On March 28, 2018, Ontario’s Finance Minister Charles Sousa delivered the 2018 budget. This budget anticipates a surplus of $500 million in 2017-18 and deficits of $6.7 billion for 2018-19 and $6.6 billion for 2019-20.
The budget also includes changes to Ontario’s personal income tax rates and brackets although these proposed changes have no impact on the top marginal income tax rates. No changes to corporate income tax rates were announced. The budget also provides increases to the Ontario Research and Development Tax Credit and the Ontario Innovation Tax Credit as well as changes to the Employer Health Tax exemption.
The Federal Government’s 2018 Budget promotes Canada’s strong economic growth over the past two years, including real GDP growth of 3.2 per cent since the second quarter of 2016, an unemployment rate of 5.9 per cent, and significant improvements in average weekly earnings, consumer confidence, and household consumption. The Finance Minister expects similar growth in the near-term. In addition, federal revenues increased by more than 11 per cent in 2017, largely from personal and corporate income taxes.
With this positive economic activity and outlook, the government has presented an “Equality and Growth,” budget that includes tens of billions of dollars in new or increased spending over the next six years, with the goal of further growing government revenues by increasing economic participation among women, visible minority Canadians and persons with disabilities, as well as substantial long-term investments in science and technology.
The government suggests that increasing equality for women and enhancing women’s participation in the workplace (especially in technology and trades) could add $150 billion to the Canadian economy over the next decade.
The 2017 U.S. tax return for an individual; Form 1040 is due on April 17th, 2018. However, if a U.S. tax person is out of the U.S. on April 18th, the filing due date is automatically extended to June 15th.
The extension allowed is for the filing of the tax return but does not extend the payment due date. Because of changes in tax laws and the ever-increasing complexity in preparing personal tax returns, we encourage you to gather your required tax information as soon as possible.
Provided below is a link to everything you will need to allow us to prepare your 2017 1040 US Income Tax Return.
Should you have any questions or concerns about anything pertaining to the preparation of your 2017 1040 Income Tax Return, please feel free to contact your Lipton advisor.
The April 30, 2018 deadline to file your 2017 personal income tax return is quickly approaching. As a result of changes in tax laws and the ever-increasing complexity in preparing personal tax returns, please gather your required tax information (as outlined in the attached 2017 Personal Tax Checklist) and submit them to us no later than Monday, April 2nd, 2018.
On December 15, 2017, the final version of the U.S. “Tax Cuts and Jobs Act” was released, which reflected a compromise between the United States House and Senate versions of the tax reform legislation.
We are pleased to provide you this comprehensive update prepared by the law firm Hodgson Russ, LLP. Headquartered in Buffalo, New York, we have had the pleasure of working with this widely respected firm for a number of years on behalf of clients who are either U.S. persons for tax purposes or those having business interests in the United States.
Click here to access the US Update Newsletter.
If you have any questions regarding any of the content found in this update, please feel free to contact your Lipton advisor.
In order to facilitate the accurate preparation of your 2017 T4 information returns, we are pleased to enclose a summary of significant taxable benefits that may apply to your employees.
It should be noted that, as mentioned last year, if you are submitting more than 50 information returns (slips) you are required to file electronically. If you fail to comply with this requirement, you may be subject to an incorrect filing format penalty. We can assist you in ensuring your compliance with these new rules.
If your T4 information return is being prepared by Lipton LLP, we will be electronically filing all 2017 T4 information returns whenever possible.
If you have any questions concerning the preparation of 2016 T4 information returns and slips, please contact our office.
Lipton LLP Chartered Accountants is proud to announce that all six of our writers, Nimesh Ratnarajah, Julie Ann Sedore, Taraneh Rashed, Sierra De Sousa, Mo Du and Cecilia Lam (not pictured), were successful in passing the 2017 Chartered Professional Accountants of Canada (CPA) Common Final Examination (CFE).
The CFE is the final examination that Chartered Professional Accountant (CPA) students take in pursuit of their CPA designation.
Ontario introduced the Phase-Out of Recaptured ITC rules (RITC) for large businesses effective July 1, 2010. These rules have had the effect of restricting the input tax credits (ITCs) for large businesses related to the provincial component of the Ontario HST for specified property or services acquired, imported or brought into Ontario.
In general, a large business is defined as a business with more than $10 million in annual revenues, including revenues from related entities, as well as most financial institutions. Special rules apply for reorganization transactions and new businesses.
A specified property or services includes qualifying energy, telecommunications, meals and entertainment expenses and motor vehicles under 3,000 kilograms.
RITC phase-out period
Ontario has begun and continues to phase out the RITC rates as follows:
Recapture periods Ontario RITC Recapture Rate
July 1, 2015 to June 30, 2016 75%
July 1, 2016 to June 30, 2017 50%
July 1, 2017 to June 30, 2018 25%
July 1, 2018 and beyond 0%
Selected compliance matters
Large businesses must apply the recapture rate that applied at the time the HST first became payable or was paid without having become payable for a particular specified property or service. As such, these businesses have to ensure that the appropriate recapture rate (100%, 75%, 50% or 25%) applies for a particular invoice, and also must ensure that the RITCs are reported in the proper reporting period.
Large businesses may also have to adjust other systems and calculations, such as employee expense accounts and their estimation/reconciliation RITC method, if applicable.
Large businesses that do not report the RITC correctly for a prior reporting period must correct the particular reporting period related to that particular RITC. They cannot simply adjust the current reporting period to remit any additional tax owing. Related penalties for misreporting RITCs may also apply.
We can help
Your Lipton adviser can help you review your systems and HST returns with respect to the reductions of the recapture rates during the balance of the phase-out period. We can assist you with these tax compliance obligations as well as other indirect tax obligations.