calculation and will therefore need a form creates a decision.

Democrat House Representatives Sean Casten and Lauren Underwood introduced The Taxpayer Extension Act, which proposes to extend theApril 15, 2019 Federal Tax Return deadlineto May 20, 2019. This provides 35 additional days for taxpayers to file their returns due to recent tax reform and the government shutdown. They suggest that the extended deadline would give the IRS more time to prepare their filing systems to avoid computer system breakdowns on Tax Day. The IRS reported that there are unclaimed tax refunds worth almost $1.4 billion for about 1.2 million taxpayers who have not filed a 2015 Tax Return.

• Unfortunately, it appears that our efforts to obtain generalized deadline relief will be unsuccessful despite what we believe is a clear need for many firms and the taxpayers they serve.
• As mentioned in a prior update, three-quarters of the small and mid-sized firms we heard from believe that a filing extension is needed for T1s and that was a focus of our discussions with the federal government.
• The IRS released a draft of the W-4 Formthat is based on tax code updates from the Tax Cuts and Jobs Act.
• Therefore, we wanted to provide you with a summary to help you track these key dates.
• Note that the usual approach will generally apply for those employees who had pre-existing work at home arrangements.

On April 19, 2021, Deputy Prime Minister and Minister of Finance Chrystia Freeland tabled Canada’s federal budget. Read CPA Canada’s Federal Budget Tax Highlightsto learn about the most important tax changes announced this year. Working collaboratively with the Canada Revenue Agency we aim to bring clarity on pressing tax questions and COVID-19 tax updates.

Don’t get lost in the fog of legislative changes, developing tax issues, and newly evolving tax planning strategies. Tax Section membership will help you stay up to date and what are retained earnings make your practice more efficient. The CRA has also highlighted that it will continue to pursue the regulatory approval necessary to implement these measures permanently.

On January 19, we posted an item mentioning that we have been in discussions with the Canada Revenue Agency on tax deadlines, and the T1 deadline in particular. We have received a significant amount of feedback that indicates that many members in small and medium-sized CPA firms have significant concerns on the ability to meet an April 30 deadline for T1 returns and concerns about other deadlines more generally. CRA and Service Canada will return any repaid CERB payments to self-employed individuals whose net self-employment income was less than $5,000 and who have already voluntarily repaid their CERB payments. The CRA has confirmed that the employee cannot claim any expenses that were or will be reimbursed by the employer. However, they can claim the portion of the eligible expenses that were not reimbursed.

As first announced in the media on March 12, the CRA has locked down approximately 800,000 online accounts. According to the CRA, affected individuals will be contacted either by email or by letter with instructions depending on the communications option that users have selected. The CRA recently published two new technical interpretations that provide some further guidance relating to the CEWS. The CRA has informed us that effective March 31, 2021, they have launched a dedicated GST/HST hotline and generic email address for businesses that are affected by the proposed new GST/HST digital economy measures. For tax preparers, to the extent that proactive relief is not available, allow them to submit a list of relief requests to streamline the process. As of July 1, 2021, digital economy businesses may have GST/HST obligations under proposed measuresthat were announced by the Government of Canada last fall.

Author: Mark J. Kohler