he Canadian Dental Care Plan (CDCP) will provide dental coverage for uninsured Canadians with an adjusted family net income of less than $90,000. There are new reporting requirements that begin with the 2023 tax year for issuers (including employers and pension plan administrators) of the T4 Statement of Remuneration Paid and T4A Statement of Pension, Retirement, Annuity, and Other Income. For more information on the requirements for the CDCP visit Employers and pension plan administrators: Changes coming to T4/T4A reporting – Canada.ca.
Laura Marcato
Additional Canada Pension Plan (CPP) contributions required for 2024
On January 1, 2024, the government introduced a second earnings ceiling known as the Year’s Additional Maximum Pensionable Earnings (YAMPE). People who have income above the first earnings ceiling will contribute an additional percentage of the income they earn above the first earnings ceiling up to the second earnings ceiling. This additional CPP contribution is part of the CPP enhancement known as second additional CPP contributions (CPP2). It will not replace the first earnings ceiling. Instead, it will subject worker’s earnings to two earnings limits.
| Contribution rate split (employee/ employer) | Contribution rate (self-employed) | YMPE, or first earnings ceiling | YAMPE, or second earnings ceiling | Maximum yearly CPP2 contribution (employee /employer) | Maximum yearly CPP2 contribution (self-employed) |
| 4% | 8% | $68,500 | $73,200 | $188 | $376 |
Starting in 2024, employees and employers will each contribute an additional 4% on earnings above the first earnings ceiling (the YMPE), up to the amount of the second earnings ceiling (the YAMPE). These are their CPP2 contributions. The rates in 2024 will be as follows:
Employees
- When you do your taxes, your CPP contributions must be separated into two parts: CPP base alongside first additional CPP contributions and CPP2 contributions (starting in 2024). Base contributions are calculated at a rate of 4.95% while first CPP contributions are calculated at a rate of 1%. Both are reported together in Box 16 on the T4 slip. Box 16A will be added to the T4 slip to report any CPP2 contributions starting with the 2024 tax year. Any year you do not make CPP2 contributions, Box 16A will be left blank.
- You can claim a 15% non-refundable tax credit for your base CPP contributions. You will claim a tax deduction for the enhanced portions such as first additional and CPP2 contributions.
- automatically separate and apply the base and enhanced contributions for you.
Employers
- Withhold and remit CPP2 contributions the same way as base and first additional CPP contributions.
- Report employees base and first additional CPP contributions in Box 16 on the T4 slip. For T4 slips filed for calendar year 2024 and after, report the amount of CPP2 contributions you deducted from your employee in Box 16A.
- Do not report any amount using Box 16A if you did not deduct CPP2. All employer contributions to the CPP are tax deductible.
Self-employed
- Send your CPP contributions when you file your T1 return.
- Your contributions are based on net business income.
- When you do your taxes, you will separate your CPP contributions into two parts: CPP base alongside first additional CPP contributions, and CPP2 contributions (starting in 2024). The base contribution is the amount that is calculated at a rate of 9.9%, and first additional CPP contributions are calculated at a rate of 2%. You can claim a 15% non-refundable tax credit on 4.95% of the base CPP contributions, and claim a tax deduction on the other 4.95%. You can also claim a tax deduction on the enhanced portion of your contributions (2%). Starting in the 2024 tax year, CPP2 contributions will be calculated at a rate of 8%. All CPP2 contributions are tax deductible.
First Home Savings Account (FHSA)
A first home savings account (FHSA) is a registered plan allowing a prospective first-time home buyer to save for your first home tax-free (up to certain limits). You can open an FHSA with your bank starting April 1, 2023. Contributions that you make to your first home savings accounts (FHSAs) are generally deductible on your income tax and benefit return. How it works:
- Annual contributions of up to $8,000 can be made, and are tax-deductible.
