COVID-19 Update – Canada Emergency Wage Subsidy

On April 1, 2020 Minister of Finance, Bill Morneau provided further details on the Canada Emergency Wage Subsidy (“the Subsidy”), as follows:

  • The Subsidy is available to businesses, both large and small, not-for-profit organizations and charities.
  • The Subsidy will provide up to 75% of an employee’s wages for a 3 month period retroactive to March 15, 2020, to a maximum of $847 per week which is 75% of the first $58,700 of an employee’s annual salary.
  • To qualify, employers must demonstrate that their revenue from business operations has fallen by at least 30% in March, April or May 2020 when compared to the same month in the prior year as a result of the COVID-19 pandemic. Support for the reduction and Subsidy amount will need to be kept and employers will have to reapply for the Subsidy each month.
  • There is no overall limit on the Subsidy amount that an eligible employer may claim.
  • Employers must make their best effort to top-up employee’s salaries to bring them to pre-crisis levels.
  • Employers that do not qualify for the Subsidy continue to qualify for the previously announced 10 percent wage subsidy.
  • The amount of the Subsidy received by an employer is considered government assistance and is to be included in the employer’s taxable income.
  • The program will be administered by the Canada Revenue Agency through a portal on its website, which is expected to be available in 3-6 weeks.
  • Employers are encouraged to sign up for direct deposit through the My Business Account service with the Canada Revenue Agency (CRA) in order to receive the Subsidy as quickly as possible.

For further details, please click on the following Government of Canada releases.



Additional details on the Subsidy will be provided as soon as they become available.

For further information, please contact your Lipton advisor.

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2018 T4 Information

In order to facilitate the accurate preparation of your 2018 T4 information returns, we are pleased to enclose a summary of significant taxable benefits that may apply to your employees.

Click Here to view the Summary 

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 2018 T4 information returns whenever possible.

If you have any questions concerning the preparation of 2018 T4 information returns and slips, please contact our office.

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U.S. Closer Connection – Form 8840

Tax Planning Update – U.S. Closer Connection, Form 8840
U.S. tax rules contain a mathematical formula to determine tax residency.  This formula involves counting the number of days that you are physically present in the U.S. over a three-year period.  This residency formula is called the Substantial Presence Test (SPT).  Based on the SPT formula, if you exceed 182 days, you are deemed to be a resident of the U.S. for income tax purposes.  With respect to 2017, the SPT formula takes all of the days in the current year (2017), 1/3 of the days in the previous year (2016), and 1/6 of the days in the second previous year (2015).  You total the results from this formula, and if you were in the U.S. for at least 31 days in 2017, and at least 183 days based on the three-year formula, then you are deemed to be a U.S. resident in 2017 for U.S. income tax purposes.

The Closer Connection Exception:

If you meet the SPT but you were in the U.S. for less than 183 days in 2017, you may file a form with the Internal Revenue Service (IRS) to report that you have a closer connection to Canada and are thus exempt from the U.S. residency designation.

Due date:

This form must be submitted to the IRS by June 15 of the year following the tax year in question (June 15, 2018 for 2017).

Form completion:

We can help you determine if you need to complete this form for 2017 if you provide us with the number of days that you were present in the U.S. in 2017, 2016 and 2015.

Please contact your Lipton adviser if you have any questions in connection with this or any other matter.
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2018 Federal Budget Commentary

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.

Please Click Here to read our full Federal Budget Commentary

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Filing Your 2017 U.S. Tax Returns

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.

Click Here to view our 1040 Information Guide

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.

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RRSP & TFSA: Tax Planning Update

Tax Planning Update – RRSP/TFSA

In order to assist you with your 2017 and 2018 tax planning, we are pleased to provide you with the following information in connection with Registered Retirement Savings Plans (RRSP) and Tax-Free Savings Accounts (TFSA) as follows:

  • The maximum contribution limit for 2017 is $26,010.
  • The deadline for 2017 contributions is March 1, 2018.
  • Your contribution limit for 2017 is noted on your 2016 Notice of Assessment.
  • The maximum contribution limit for 2018 is $26,230.


  • The contribution limit for 2018 is $5,500.
  • The cumulative contribution limit from 2009 to 2018 is $57,500.
The rules regarding RRSP and TFSA contributions can be complex.  Please contact your Lipton LLP advisor if you would like to discuss your particular situation further.
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Federal Government Revises July 2017 Income Sprinkling Proposals

On December 13, 2017, the Department of Finance released revised draft legislation which simplifies the income sprinkling proposals first announced on July 18, 2017. The legislation will likely be enacted as part of the 2018 Budget process, but is intended to apply as of January 1, 2018.

