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.

  • LOSING THE SMALL BUSINESS DEDUCTION (SBD): Intercompany Payments
    Posted

    The 2016 Federal Budget proposed a number of measures to prevent the ability to multiply access to the $500,000 SBD limit, addressing several strategies which the Government perceived as inappropriate. Broad restrictions in eligibility for the SBD on payments between private corporations in general have been introduced. The restrictions as proposed are so broad that they will affect many corporations and structures where multiplication of the SBD was not a goal or even a consideration.

    The measures will apply to taxation years that begin on or after March 22, 2016. For example, a corporation with a December 31 fiscal year-end will first be subject to these restrictions in the year ending December 31, 2017. A corporation with a March 31 fiscal year-end will first be affected in the year ending March 31, 2017.

    In general, these new Specified Corporate Income (SCI) rules will restrict access to the SBD on any active business income (ABI) earned from providing services or property to another private corporation (PayerCo) where there is common ownership.  Such income will not be eligible for the SBD.

    Consider the situation where ServiceCo provides services to PayerCo, and PayerCo pays a fee back to ServiceCo.

    Payments will be restricted by the SCI rules where an interest in PayerCo is held by any of:

    • ServiceCo(the corporation providing the service and receiving the fees);
    • any shareholderof ServiceCo; or,
    • any personwho does not deal at arm’s length with any shareholder of ServiceCo.

    There is no de minimis ownership interest threshold – based on the draft legislative proposals of July 29, 2016, even one share of thousands will cause these restrictions to apply. In addition, even indirect interest can trigger the SCI rules. For example, if you own 10% of ServiceCo, and your brother-in-law owns one share of thousands issued by PayerCo, these rules could apply.

    An exception: if all or substantially all of ServiceCo’s active business income (which CRA generally considers to be 90%) is earned from providing services to arm’s length persons other than PayerCo, ServiceCo will not be subject to the SCI rules.

    The Budget also proposed that PayerCo may be permitted to assign a portion of its own unused SBD limit to ServiceCo to make the payments SCI (a special form must be filed to make the assignment).

    Examples of Corporations Potentially Affected

    Consider a corporation, OpCo, held by four unrelated shareholders which pays management fees (or some other type of active income) to four HoldCos each owned by one of the four shareholders (whether in whole or in part).

    Under the proposals, the management fees earned by the four HoldCos would not generally be eligible for the SBD, unless OpCo allocated a portion of its own $500,000 limit amongst the HoldCos. In other words, OpCo and the four HoldCos must now share access to a single business limit, assuming the HoldCos do not have ABI from other sources. Historically, each of the five corporations (OpCo and the four HoldCos) may each have had full access to the $500,000 SBD depending on their ownership and business structure.

    As a second example, consider Dr. A, whose professional corporation (PC) carries on a dental practice. Dr. A’s spouse owns a second corporation (HyCo), which carries on the hygiene practice at the PC’s dental clinic. PC and HyCo are not associated, either by share structure or by de facto control.  Currently PC and HyCo each have full access to the SBD. Under the proposals, if HyCo provides its services to the PC, HyCo’s income would be ineligible for the SBD, unless one of the exceptions noted above applies.

    The proposals are quite broad and there are many existing corporate structures which are, or could be, exposed to these provisions. While the proposals may change during the process of becoming law, it is clear that many existing structures will be affected.

    Action Item:  Review your current corporate structures to determine if the small business rates will remain applicable, and whether any change in historical planning is appropriate.

     

     

    This publication is produced by Andrews & Co. as an information service to clients and friends of the firm, and is not intended to substitute for competent professional advice. No action should be initiated without consulting your professional advisors.

    The 2016 Federal Budget proposed a number of measures to prevent the ability to multiply access to the $500,000 SBD limit, addressing several strategies which the Government perceived as inappropriate. Broad restrictions in eligibility for the SBD on payments between private corporations in general have been introduced. The restrictions as proposed are so broad that they will affect many corporations and structures where multiplication of the SBD was not a goal or even a consideration.

    The measures will apply to taxation years that begin on or after March 22, 2016. For example, a corporation with a December 31 fiscal year-end will first be subject to these restrictions in the year ending December 31, 2017. A corporation with a March 31 fiscal year-end will first be affected in the year ending March 31, 2017.

