Announcements

 

Get caught up with Andrews & Co.

Whether it's tax season or welcoming new team members, we have a lot going on at our firm. We'll keep you connected by sharing our ongoing news.

  • Canada Pension Plan (CPP) Changes: Costs and Benefits are Increasing
    Posted

    Starting January 1, 2019, the CPP will be enhanced. This means that both employees and employers will be required to contribute more, but, retirement, survivor, and disability pensions will also increase. The changes will be gradually phased in over 7 years: Phase 1 will take place from 2019 to 2023; and Phase 2 will take place in 2024 and 2025.

    Phase 1 – The prior 4.95% base employer/employee contribution rate will increase annually to 2023, as follows, 5.10%, 5.25%, 5.45%, 5.70%, 5.95%.

    Phase 2 – In 2024, an additional 4% contribution will be required on earnings in excess of the Year’s Maximum Pensionable Earnings (YMPE), up to 107% of the YMPE. For example, if the YMPE is $70,100, the additional limit will be approximately $75,000 ($70,100 x 107%). The 4% rate will be applied to the difference between the two numbers: $4,900 ($75,000 – $70,100). For 2025 and later, the 107% multiplier will be increased to 114%.

    Eligibility for CPP benefits will not be affected, however, some benefits will increase. In 2019, the CPP retirement benefits will begin to grow, eventually covering 1/3 of average earnings up to the maximum amount (which will also be increasing by 14%). One’s benefits will depend on how much and how long they contributed to the enhanced CPP. Post-retirement benefits will also be increased. Disability benefits will be increased depending on one’s contributions, and the survivor’s benefit will also be increased based on the deceased spouse or common-law partner’s contribution.

     

    ACTION ITEM: Employers should budget for higher CPP costs on continual increases over the coming seven years.

     

     

     

    Starting January 1, 2019, the CPP will be enhanced. This means that both employees and employers will be required to contribute more, but, retirement, survivor, and disability pensions will also increase. The changes will be gradually phased in over 7 years: Phase 1 will take place from 2019 to 2023; and Phase 2 will take place in 2024 and 2025.

    Phase 1 – The prior 4.95% base employer/employee contribution rate will increase annually to 2023, as follows, 5.10%, 5.25%, 5.45%, 5.70%, 5.95%.

    Phase 2 – In 2024, an additional 4% contribution will be required on earnings in excess of the Year’s Maximum Pensionable Earnings (YMPE), up to 107% of the YMPE. For example, if the YMPE is $70,100, the additional limit will be approximately $75,000 ($70,100 x 107%). The 4% rate will be applied to the difference between the two numbers: $4,900 ($75,000 – $70,100). For 2025 and later, the 107% multiplier will be increased to 114%.

    Eligibility for CPP benefits will not be affected, however, some benefits will increase. In 2019, the CPP retirement benefits will begin to grow, eventually covering 1/3 of average earnings up to the maximum amount (which will also be increasing by 14%). One’s benefits will depend on how much and how long they contributed to the enhanced CPP. Post-retirement benefits will also be increased. Disability benefits will be increased depending on one’s contributions, and the survivor’s benefit will also be increased based on the deceased spouse or common-law partner’s contribution.

     

    ACTION ITEM: Employers should budget for higher CPP costs on continual increases over the coming seven years.

     

     

     

    Read More
  • Federal Carbon Tax: Costs and Rebates
    Posted

    On October 23, 2018, draft amendments to the Federal Fuel Charge Regulations and the Greenhouse Gas Pricing Act were released. As of April 1, 2019, a federal carbon tax is scheduled to be imposed in respect of Ontario, New Brunswick, Manitoba, and Saskatchewan. The federal backstop legislation will be partially used in Prince Edward Island, Yukon, and Nunavut. The other provinces and territory are not subject to this regime as they have, or are, instituting their own custom carbon pricing structures.

    In the first year, the federal tax will, for example, subject gasoline purchases to a 4.42 cents/L tax while 3.91 cents/cubic meter will be assessed on marketable natural gas. The rates will be increased annually until 2024.

