Waters & Meredith

Serving Niagara..

Client Information Newsletter: 4th Quarter 2003

CONTENTS

  • Automobile Benefits - 2003
  • Lower Penalties on Late Payroll Remittances
  • CCRA Interest Rates - 4th Quarter 2003
  • Seniors in Retirement Homes
  • Why File an Income Tax Return If You Are Not Taxable
    		•

    AUTOMOBILE BENEFITS - 2003

    1. The basic standby charge is 2% per month of the original cost of the auto, or two-thirds (2/3) of the lease payment.


    2. The standby benefit may be reduced if the automobile is used more than 50% of the time for business use and the personal driving is less than 1,667 km. per month (20,004 km. annually).


    3. Where the majority of kilometres driven is for business:

      Total km. 15,000 20,000 25,000 30,000 40,000 30,000
      Business km. 10,000 15,000 15,000 20,000 25,000 14,000
      Personal km. 5,000 5,000 10,000 10,000 15,000 16,000
      Benefit % Calculation 20,004
      ÷
      5,000      		 20,004
      ÷
      5,000      		 20,004
      ÷
      10,000      		 20,004
      ÷
      10,000      		 20,004
      ÷
      15,000      		 20,004
      ÷
      16,000
      Benefit % 25% 25% 50% 50% 75% 100%

      The last column shows as 100% because the personal use is more than 50%.


    4. One should also report an operating cost benefit of 17¢ per kilometre or 50% of the standby charge.


    5. With the new rules allowing reduced taxable benefits on automobiles, it is likely that a log of employment/business use will be more of an issue.

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    LOWER PENALTIES ON LATE PAYROLL REMITTANCES

    1. There is good news for employers who make every effort to remit but are late within a few days of the due date. With the new revised structure, penalties of 3% will be applied to remittances that are late 3 days or less, 5% for remittances that are 4 or 5 days late, 7% for remittances that are 6 or 7 days late, and 10% for remittances that are 8 or more days late.

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    CCRA INTEREST RATES - 4TH QUARTER 2003

    1. The interest rate charged on overdue taxes, CPP contributions and EI premiums will be 7%.


    2. The interest rate paid on overpayments will be 5%.


    3. The interest rate use to calculate taxable benefits for employees and shareholders from interest-free or low-interest loans will be 3%.

    SENIORS IN RETIREMENT HOMES

    1. Starting with the 2002 tax year, seniors who are eligible to claim the disability amount and who live in a retirement home can claim attendant care expenses as a medical expense.


    2. The following must be provided for a claim to be allowed:

      (a) Proof of payment, such as a receipt, that shows the actual amount paid specifically for attendant care (as opposed to rent, for example). As the service provider, the retirement home should determine the amount paid specifically for attendant care.

      (b) The senior must be eligible to claim the disability amount by having "Form T2201 - Disability Tax Credit Certificate" certified by a qualified person and approved by CCRA.


    3. The claim for attendant care is the portion of the salary and wages of all such attendants that can reasonably apply to the senior, but is limited to $10,000 per year ($20,000 in the year of death). The claim for attendant-care expenses can be made in addition to amounts claimed under the Disability Tax Credit.

    WHY FILE AN INCOME TAX RETURN IF YOU ARE NOT TAXABLE

    1. It is still a good idea to file a return even if you do not have to pay taxes. Some reasons are:

      (a) To receive the GST/HST credit. You have to file a return and apply for the credit, even if you applied and received it last year.

      (b) To receive Child Tax Benefit payments for your children. You and your spouse or common-law partner each have to file a return, even if you received the benefit payments last year.

      (c) Most seniors can renew their Guaranteed Income Supplement and Allowance benefit by filing.

      (d) Students who earn a small amount of income at a summer job can benefit by filing a return, since it allows them to build up future contribution room for registered retirement savings plans (RRSP's). Future RRSP contributions will reduce their taxes in subsequent years.

      (e) Students who have tuition and education amounts should file a return so that these amounts will be on record, even if they do not need them to reduce their taxes this year. These tuition and education amounts can be carried forward to reduce their taxes on future returns, or they can be transferred to a qualifying person to reduce their taxes for the current year.

    We welcome comments you may have on this newsletter as well as suggestions for future topics.

    The information herein is provided for your general information and action should not be taken on the basis of this newsletter, but only on the advice of your own individual advisor, applying this advice to your individual situation. Please call if you have any questions.

    Waters Meredith MacRae & Tchang LLP
    Chartered Accountants
    Telephone: 905-356-4324
    Fax: 905-356-0964
    E-mail: wm@watersmeredith.com

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