    In general, these new Specified Corporate Income (SCI) rules will restrict access to the SBD on any active business income (ABI) earned from providing services or property to another private corporation (PayerCo) where there is common ownership.  Such income will not be eligible for the SBD.

    Consider the situation where ServiceCo provides services to PayerCo, and PayerCo pays a fee back to ServiceCo.

    Payments will be restricted by the SCI rules where an interest in PayerCo is held by any of:

    • ServiceCo(the corporation providing the service and receiving the fees);
    • any shareholderof ServiceCo; or,
    • any personwho does not deal at arm’s length with any shareholder of ServiceCo.

    There is no de minimis ownership interest threshold – based on the draft legislative proposals of July 29, 2016, even one share of thousands will cause these restrictions to apply. In addition, even indirect interest can trigger the SCI rules. For example, if you own 10% of ServiceCo, and your brother-in-law owns one share of thousands issued by PayerCo, these rules could apply.

    An exception: if all or substantially all of ServiceCo’s active business income (which CRA generally considers to be 90%) is earned from providing services to arm’s length persons other than PayerCo, ServiceCo will not be subject to the SCI rules.

    The Budget also proposed that PayerCo may be permitted to assign a portion of its own unused SBD limit to ServiceCo to make the payments SCI (a special form must be filed to make the assignment).

    Examples of Corporations Potentially Affected

    Consider a corporation, OpCo, held by four unrelated shareholders which pays management fees (or some other type of active income) to four HoldCos each owned by one of the four shareholders (whether in whole or in part).

    Under the proposals, the management fees earned by the four HoldCos would not generally be eligible for the SBD, unless OpCo allocated a portion of its own $500,000 limit amongst the HoldCos. In other words, OpCo and the four HoldCos must now share access to a single business limit, assuming the HoldCos do not have ABI from other sources. Historically, each of the five corporations (OpCo and the four HoldCos) may each have had full access to the $500,000 SBD depending on their ownership and business structure.

    As a second example, consider Dr. A, whose professional corporation (PC) carries on a dental practice. Dr. A’s spouse owns a second corporation (HyCo), which carries on the hygiene practice at the PC’s dental clinic. PC and HyCo are not associated, either by share structure or by de facto control.  Currently PC and HyCo each have full access to the SBD. Under the proposals, if HyCo provides its services to the PC, HyCo’s income would be ineligible for the SBD, unless one of the exceptions noted above applies.

    The proposals are quite broad and there are many existing corporate structures which are, or could be, exposed to these provisions. While the proposals may change during the process of becoming law, it is clear that many existing structures will be affected.

    Action Item:  Review your current corporate structures to determine if the small business rates will remain applicable, and whether any change in historical planning is appropriate.

     

     

    This publication is produced by Andrews & Co. as an information service to clients and friends of the firm, and is not intended to substitute for competent professional advice. No action should be initiated without consulting your professional advisors.

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  • CANADA CHILD BENEFIT: Get Yours Today!
    Posted

    A well-publicized aspect of the Liberal election platform was the replacement of the Canada Child Tax Benefit, National Child Benefit Supplement, and the Universal Child Care Benefit with the Canada Child Benefit.

    This new program commenced in July 2016, with payments determined from the family’s 2015 personal income tax returns. The family income used in the calculation consists of the net income (not including Universal Child Care Benefits and Registered Disability Savings Plan Income) of the person primarily responsible for the care and upbringing of the child, plus that person’s spouse or common-law partner, but not the net income of the child.

    Families may be eligible for the maximum annual benefits of $6,400 per child under age 6 and $5,400 per child age 6 to 17. Benefits will be phased out based on family income in excess of $30,000 with a reduced phase-out rate applied to incomes over $65,000, as follows:

    ccb-table

    For example, the payment for a family with $75,000 of income and a 4-year old would be: $3,630 = $6,400 – (10k (income over 65k) X 3.2%) – ((65k-30k) X 7.0%)

    A further benefit of $2,730 per disabled child may apply, with the phase-out rates generally aligning with the Canada Child Benefit.

    For a tool which will calculate an individual’s entitlement to the Canada Child Benefit, go to http://www.budget.gc.ca/2016/tool-outil/ccb-ace-en.html. For a tool which will consider additional benefits available for those with children, go to http://www.cra-arc.gc.ca/benefits-calculator/.