Highlights of the revised draft legislation are as follows:

Tax on split income

The tax on split income (TOSI) will be extended to individuals over 18 (who are “specified individuals”) on amounts that are received directly or indirectly, whether in the form of dividends, trust distributions, partnership distributions or certain capital gains derived from a business in which a related individual is actively engaged or is a significant equity owner.

Income from excluded businesses exempted from TOSI

Amounts derived from excluded businesses are exempted from TOSI. An excluded business is a business in which the specified individual contributes labour on a regular, continuous and substantial basis (at least 20 hours per week) during the year or in any five previous years (need not be consecutive). For businesses with seasonal operations, the labour requirement will be for the part of the year in which the business operates. If the 20 hour per week test is not met, it will be a question of fact as to whether the specified individual contributed labour on a regular, continuous and substantial basis.

Reasonableness test

If none of the exclusions apply, specified individuals aged 25 and older will be subject to a reasonableness test to determine how much income should be subject to TOSI. Reasonableness will be determined based on a number of factors, including labour contribution, capital contribution, risks assumed, and any other relevant factors. The CRA has also released a list of criteria it will consider in assessing reasonableness.

Specified individuals over age 24

For specified individuals over age 24, TOSI will not apply to income derived from excluded shares. To qualify, the individual must own shares representing at least 10 per cent of the votes and value of the corporation, and the corporation must meet one of the following conditions: (i) it must earn less than 90 per cent of its income from the provisions of services; (ii) it must not be a professional corporation; and (iii) no more than 10 per cent of its income can be derived directly or indirectly from related businesses. The condition that the specified individual own shares having at least 10 per cent of the votes and value must be met by the end of 2018. Specified individuals under age 25 who inherit shares that qualified as excluded shares to the deceased will benefit from the excluded share exemption.

TOSI and spouses

TOSI will not apply to dividends paid to a business owner’s spouse if the spouse contributed to the business in an important way and has reached age 65 (with relieving rules applicable where the contributing business owner dies before age 65). This is somewhat consistent with the existing pension income splitting rules.

Capital gains exemption

Taxable capital gains arising from the disposition of property that would be eligible for the lifetime capital gains exemption will be excluded from TOSI. These rules do not apply to non-arm’s length dispositions of property by individuals under age 18, or by trusts for the benefit of individuals under age 18.

Passive investment income

The government also reconfirmed its commitment to introducing the proposed passive investment income rules to limit tax deferral opportunities for private corporations in the 2018 Federal Budget.

Please contact your Lipton advisor if you would like to discuss these proposed changes further.

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2016 Ontario Provincial Budget Commentary

On February 25, 2016 Finance Minister Charles Sousa tabled his fourth Budget.

The deficit for the 2015-16 fiscal year is projected to be $5.7 billion, which is $2.8 billion less than forecasted in the 2015 Budget. The deficit is projected to drop to $4.3 billion for 2016-17 and to be eliminated by 2017-18. Furthermore, the government is also projecting a balanced budget in 2018-19.

The Budget does not include any changes to Ontario’s personal tax rates but certain personal tax credits are being eliminated. In addition, changes to the so-called “sin taxes” are proposed. From a business perspective, although there are no changes to corporate tax rates, there are proposed reductions to certain credits.

Please Click Here to read our full Ontario Provincial Budget Commentary

Jeff Nightingale is the Co-Managing Partner and Senior Tax Partner at Lipton LLP, Chartered Accountants.  Jeff has written a number of publications and speaks to a variety of professional and business groups, including the Canadian Tax Foundation, the Institute of Chartered Accountants of Ontario and The Law Scociety of Upper Canada.  He has also completed the CICA In-Depth Tax Course as well as other advanced taxation courses and is a member of the Canadian Tax Foundation and the Society of Trust and Estate Practitioners.

Learn More about Jeff Nightingale

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Why should I setup a Professional Corporation?

What is a “Professional Corporation”?

A professional corporation is a corporation that provides professional services and that is regulated by a governing professional body such as the Law Society of Upper Canada or the College of Physicians and Surgeons of Ontario.

Basically, if you are a professional and you are planning on offering your services through a company, you will need to setup a professional corporation.

Who is considered a “Professional”?