    According to a Government Backgrounder entitled Ensuring Transparency the direct proceeds from the federal carbon tax will be returned to the territory or province of origin. For the provinces subject to the federal carbon tax, approximately 90% of funds will be returned directly to individuals and families through a Climate Action Incentive (CAI) payment. The remainder will be returned through electricity generation support in remote communities; support for small and medium enterprises; and support for municipalities, universities, schools, colleges, hospitals, non-profit-organizations, and indigenous communities.

    The following are sample published payout amounts and estimated costs for 2019.

    Province Climate Action Incentive Payments ($) Carbon Tax Cost ($)
    Family of 4 Avg.

    House-hold

    1st

    Adult

    2nd Adult Each Child Avg. House-hold
    Ontario 307 300 154 77 38 244
    Manitoba 339 336 170 85 42 232
    Saskatchewan 609 598 305 152 76 403
    New Brunswick 256 248 128 64 32 202

     

    Also note that a 10% top-up will apply for those residing in rural areas.

    The legislation does not set out the amounts of the payments. Rather, it provides that the amounts for each year may be specified by the Minister of Finance. Absent amounts specified for any specific province, the amounts are nil. It is not clear whether the amounts included in the above release are estimates, or are the amounts specified in accordance with this provision. Payments are expected to increase annually to reflect increases in the federal carbon tax, until at least 2022.

    The Government of Canada website (https://www.canada.ca/en/

    environment-climate-change/services/climate-change/pricing-

    pollution-how-it-will-work.html) provides additional information specific to each jurisdiction.

    The other provinces which are not subject to the federal program generally have similar systems in place which include the collection of levies, and a partial refund to individuals, with the remainder being used to fund the programs or other credits and direct expenditures. For example, in Alberta, the carbon levy is applied at a rate of $30/ton in 2019 to diesel, gasoline, natural gas and propane at the gas station and on heating bills. It does not apply to electricity. A carbon rebate valued at $300 for the first taxpayer, $150 for the spouse, and $45 for each child will be available with the payments beginning to be phased out at an income of $47,500 for individuals ($95,000 for families).

    ACTION ITEM: Review the above website to review exposure and potential rebates in your particular jurisdiction. Businesses may want to budget for increased costs to operate.

    On October 23, 2018, draft amendments to the Federal Fuel Charge Regulations and the Greenhouse Gas Pricing Act were released. As of April 1, 2019, a federal carbon tax is scheduled to be imposed in respect of Ontario, New Brunswick, Manitoba, and Saskatchewan. The federal backstop legislation will be partially used in Prince Edward Island, Yukon, and Nunavut. The other provinces and territory are not subject to this regime as they have, or are, instituting their own custom carbon pricing structures.

    In the first year, the federal tax will, for example, subject gasoline purchases to a 4.42 cents/L tax while 3.91 cents/cubic meter will be assessed on marketable natural gas. The rates will be increased annually until 2024.

    According to a Government Backgrounder entitled Ensuring Transparency the direct proceeds from the federal carbon tax will be returned to the territory or province of origin. For the provinces subject to the federal carbon tax, approximately 90% of funds will be returned directly to individuals and families through a Climate Action Incentive (CAI) payment. The remainder will be returned through electricity generation support in remote communities; support for small and medium enterprises; and support for municipalities, universities, schools, colleges, hospitals, non-profit-organizations, and indigenous communities.

    The following are sample published payout amounts and estimated costs for 2019.

    Province Climate Action Incentive Payments ($) Carbon Tax Cost ($)
    Family of 4 Avg.

    House-hold

    1st

    Adult

    2nd Adult Each Child Avg. House-hold
    Ontario 307 300 154 77 38 244
    Manitoba 339 336 170 85 42 232
    Saskatchewan 609 598 305 152 76 403
    New Brunswick 256 248 128 64 32 202

     

    Also note that a 10% top-up will apply for those residing in rural areas.

    The legislation does not set out the amounts of the payments. Rather, it provides that the amounts for each year may be specified by the Minister of Finance. Absent amounts specified for any specific province, the amounts are nil. It is not clear whether the amounts included in the above release are estimates, or are the amounts specified in accordance with this provision. Payments are expected to increase annually to reflect increases in the federal carbon tax, until at least 2022.