    Action Item: Ensure that your children are registered in order to receive payment. If you were previously receiving the Canada Child Tax Benefit, you are already registered.

     

     

    This publication is produced by Andrews & Co. as an information service to clients and friends of the firm, and is not intended to substitute for competent professional advice. No action should be initiated without consulting your professional advisors.

    A well-publicized aspect of the Liberal election platform was the replacement of the Canada Child Tax Benefit, National Child Benefit Supplement, and the Universal Child Care Benefit with the Canada Child Benefit.

    This new program commenced in July 2016, with payments determined from the family’s 2015 personal income tax returns. The family income used in the calculation consists of the net income (not including Universal Child Care Benefits and Registered Disability Savings Plan Income) of the person primarily responsible for the care and upbringing of the child, plus that person’s spouse or common-law partner, but not the net income of the child.

    Families may be eligible for the maximum annual benefits of $6,400 per child under age 6 and $5,400 per child age 6 to 17. Benefits will be phased out based on family income in excess of $30,000 with a reduced phase-out rate applied to incomes over $65,000, as follows:

    ccb-table

    For example, the payment for a family with $75,000 of income and a 4-year old would be: $3,630 = $6,400 – (10k (income over 65k) X 3.2%) – ((65k-30k) X 7.0%)

    A further benefit of $2,730 per disabled child may apply, with the phase-out rates generally aligning with the Canada Child Benefit.

    For a tool which will calculate an individual’s entitlement to the Canada Child Benefit, go to http://www.budget.gc.ca/2016/tool-outil/ccb-ace-en.html. For a tool which will consider additional benefits available for those with children, go to http://www.cra-arc.gc.ca/benefits-calculator/.

    Action Item: Ensure that your children are registered in order to receive payment. If you were previously receiving the Canada Child Tax Benefit, you are already registered.

     

     

    This publication is produced by Andrews & Co. as an information service to clients and friends of the firm, and is not intended to substitute for competent professional advice. No action should be initiated without consulting your professional advisors.

    Read More
  • 2016 Nexia Canada Conference
    Posted

    Staff and partners from Andrews & Co were pleased to attend the 2016 Nexia Canada Conference on November 7th.

    This year’s conference, which was hosted by Zeifmans LLP in Toronto, saw representatives from all across Canada come together and not only take part in tax and accounting sessions, but also to network with other accounting firms and share their own insights.

    The 2017 Canadian Conference location has yet to be released, but we are already looking forward to attending!

     

     

     

    Staff and partners from Andrews & Co were pleased to attend the 2016 Nexia Canada Conference on November 7th.

    This year’s conference, which was hosted by Zeifmans LLP in Toronto, saw representatives from all across Canada come together and not only take part in tax and accounting sessions, but also to network with other accounting firms and share their own insights.

    The 2017 Canadian Conference location has yet to be released, but we are already looking forward to attending!

     

     

     

    Read More
  • AUDIT REQUIREMENTS FOR NOT-FOR-PROFITS
    Posted

    As a Not-For-Profit organization, are you aware of what your audit requirements are and how they vary based on your jurisdiction?

    For more information, please see our helpful guide “Audit Requirements For NPOs” which can be found in our Resource section here: https://andrews.ca/media/2016/11/Audit-Requirements-for-NPOs.pdf

    As a Not-For-Profit organization, are you aware of what your audit requirements are and how they vary based on your jurisdiction?

    For more information, please see our helpful guide “Audit Requirements For NPOs” which can be found in our Resource section here: https://andrews.ca/media/2016/11/Audit-Requirements-for-NPOs.pdf

    Read More
  • HALLOWEEN BASKETS
    Posted

    Trick-or-treat yourself for the remainder of October by stopping by Andrews & Co to pick up a Halloween gift basket!

    These baskets are filled with both tricks and treats and are great for children of all ages – they also include an excellent bag that can be used for trick-or-treating on Halloween night! Stop by and see our ghoulish bunch to collect your basket – hurry while supplies last!

     

    img_0239

    Trick-or-treat yourself for the remainder of October by stopping by Andrews & Co to pick up a Halloween gift basket!