- Unlike RRSPs, only contributions made within the calendar year (not within the first 60 days of the following calendar year), or contributed and not deducted in a previous tax year, can be claimed as a deduction for that calendar/tax year. Similar to RRSPs, contributions made can be carried forward indefinitely and deducted in a later tax year instead of being deducted in the year the contribution is made.
- You can open an FHSA with bank, credit union, or a trust or insurance company. Your issuer will advise you on the types of FHSAs and the qualified investments they can contain
- Unused contribution room can be carried forward, but only to a maximum of $8,000.
- The lifetime contribution limit is $40,000.
You can withdraw all of the property from your FHSAs tax-free if you meet all the following criteria:
- you must fill out Form RC725, Request to Make a Qualifying Withdrawal from your FHSA and give it to your FHSA issuer .
- you must be a first-time home buyer
- you must have a written agreement to buy or build a qualifying home with the acquisition or construction completion date of the qualifying home before October 1 of the year following the date of the withdrawal
- you must not have acquired the qualifying home more than 30 days before making the withdrawal
- you must be a resident of Canada from the time that you make your first qualifying withdrawal from one of your FHSAs until the earlier of the acquisition of the qualifying home, or the date of your death
- you must occupy or intend to occupy the qualifying home as your principal place of residence within one year after buying or building it
Canada Revenue Agency (CRA) Employees Strike
On April 19, 2023, the Union of Taxation Employees (PSAC-UTE) members have gone on strike.
As a result of PSAC-UTE’s decision to begin labour action, Canadians should expect that some CRA services will be delayed or unavailable. While there are no plans to extend tax filing deadlines, the CRA will continue to accept all tax returns. Those that are filed digitally, which represent the vast majority of T1 and T2 returns, will largely be processed automatically by our systems without delay.
For information on any impacts to services, Canadians can consult the Contact Us page for more details and current wait times and Labour disruptions impact at the Canada Revenue Agency pages for more information as the situation continues to evolve.
Passing of Founding Partner Michael Seniuk Sr.
Our firm is saddened to announce the passing of Michael Seniuk Sr. on March 24, 2023, at the age of 92. Michael attended the University of Saskatchewan and became a member of the Institute of Chartered Accountants in 1960. He founded Seniuk and Company CAs in 1973 and was still actively practicing until 2016.
He had an intelligent mind, a keen wit, and a caring and supportive heart to all who knew him. He was a big teddy bear with a smile, a sense of humor, and an occasional harmless growl. His passion was golf and not just playing it but serving the ideals of the game. He served with the Alberta Golf Association, was a Governor of the Royal Canadian Golf Association, and was an active member in several golf courses. He enriched the lives of all who knew him including family, friends, and clients of the Firm. He was one of a kind and will be greatly missed and always remembered fondly.
A Celebration of Life will be held at Hainstock’s Funeral Home and Crematorium, 9810 – 34 Avenue on Monday, April 3, 2023, at 2:00 pm. A live stream of the event can be viewed at https://view.oneroomstreaming.com/index.php?data=MTY4MDE0ODA2MDI0MzcyMyZvbmVyb29tLWFkbWluJmNvcHlfbGluaw
Alberta Affordability Payments Program
As part of the Affordability Action Plan, millions of Albertans struggling with inflation and the high cost of living can apply for the Affordability Payments program until June 30, 2023.
- Families with household incomes under $180,000 can apply for $600 per child under 18.
- Seniors who have household incomes under $180,000 and do not receive the Alberta Seniors Benefit can apply for $600 per person.
- Anyone receiving monthly benefits through AISH, Income Support, Alberta Seniors Benefit or services through Persons with Developmental Disabilities (PDD) will automatically get their personal $600 payment but will need to apply for additional payments if they have kids under 18.
To apply, please follow this link: https://affordability.alberta.ca/prescreen
Bank of Canada interest rate increase Jan 25, 2023
The Bank of Canada has announced an increase in the target for the overnight rate to 4.5%, with the Bank Rate at 4.75% and the deposit rate at 4.5%.