Generally only those professions that are governed by a professional body or association will be allowed to incorporate. These typically include physicians, psychologists, dentists, veterinarians, lawyers, accountants, engineers and architects. The rules will differ slightly across provinces, so it’s a good idea to check with your accountant or legal advisor before you go ahead. In Ontario for example, social workers and certain regulated health professionals can also incorporate which may not be the case for other provinces.

Why Setup a Professional Corporation?

The tax reasons for setting up a professional corporation are similar to why many businesses will want to incorporate. The main income tax advantages of a professional incorporation are:

Tax deferral

Professional corporations can take advantage of the difference in tax rates between the highest personal tax rate and the more favourable small business corporate tax rate. By taking out less than the full amount of corporate earnings, you can defer the tax paid to a later date when you’re in a lower tax bracket.

Potential income splitting

Professional corporations can issue salary or dividends to family members in lower tax brackets, allowing you to reduce your overall tax liability. Instead of taking out $150,000 in salary by yourself and paying tax at the highest personal rate, you may be able to split the amount between your spouse and children which will significantly reduce your tax bill.

Can all of my family members be included in the income-splitting?

Unlike a non-professional corporation where you typically have the flexibility to elect anyone as a shareholder, a professional corporation is restricted to the rules set out by the governing professional body. That means who can be on your shareholder list (other than you of course) is a question for your governing body, which will differ depending on what profession you are in and in which province you are operating.

Favourable tax rates on dividends

As an incorporated individual, you have the ability to take out a portion of your income from the company as dividends and pay less tax on your earnings due to favourable tax rates on dividends.

Consider Liability

Keep in mind that a main differentiator between a professional corporation and a non-professional corporation is that of liability. If you incorporate your photography business and you get sued, your liability will be limited to whatever you invested in the company (there are exceptions).  Of course if you weren’t incorporated, all your personal assets would be up for grabs.

In a professional corporation, the story around liability is a bit different.  If you are a physician and are sued for malpractice, the corporation does not protect you. You’ll have to check the terms of your professional insurance to see just what your liability is. What the corporation does provide is some protection from creditors if you borrow money, perhaps for the financing of a new office or for some expensive equipment.

Think a professional corporation is right for you?

Getting professional advice is the best way to start!  Contact me today, I will be happy to get you started!

Michael Wagman received his Chartered Accountant designation in 1995, and has spent his entire professional career at Lipton, where he became a Partner in 2002.   Michael’s extensive experience includes a wide variety of professionals in the medical, dental, psychology, legal and real estate sectors.   Michael has decades of  experience servicing professionals and has a substantial knowledge of the rules and regulations governing specific organizations, such as the Ontario and Canadian Psychological Associations,   The College of Physicians and Surgeons of Ontario, The Royal College of Surgeons of Ontario, Ontario Society of Professional Engineers and The Law Society of Upper Canada.

Michael offers his clients a variety of services including accounting, taxation, estate planning, corporate finance, reorganization and restructuring.  Michael has developed an extensive network of contacts, including the community’s top banking, financial, insurance and legal institutions. He is particularly adept at leveraging his contacts for his clients’ benefit.  Michael takes pride in bringing the right people together.

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2015 Federal Budget Commentary

Yesterday, the Honourable Joe Oliver, Minister of Finance, tabled Economic Action Plan 2015, the Harper Government’s “balanced-budget, low-tax plan for jobs, growth and security.”

Budget 2015 focused on four key areas:

  • Fulfill the Harper Government’s promise to balance the budget in 2015. The Government will return to balanced budgets while maintaining the lowest federal tax burden on Canadians in over half a century.
  • Support jobs and growth by making Canada more competitive and allowing job-creating businesses to thrive; making new and innovative investments that build on the Government’s historic support for infrastructure; and training a highly skilled workforce that responds to the evolving needs of employers.
  • Help families and communities prosper by continuing to provide tax relief and other support for hard-working families and individuals while enhancing opportunity for all.
  • Ensure the security of Canadians by supporting the Canadian Armed Forces and protecting Canadians from the threat of terrorism at home and abroad.


Please Click Here to read our full Federal Budget Commentary

Jeff Nightingale is the Co-Managing Partner and Senior Tax Partner at Lipton LLP, Chartered Accountants.  Jeff has written a number of publications and speaks to a variety of professional and business groups, including the Canadian Tax Foundation, the Institute of Chartered Accountants of Ontario and The Law Scociety of Upper Canada.  He has also completed the CICA In-Depth Tax Course as well as other advanced taxation courses and is a member of the Canadian Tax Foundation and the Society of Trust and Estate Practitioners.

Learn More about Jeff Nightingale

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