Time’s Up: CRA’s 100 Day Mandate for Improvement

After years of frustration on the part of tax professionals and taxpayers alike, the Finance Minister ordered the Canada Revenue Agency to clean up its act in 100 days. Specifically, the improvement plan was to run from September 2 through December 11. Finance Minister and Minister of National Revenue, Francoise-Phillippe Champagne instructed CRA to fix “unacceptable wait times and service delays.” Time’s up this week and CRA has released an update on progress. What gets measured, gets done. Let’s see what CRA’s metrics show. 

The Finance Department Released its update on economic projections on October 12, a fitting encore to a Thanksgiving weekend that had Canadians basking in beautiful sunshine in much of the country. Sunny too is the mood of investors, particularly with the news about our financial recovery, which has taken us back to a pre-crisis environment. However, the fly in the ointment is certainly the deficit, which has increased moderately to almost $56  Billion, according to the report, since the March 4, 2010 budget, primarily due to an accrual of $5.6billion in transitional assistance payments for recent provincial tax decisions to be paid in 2010ñ11 and 2011ñ12. Personal income taxes will also rise by 8.8 per cent in 2010ñ11, as our progressive tax system takes more from the anticipated growth in personal income, combined with the expiration of the Home Renovation Tax Credit. Corporate income tax revenues are projected to decline by 7.6 per cent in 2010ñ11. The department underscored that the Canadian economy "fared much better than other major advanced economies throughout the recession and over the recovery to date.î Our decline in GDP during the global recession was the smallest of all G-7 countries. However, looking forward into the short term, our GDP growth is expected to be moderate. Private sector economists expect a growth rate of 1.8 per cent in the third quarter of 2010 followed by an increase to approximately 2.5 per cent over the next three quarters. Interest rate projections have also been decreased since the March budget. Three-month treasury bill rates are now expected to be lower by an average of about 50 basis points between 2010 and 2014 while 10-year government bond rates are expected to be lower by an average of about 75 basis points. Further the unemployment rate for 2010 is forecasted to remain at 8.0 per cent, which is down only .5% since budget time. These economic trendlines and their impact on tax, investment, and retirement plannng will be discussed in depth at the Distinguished Advisor Workshops throughout Canada in November and at the Distinguished Advisor Conference in Orlando. In particular delegates will learn how these projections affect year end planning and a longer term strategic approach to family wealth management, respectively, at these events.

Golden Girl Finance Inc. and The Knowledge Bureau are pleased to announce their strategic educational partnership. Through this partnership, Golden Girl Finance hopes to inspire more women towards pro-active management of their personal and family wealth, as well as incite interest and excitement towards careers in finance. As Laura J. McDonald, co-founder of Golden Girl Finance along with Susan L. Misner, cites: Through our partnership with The Knowledge Bureau, we hope women will want to get more engaged in personal finance and careers in finance, surrounding themselves with their own circle of financially savvy friends!î Susan L. Misner echoes this enthusiasm: "Weíre very excited about working with The Knowledge Bureau and its innovative leader, Evelyn Jacks, one of Canadaís most recognized tax experts. The Knowledge Bureau offers opportunities for women to switch careers, maintain flexible hours that benefit their family, and light a real path in the financial services industry.î "We recognized that Golden Girl Finance was connecting with women and truly engaging them,î said Evelyn Jacks, founder and president of the Knowledge Bureau. "We are pleased to partner with such an exceptional opportunity to reach smart, savvy, influential women.î About The Knowledge Bureau The Knowledge Bureau is a national educational institute providing certificate training and professional development at a post-secondary level to advisors in the tax and financial services industries, as well as educational news and information services to their clients. http://www.knowledgebureau.com/ About Golden Girl Finance Golden Girl Finance was born out of a deep desire to inspire, motivate, engage and support women into taking control of their financial lives and futures. To connect women, to mentor them, and certainly to never underestimate them. And to make it all fun and, dare we say, fashionable. Absolute style backed by absolute quality and top notch content and expertise. Giving women the sweet on the street. http://www.goldengirlfinance.ca/