    These baskets are filled with both tricks and treats and are great for children of all ages – they also include an excellent bag that can be used for trick-or-treating on Halloween night! Stop by and see our ghoulish bunch to collect your basket – hurry while supplies last!

     

    img_0239

    Read More
  • CHANGES TO THE PRINCIPAL RESIDENCE EXEMPTION:
    Posted

    Canadians have long been utilizing the Principal Residence Exemption (PRE) in order to be exempt of capital gains tax on the sale of their primary home. Effective October 3, 2016, the federal government has imposed some changes with the intent to ensure the PRE is only available in appropriate cases and only for Canadian residents.

    Some of the notable changes include the formula calculation and reporting requirements.

    The prior formula for calculating your PRE would use the number of years owned (or designated) plus one. Effective October 3, 2016 this formula of designating one additional year for exemption will no longer be available for home owners who were a non-resident in the year of purchase. The one additional year of exemption will be strictly for Canadian residents only. The goal of this is to deter foreign speculators from coming in.

    For an illustration of the change, please see the example further below in this blog.

    An additional change will be the reporting obligations for taxpayers claiming a PRE, which will include additional disclosure and an increase in audits. The CRA has not yet announced whether it will be using existing forms or developing a new form for the additional disclosure, but we will be sure to keep you posted.

    Example calculation:

    You own two properties: House – purchased in 2001 for $350,000 and Cottage – purchased in 2005 for $150,000.

    In 2014 you decided to sell your house for $500,000. You then sell your cottage in 2016 for $225,000

    Under the old rules – same for Canadians and non-residents:

    (1 + # of years designated / total # of years owned) x Capital Gain = Principal Residence Exemption

    House: (1 + 13 years designated / 14 years owned) x $150,000 capital gain = $150,000 exemption and $NIL capital gain

    Cottage: (1 + 3 years designated / 12 years owned) x $75,000 capital gain = $25,000 exemption and a $50,000 capital gain

    Under the new rules – non-residents only:

    (# of years designated / total # of years owned) x Capital Gain = Principal Residence Exemption

    House: (14 years designated / 14 years owned) x $150,000 capital gain = $150,000 exemption and $NIL capital gain

    Cottage: (2 years designated / 12 years owned) x $75,000 capital gain = $12,500 exemption and a $62,500 capital gain

    Total increase in capital gain for this example of $12,500 – applicable only to non-residents

    Note: since you had to designate one extra year to the house to receive a full exemption, there is one less year to designate to the cottage

     

    If you are unsure of any of these new rules with regards to PRE and how they may impact you, we advise you to speak with your accountant today!

     

     

     

    This publication is produced by Andrews & Co. as an information service to clients and friends of the firm, and is not intended to substitute for competent professional advice. No action should be initiated without consulting your professional advisors.

     

    Canadians have long been utilizing the Principal Residence Exemption (PRE) in order to be exempt of capital gains tax on the sale of their primary home. Effective October 3, 2016, the federal government has imposed some changes with the intent to ensure the PRE is only available in appropriate cases and only for Canadian residents.

    Some of the notable changes include the formula calculation and reporting requirements.

    The prior formula for calculating your PRE would use the number of years owned (or designated) plus one. Effective October 3, 2016 this formula of designating one additional year for exemption will no longer be available for home owners who were a non-resident in the year of purchase. The one additional year of exemption will be strictly for Canadian residents only. The goal of this is to deter foreign speculators from coming in.

    For an illustration of the change, please see the example further below in this blog.

    An additional change will be the reporting obligations for taxpayers claiming a PRE, which will include additional disclosure and an increase in audits. The CRA has not yet announced whether it will be using existing forms or developing a new form for the additional disclosure, but we will be sure to keep you posted.

    Example calculation:

    You own two properties: House – purchased in 2001 for $350,000 and Cottage – purchased in 2005 for $150,000.