    The Government of Canada website (https://www.canada.ca/en/

    environment-climate-change/services/climate-change/pricing-

    pollution-how-it-will-work.html) provides additional information specific to each jurisdiction.

    The other provinces which are not subject to the federal program generally have similar systems in place which include the collection of levies, and a partial refund to individuals, with the remainder being used to fund the programs or other credits and direct expenditures. For example, in Alberta, the carbon levy is applied at a rate of $30/ton in 2019 to diesel, gasoline, natural gas and propane at the gas station and on heating bills. It does not apply to electricity. A carbon rebate valued at $300 for the first taxpayer, $150 for the spouse, and $45 for each child will be available with the payments beginning to be phased out at an income of $47,500 for individuals ($95,000 for families).

    ACTION ITEM: Review the above website to review exposure and potential rebates in your particular jurisdiction. Businesses may want to budget for increased costs to operate.

    Read More
  • Nexia Canada Managers Seminar 2019
    Posted

    Last week Adam Patrick and Anik Audet travelled to Toronto to participate in the Nexia Canada Managers Training Seminar. Throughout their jam packed two days Adam and Anik did many team bonding activities such as axe throwing and a Toronto Blue Jays game while also attending several Manager Seminars. Thank you Zeifmans and Nexia Canada for hosting a wonderful two days!

    Last week Adam Patrick and Anik Audet travelled to Toronto to participate in the Nexia Canada Managers Training Seminar. Throughout their jam packed two days Adam and Anik did many team bonding activities such as axe throwing and a Toronto Blue Jays game while also attending several Manager Seminars. Thank you Zeifmans and Nexia Canada for hosting a wonderful two days!

    Read More
  • Golf Day 2019
    Posted

    This past Friday marked Andrews & Co.’s Annual Foreman Memorial Golf Tournament held at The Meadows Golf and Country Club. Staff enjoyed a round of 18 holes, dinner and many activities such as Longest Drive, Closest to The Pin and 50/50 draws to raise funds for the Candlelighters Childhood Cancer Support Programs. Overall, as a firm, Andrews is proud to donate $1700 (surpassing our goal of $1300) to help fund Candlelighters research this year! Thank you to everyone who supported, and donated us this year.

    This past Friday marked Andrews & Co.’s Annual Foreman Memorial Golf Tournament held at The Meadows Golf and Country Club. Staff enjoyed a round of 18 holes, dinner and many activities such as Longest Drive, Closest to The Pin and 50/50 draws to raise funds for the Candlelighters Childhood Cancer Support Programs. Overall, as a firm, Andrews is proud to donate $1700 (surpassing our goal of $1300) to help fund Candlelighters research this year! Thank you to everyone who supported, and donated us this year.

    Read More
  • ACCELERATED DEPRECIATION: Federal Fall Economic Update Changes
    Posted

    In response to U.S. tax changes and cuts, the Federal Government released its Fall Economic Update on November 21, 2018 which primarily focused on changes to the first year of depreciation on most capital assets. The changes include immediate full depreciation in respect of manufacturing & processing assets, along with clean energy generation and storage assets. Also, an enhanced first year depreciation claim is now available for most other depreciable assets.

    Manufacturing and Processing Machinery and Equipment

    Machinery and equipment used in manufacturing and processing acquired and made available for use from November 21, 2018 to December 31, 2023 will be eligible for a full capital cost allowance (CCA) deduction in the year of acquisition (the full deduction will then be phased out incrementally). Specifically, the asset must be used directly or indirectly by the taxpayer in Canada primarily for the manufacturing or processing of goods for sale or lease, or leased by certain corporations to a lessee who can reasonably be expected to use the property in this manner.

    In broad terms, the manufacture of goods normally involves the creation of something (e.g. making or assembling machines, clothing or soup) or the shaping, stamping or forming of an object of something (e.g. making steel rails, wire nails, rubber balls, or wood moulding).

    Processing of goods usually refers to a uniform process, system, technique, or method of preparation, handling or other activity designed to effect a physical or chemical change in an article or substance (e.g. galvanizing iron, creosoting fence posts, dyeing cloth, dehydrating foods, or homogenizing and pasteurizing dairy products), other than natural growth. Jurisprudence has determined that a taxpayer would be engaged in processing if the following two tests are met: there is a change in the form, appearance, or other characteristics of the goods subject to the operation; and the product becomes more marketable.

