December 18, 2012
CRA Canada Revenue Agency) annouced an increase to reasonable cents per KMs driven for business purposes. If your employees use their own vehicle to conduct your company’s business, they are getting a raise! Effective January 1, 2013 the rate per business KM driven will increase from $0.52 to $0.53 for the first 5000 KMs. All KMs after that are paid at $0.47.
Also, if you are employed as a car salesman -yes, these folks do make an honest living in this career path…your operating cost has gone up from $0.21 to $0.23 per personal KM driven
December 7, 2012
CRA Canada Revenue Agency) announced today the first quarter prescribed interest for low or interest-free loans. From January to March 2013 the prescribed interest rate will remain at 1%. This means when you offer your employees a loan or cash advance (for longer than 1 pay period) without charging at minimum the prescribed rates, they incur a 1% taxable benefit upon which they will be required to pay CPP and Income Tax.
October 1, 2012
If you haven’t already done so, you need to conduct a PIER (pensionable, insurable earnings review) Audit for all employees in your company. Do it now while you still have time to make corrections in 2012 for the 2012 calendar year. A PIER is a deficiency in the amount of CPP or EI deducted throughout the year. The most common causes for deficiencies:
1) Bonus paid on a separate cheque and the CPP exemption is taken too many times during the year
2) Benefits not included in the calculation of CPP and/or EI
3) Incorrect birthday will cause CPP to start/stop at the wrong time
To calculate CPP:
Take total pensionable earnings to a point in the calendar year. (Regardless of your pay frequency, you can take full months at a time.)
Take the annual CPP exemption and divide by 12 to get the monthly amount
3500 / 12 = 291.66
If you are using September for the YTD pensionable earnings use the following calculation for exemption:
9 months x 291.66 = 2625.00 exemption used so far in 2012
Take total pensionable earnings and reduce by exemption (as per above)
39,450.00 – 2625.00 = 36,825 (earnings subject to CPP deductions)
To calculate CPP
36,825 x 4.95% = 1822.84 total employee contribution
To calculate EI – there is no exemption
39,450.00 x 1.83% = 721.94
If for any reason the YTD balances for this employee are different in your system than what you calculate you need to review why and make appropriate contributions.
Better to do this now than to wait for the PIER review to happen in May next year. If you wait, you will be responsible for the employee’s portion, your portion, penalties and interest. Do yourself a favour take care of it now while you still have time.
September 21, 2012
BC Medical is the only provincial medical fund that is still paid for by employees in the province of British Columbia. There are three rate: single, couple, family. The employer has the option to pay for this health tax if they choose. Remember that if the company pays for it, this is a taxable benefit for the employee. If the employee’s pay is deducted to cover this amount, the amount comes of their after tax dollars. In other words, this takes away from what is “going into the employee’s pocket.
August 30, 2012
For several years now, a gift given to an employee in the form of a gift card or gift certificate is considered just like cash. Because you have given the employee the opportunity to “CHOOSE” what they can purchase with the gift card, it’s as though they have cold hard cash in their pockets to spend as they see fit. From the very first $1.00 given on the card the employee is subjected to statutory deductions on the value of the card.
Gone are the days of giving an employee a turkey at Christmas; or are they? The boss is permitted by law to give an employee up to 2 gifts per year with a value totaling less than $500.00 before they become taxable for any amount over that. A savvy boss will partner with a local supermarket to produce gift certificates redeemable only for a turkey – easier than lugging dozens of turkeys to the workplace! The employee no longer has a choice and that means they will not be hit by the tax man. I don’t know about you, but I have never seen a $500.00 turkey – after all it’s not the goose that laid the golden egg.
August 13, 2012
As of January 1, 2012, income earned by employees through wage loss replacement plans or company paid sick leave or short term disability is subjected to CPP. Running a PIER (Pensionable, Insurable Earnings Review) now will help save you money in the long run and will keep you compliant.
August 11, 2012
The end of the year is fast approaching. Remember to verify the amounts of CPP and EI calculated deducted and remitted are accurate. You still have time to catch up any missed deductions. If you don’t, you the employer, will be responsible for paying the employee portion, the employer portion and the penalties and interest associated with these statutory deductions
August 10, 2012
Did you know…the Canadian equivalent of the US 401K is called an RRSP?
There is one major difference. RRSPs are not mandatory in Canada and can be purchased from any registered financial institution or insurance carrier.