On October 5, the The Department of Finance announced the interest rates payable on Canada Savings Bond (CSB) Series 126 and Canada Premium Bond (CPB) Series 76, which are on sale now until November 1, 2010. These bonds have a 10-year maturity.  For the CSBs, only the rate for the first year has been set: 0.65%.  For the CPBs, rates or the first three years are set at 1.1%, 1.4% and 1.7% respectively. With Statistics Canada's latest inflation rate (August) sitting at 1.7%, plus the fact that interest earned on these bonds is taxable, it is unlikely that investments in either CSB or CPB will even protect investors from inflation much less increase the value of the investments. Educational Resources:   Learn more about the taxation of interest income and claiming of carrying charges in EverGreen Explanatory Notes from The Knowledge Bureau.  

An interesting change in the most recent income tax bill (C-47) is the introduction of new subsection 244(14.1) of the Income Tax Act, which authorizes electronic communications of a notice or other communication to a person or partnership.  Bill C-47  also changes the word "mailed" to "sent" in many areas of the Income Tax Act. This will accommodate the electronic transmission of notices both to and from CRA. Whatís interesting is that a notice or other communication will be presumed to be sent by the Minister and received by you at the electronic address you have most recently provided on the date before the message. This has all kinds of ramifications for significant compliance dates, appeal periods, and so on. Once an email address is given to CRA it must be kept up to date to avoid unintended and expensive consequences.  This new section as no effective date so one can assume that it will become effective when Bill C-47 is passed.  The bill is currently in first reading in the House of Commons. While the contents of Notices of Assessment, etc. will not be included in an email message for security reasons, the email message will serve as notification that the Notice of Assessment (or other notice) is available online in the person or partnership's secure electronic account.  Presumably the CRA will use the individual's "My Account" or "My Business Account" for posting such notices

The 2010 Manitoba provincial budget announced a new Fertility Treatment Tax Credit which allows a credit for 40% of the costs of fertility treatments, up to $20,000, including both the cost treatment and of drugs, (maximum credit $8,000). Eligible expenses incurred after September 2010 qualify for this new credit. Eligible expenses claimed as a medical expense using federal income tax rules may also be claimed under the provincial credit.  Expenses that are reimbursed may not be claimed. In an October 1, 2010 News Release, the following guidelines were provided: The credit may be claimed by either spouse (but may not be split between spouses). Claims may be made for expenses paid for fertility treatments provided by Manitoba licensed medical practitioners and infertility treatment clinics. Claim may be made for medications prescribed in Manitoba for fertility treatments, even if those treatments are not tied to a specific fertility program or service. Reversing procedures such as vasectomies or tubal ligations do not qualify for the credit. Educational Resources:   Learn more medical expense claims taking the Knowledge Bureau's certificate course Introduction to Personal Tax Preparation Services.

The deadline for the Canada Employment Insurance Financing Board to officially announce the EI premium rate for 2011 is November 14, 2010. Speculation of late has been that the rate would be increased by the maximum allowed (0.15%). However, on September 30, the finance minister announced that the maximum increase for 2011 will be limited to .05% and for subsequent years, the increase will be limited to 0.1%. The EI premium rate for 2010 was capped at the 2009 rate (1.73%; 1.36% in Quebec).  The new rate for 2011 will therefore be no more than 1.78% of insurable earnings.  With Statistics Canada reporting an increase in the average weekly earnings of about 3.9%, one can expect that the maximum insurable earnings will increase from $43,200 to roughly $44,800.  This would mean an increase of about $50.00 in maximum EI premiums ($44,800 x 1.78% ñ $43,200 x 1.73%) to $797.44  (from $747.36).  The official announcement of the 2011 rate and maximum insurable earnings has not yet been made. Educational Resources:   Learn more about payroll taxes by taking the Knowledge Bureau's certificate course Basic Bookkeeping for Business or increase your knowledge by taking Advanced Payroll for Professional Bookkeepers.