    Property “used directly or indirectly” in eligible activities may qualify for this enhanced deduction.

    Some assets commonly used in smaller operations, such as restaurants, bars or bakeries, may qualify. For example, an oven which converts ingredients into a meal for sale may be considered used in manufacturing or processing.

    Clean Energy Assets

    Clean energy assets (Classes 43.1 and 43.2) will qualify for the same first year depreciation claims as manufacturing and processing equipment (100% up to December 31, 2023, declining thereafter). Eligible assets for these classes include certain types of energy and heat production and storage equipment related to hydro, wind, solar, bio fuel, eligible waste fuels, hydrogen fuel cells, kinetic wave/tidal, ground source heat pump systems and heat recovery equipment.

    Most Other Capital Assets – Accelerated Investment Incentive

    CCA also will be enhanced for acquisitions of depreciable assets in most other classes from November 21, 2018 to December 31, 2027.

    Prior to the rule change, the half-year rule essentially only allowed half a year of depreciation in the year of acquisition (applicable to most CCA classes), regardless of how early or late in the fiscal year the asset was acquired. Now, for most assets, the usual half year of CCA available in the year of acquisition will be tripled for acquisitions to December 31, 2023 (the enhancement will decline thereafter, returning to the typical half-year rule in 2028).

    For example, a Class 10 vehicle which is normally subject to a 15% depreciation claim in the first year would now be allowed a 45% claim.

    Planning and Purchases

    Claiming depreciation is optional. In essence, one has the option of claiming depreciation up to the maximum level available in respect of its class for any given year (other less common limits may also apply). The accelerated depreciation rules operate as the name implies: they accelerate when a tax deduction for depreciation can be claimed, but they do not increase the overall lifetime amounts that can be claimed. In other words, more can be claimed up front, but less will be available in the future. Note that an accelerated CCA claim in the year of acquisition is only available in that year – one must “use it or lose it”. Reducing the claim in the year of acquisition does not allow an accelerated deduction in a future year.

    When determining whether, and to what extent a claim should be made, considerations vary depending on factors such as:

    • whether the asset is owned personally or in a corporation;
    • the current income levels, and the expected income in the future;
    • future corporate tax rates (for example, whether the corporation may be subject to small business deduction restrictions as too much passive income is being earned); and
    • whether the asset is generating passive or active income.

    Accelerated depreciation is available even if purchased just before year’s end, as long as it is also made available for use by that point as well.

     

    ACTION ITEM: Review whether capital purchases should be accelerated, and whether the accelerated deduction should be claimed given your particular situation.

    In response to U.S. tax changes and cuts, the Federal Government released its Fall Economic Update on November 21, 2018 which primarily focused on changes to the first year of depreciation on most capital assets. The changes include immediate full depreciation in respect of manufacturing & processing assets, along with clean energy generation and storage assets. Also, an enhanced first year depreciation claim is now available for most other depreciable assets.

    Manufacturing and Processing Machinery and Equipment

    Machinery and equipment used in manufacturing and processing acquired and made available for use from November 21, 2018 to December 31, 2023 will be eligible for a full capital cost allowance (CCA) deduction in the year of acquisition (the full deduction will then be phased out incrementally). Specifically, the asset must be used directly or indirectly by the taxpayer in Canada primarily for the manufacturing or processing of goods for sale or lease, or leased by certain corporations to a lessee who can reasonably be expected to use the property in this manner.

    In broad terms, the manufacture of goods normally involves the creation of something (e.g. making or assembling machines, clothing or soup) or the shaping, stamping or forming of an object of something (e.g. making steel rails, wire nails, rubber balls, or wood moulding).

    Processing of goods usually refers to a uniform process, system, technique, or method of preparation, handling or other activity designed to effect a physical or chemical change in an article or substance (e.g. galvanizing iron, creosoting fence posts, dyeing cloth, dehydrating foods, or homogenizing and pasteurizing dairy products), other than natural growth. Jurisprudence has determined that a taxpayer would be engaged in processing if the following two tests are met: there is a change in the form, appearance, or other characteristics of the goods subject to the operation; and the product becomes more marketable.