    In 2014 you decided to sell your house for $500,000. You then sell your cottage in 2016 for $225,000

    Under the old rules – same for Canadians and non-residents:

    (1 + # of years designated / total # of years owned) x Capital Gain = Principal Residence Exemption

    House: (1 + 13 years designated / 14 years owned) x $150,000 capital gain = $150,000 exemption and $NIL capital gain

    Cottage: (1 + 3 years designated / 12 years owned) x $75,000 capital gain = $25,000 exemption and a $50,000 capital gain

    Under the new rules – non-residents only:

    (# of years designated / total # of years owned) x Capital Gain = Principal Residence Exemption

    House: (14 years designated / 14 years owned) x $150,000 capital gain = $150,000 exemption and $NIL capital gain

    Cottage: (2 years designated / 12 years owned) x $75,000 capital gain = $12,500 exemption and a $62,500 capital gain

    Total increase in capital gain for this example of $12,500 – applicable only to non-residents

    Note: since you had to designate one extra year to the house to receive a full exemption, there is one less year to designate to the cottage

     

    If you are unsure of any of these new rules with regards to PRE and how they may impact you, we advise you to speak with your accountant today!

     

     

     

    This publication is produced by Andrews & Co. as an information service to clients and friends of the firm, and is not intended to substitute for competent professional advice. No action should be initiated without consulting your professional advisors.

     

    Read More
  • Congratulations to our newest CPA
    Posted

    Andrews and Co is pleased to congratulate Anik Audet on becoming a Chartered Professional Accountant.

    After obtaining an Honours Bachelor of Commerce degree from the University of Ottawa, Anik Joined Andrews in 2012.  As part of the Andrews team, Anik is committed to providing a full range of accounting services, while championing the firms philosophy of building lasting relationships with our clients.

     

    anik_linkedin_1320

    Andrews and Co is pleased to congratulate Anik Audet on becoming a Chartered Professional Accountant.

    After obtaining an Honours Bachelor of Commerce degree from the University of Ottawa, Anik Joined Andrews in 2012.  As part of the Andrews team, Anik is committed to providing a full range of accounting services, while championing the firms philosophy of building lasting relationships with our clients.

     

    anik_linkedin_1320

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  • ROAD CLOSURE
    Posted

    Due to construction in the area, Taylor Creek Drive between Lacolle Way and Trim Road will be closed from Monday, September 26th until approximately September 30th / October 4th pending weather etc.

    Traffic is to be diverted to St. Joseph Blvd detouring to Trim Road. Please follow detour signs accordingly.

    If you have any questions or concerns, please contact our office.

    Due to construction in the area, Taylor Creek Drive between Lacolle Way and Trim Road will be closed from Monday, September 26th until approximately September 30th / October 4th pending weather etc.

    Traffic is to be diverted to St. Joseph Blvd detouring to Trim Road. Please follow detour signs accordingly.

    If you have any questions or concerns, please contact our office.

    Read More
  • 2016 Army Run
    Posted

    The Canada Army Run, which celebrated its 9th year on Sunday, September 18, 2016, offers both a half marathon and 5K race option. This year, more than 23,000 participants took part and raced alongside Canadian Armed Forces personnel and soldiers.

    Despite the humid temperatures, two staff members conquered through one of the toughest races they have run and made excellent times. Mayra Petit finished in 2 hours and 9 minutes and Phil Hunter finished in 2 hours and 8 minutes. Both had a great experience and were cheered on by the immense support by the City of Ottawa and spectators.

    Mayra and Phil will also be running in the 10K Resolution Run on December 31, 2016 – join us in wishing them luck!

    The Canada Army Run, which celebrated its 9th year on Sunday, September 18, 2016, offers both a half marathon and 5K race option. This year, more than 23,000 participants took part and raced alongside Canadian Armed Forces personnel and soldiers.

    Despite the humid temperatures, two staff members conquered through one of the toughest races they have run and made excellent times. Mayra Petit finished in 2 hours and 9 minutes and Phil Hunter finished in 2 hours and 8 minutes. Both had a great experience and were cheered on by the immense support by the City of Ottawa and spectators.

    Mayra and Phil will also be running in the 10K Resolution Run on December 31, 2016 – join us in wishing them luck!

    Read More
  • CFE 2016
    Posted

    Andrews & Co would like to wish two staff accountants the best of luck as they write the Common Final Exam (CFE).

    Tomorrow Lauren Sels and Lee-Ann Parent will begin a three day examination as the final part of their CPA testing stream. Join us in wishing them good luck!

    Andrews & Co would like to wish two staff accountants the best of luck as they write the Common Final Exam (CFE).

    Tomorrow Lauren Sels and Lee-Ann Parent will begin a three day examination as the final part of their CPA testing stream. Join us in wishing them good luck!

    Read More