    Property “used directly or indirectly” in eligible activities may qualify for this enhanced deduction.

    Some assets commonly used in smaller operations, such as restaurants, bars or bakeries, may qualify. For example, an oven which converts ingredients into a meal for sale may be considered used in manufacturing or processing.

    Clean Energy Assets

    Clean energy assets (Classes 43.1 and 43.2) will qualify for the same first year depreciation claims as manufacturing and processing equipment (100% up to December 31, 2023, declining thereafter). Eligible assets for these classes include certain types of energy and heat production and storage equipment related to hydro, wind, solar, bio fuel, eligible waste fuels, hydrogen fuel cells, kinetic wave/tidal, ground source heat pump systems and heat recovery equipment.

    Most Other Capital Assets – Accelerated Investment Incentive

    CCA also will be enhanced for acquisitions of depreciable assets in most other classes from November 21, 2018 to December 31, 2027.

    Prior to the rule change, the half-year rule essentially only allowed half a year of depreciation in the year of acquisition (applicable to most CCA classes), regardless of how early or late in the fiscal year the asset was acquired. Now, for most assets, the usual half year of CCA available in the year of acquisition will be tripled for acquisitions to December 31, 2023 (the enhancement will decline thereafter, returning to the typical half-year rule in 2028).

    For example, a Class 10 vehicle which is normally subject to a 15% depreciation claim in the first year would now be allowed a 45% claim.

    Planning and Purchases

    Claiming depreciation is optional. In essence, one has the option of claiming depreciation up to the maximum level available in respect of its class for any given year (other less common limits may also apply). The accelerated depreciation rules operate as the name implies: they accelerate when a tax deduction for depreciation can be claimed, but they do not increase the overall lifetime amounts that can be claimed. In other words, more can be claimed up front, but less will be available in the future. Note that an accelerated CCA claim in the year of acquisition is only available in that year – one must “use it or lose it”. Reducing the claim in the year of acquisition does not allow an accelerated deduction in a future year.

    When determining whether, and to what extent a claim should be made, considerations vary depending on factors such as:

    • whether the asset is owned personally or in a corporation;
    • the current income levels, and the expected income in the future;
    • future corporate tax rates (for example, whether the corporation may be subject to small business deduction restrictions as too much passive income is being earned); and
    • whether the asset is generating passive or active income.

    Accelerated depreciation is available even if purchased just before year’s end, as long as it is also made available for use by that point as well.

     

    ACTION ITEM: Review whether capital purchases should be accelerated, and whether the accelerated deduction should be claimed given your particular situation.

    Read More
  • Nexia Day 2019
    Posted

    “Nexia Day is a great way for everyone to get involved and celebrate the strengths of our network, wherever they are” Kevin Arnold, CEO of Nexia International.

    On Thursday, staff of Andrews & Co. participated in a “Hot Ones” Wing Challenge. Staff had the chance to try 9 different flavours of wings, ranging from honey garlic to the hottest of them all, da bomb!

    During this challenge, Andrews & Co. staff raised a total of $525.00 for the Orleans-Cumberland Community Resource Centre Food Bank.

    Thank you to everyone who participated. For more information on Nexia Day please visit their website: https://nexia.com/nexia-day/

    “Nexia Day is a great way for everyone to get involved and celebrate the strengths of our network, wherever they are” Kevin Arnold, CEO of Nexia International.

    On Thursday, staff of Andrews & Co. participated in a “Hot Ones” Wing Challenge. Staff had the chance to try 9 different flavours of wings, ranging from honey garlic to the hottest of them all, da bomb!

    During this challenge, Andrews & Co. staff raised a total of $525.00 for the Orleans-Cumberland Community Resource Centre Food Bank.

    Thank you to everyone who participated. For more information on Nexia Day please visit their website: https://nexia.com/nexia-day/

    Read More
  • Travel Expenses: Home to Work Site
    Posted

    Travel from home to a regular place of employment is usually a personal expenditure, the costs of which cannot be claimed as an employment expense. However, if the taxpayer is required to travel away from the employer’s place of business, amounts may be deductible by the employee.

    A June 29, 2018 Tax Court of Canada case examined this issue. The taxpayer travelled from home to three different construction sites to carry on employment duties. Specifically, the taxpayer’s work for a Toronto construction corporation required frequent travel to sites requiring round trips of 167 km (Hamilton) and 92 km (Aurora), and infrequently to a site requiring a 94 km round trip (Whitby).

    CRA argued that each was a regular place of employment, such that no deduction was available. The Court, however, concluded that this was travel “away from the employer’s place of business or in different places”, as required by the Income Tax Act. As such, the costs of this travel could qualify as deductible employment expenses.

    While the taxpayer was not ultimately successful in his claim due to his receipt of an allowance from his employer, the case may provide a basis for business travel from home to a construction site.

    As implied above, there are other conditions that must be met in order to deduct amounts against employment income. For example, the employee must not receive a non-taxable allowance in respect of the travel, and an appropriately completed T2200 from their employer must have been issued.

     

    CAUTION ITEM: Although it may be possible deduct travel amounts against employment income, such amounts are often challenged by CRA.

    Travel from home to a regular place of employment is usually a personal expenditure, the costs of which cannot be claimed as an employment expense. However, if the taxpayer is required to travel away from the employer’s place of business, amounts may be deductible by the employee.

    A June 29, 2018 Tax Court of Canada case examined this issue. The taxpayer travelled from home to three different construction sites to carry on employment duties. Specifically, the taxpayer’s work for a Toronto construction corporation required frequent travel to sites requiring round trips of 167 km (Hamilton) and 92 km (Aurora), and infrequently to a site requiring a 94 km round trip (Whitby).

    CRA argued that each was a regular place of employment, such that no deduction was available. The Court, however, concluded that this was travel “away from the employer’s place of business or in different places”, as required by the Income Tax Act. As such, the costs of this travel could qualify as deductible employment expenses.

    While the taxpayer was not ultimately successful in his claim due to his receipt of an allowance from his employer, the case may provide a basis for business travel from home to a construction site.

    As implied above, there are other conditions that must be met in order to deduct amounts against employment income. For example, the employee must not receive a non-taxable allowance in respect of the travel, and an appropriately completed T2200 from their employer must have been issued.

     

    CAUTION ITEM: Although it may be possible deduct travel amounts against employment income, such amounts are often challenged by CRA.

    Read More
  • ALS WALK 2019
    Posted

    This past weekend Tracey Stratton along with other members of staff completed the Walk to End ALS in Ottawa. The total raised this year was $4,160! (fundraising, bake sale).

    Every year the office participates in the walk in memory of our former partner Andy Foreman.  Andy passed away in 2013 and since that time we have raised in excess of $20,000 for this worthwhile and close to home cause.

    Thank you to everyone who contributed to our efforts this year.

    This past weekend Tracey Stratton along with other members of staff completed the Walk to End ALS in Ottawa. The total raised this year was $4,160! (fundraising, bake sale).

    Every year the office participates in the walk in memory of our former partner Andy Foreman.  Andy passed away in 2013 and since that time we have raised in excess of $20,000 for this worthwhile and close to home cause.

    Thank you to everyone who contributed to our efforts this year.

    Read More
  • SOFTBALL LEAGUE 2019
    Posted

    Andrews & Co. is hittin the field this upcoming summer! Staff have recently joined a Softball League through Ottawa Sport & Social Club. Everyone is looking forward to working and playing together as a team on Tuesday nights.

    Andrews & Co. is hittin the field this upcoming summer! Staff have recently joined a Softball League through Ottawa Sport & Social Club. Everyone is looking forward to working and playing together as a team on Tuesday nights.

    Read More
  • Summer Office Hours 2019
    Posted

    Please note our office hours have changed for the summer

    Monday – Thursday 8:30am – 5:00pm

    Friday 8:30am – 1:00pm

    Please note our office hours have changed for the summer

    Monday – Thursday 8:30am – 5:00pm

    Friday 8:30am – 1:00pm

    Read More