The main reasons for the increase include:
- Global inflation remains high and broad-based.
- The Bank estimates the global economy to grow by 2% in 2023 and 2.5% in 2024.
- Inflation in Canada has declined to 6.3% in December.
- The Bank estimates Canada’s economy grew by 3.6% in 2022.
- The Bank of Canada’s decision to increase the target for the overnight rate is aimed at returning inflation to its 2% target.
Despite the decline in inflation, Canadians are still feeling the impact of high inflation on their essential household expenses. The bank expects the global economy to grow at a slower pace in the coming years, with Canada’s economy expected to grow by 1% in 2023 and 2% in 2024. The next scheduled date for announcing the overnight rate target is March 8, 2023, with the bank publishing its next full outlook for the economy and inflation in April 12, 2023.
Taxability of Recreational Facilities and Club Dues Paid for Employees
The use of a recreational facility or club is a taxable benefit for an employee in any of the following situations:
- You pay, reimburse, or subsidize the cost of a membership at a recreational facility, such as an exercise room, swimming pool, or gymnasium
- You pay, reimburse, or subsidize the cost of memberships to a business or professional club (that operates fitness, recreational, sports, or dining facilities for the use of their members but whose main purpose is something other than recreation)
- You pay, reimburse, or subsidize the cost of membership dues in a recreational facility of the employee’s choice, up to a set maximum. In this case, it is the employee who has paid for the membership, owns it, and has signed some kind of contract with the company providing the facility
- You pay, reimburse, or subsidize the employee for expenses incurred for food and beverages at a restaurant, dining room lounge, banquet hall, or conference room of a recreational facility or club
- You provide recreational facilities to a select group or category of employees for free or for a minimal fee, while other employees have to pay the full fee. There is a taxable benefit for employees who do not have to pay the full fee
However, the use of a recreational facility or club does not result in a taxable benefit for an employee in any of the following situations:
- You provide an in-house recreational facility and the facility is available to all your employees. This applies whether you provide the facilities free of charge or for a minimal fee
- You make an arrangement with a facility to pay a fee for the use of the facility, the membership is with you and not your employee and the facility or membership is available to all your employees. Membership will be considered to be made available to all employees as long as each employee can use the membership even if an employee chooses not to
- You provide your employee with a membership in a social or athletic club and it can be clearly demonstrated that you are the primary beneficiary of the membership. The membership is a taxable benefit to your employee if the membership in or use of the club’s facilities provides only an indirect benefit to you. This would be the case where the employee becomes physically healthier as a result of using the club’s facilities and becomes generally better able to perform their duties (for example, fewer sick days, less downtime, remain fit for duty)
Taxability of Board and Lodging benefits and allowances given to Employees
Board and lodging
You may give your employee board and lodging which means that you provide them with accommodations and, in some cases, food. If you provide only meals to an employee, see Meals.
If you provide free lodging, or free board and lodging, to an employee, the employee receives a taxable benefit. As a result, you have to add to the employee’s salary the fair market value of the board and lodging you provide. Report this amount in box 14, “Employment income,” and in the “Other information” area under code 30 at the bottom of the employee’s T4 slip.
If you provide subsidized lodging, or subsidized board and lodging, to an employee, the employee receives a taxable benefit. As a result, you have to add to the employee’s salary the fair market value of the board and lodging you provide, minus any amount the employee paid. Report this amount in box 14, “Employment income,” and in the “Other information” area under code 30 at the bottom of the employee’s T4 slip.
Exceptions to the rules
There are certain situations that can affect the value of the taxable benefit your employee gets if you provide free or subsidized board and lodging. The exceptions are as follows:
- If you provide board and/or lodging allowances to players on sports teams or members of recreation programs, see the next section
- If you provide board, lodging and/or transportation to an employee who works at a special work site or a remote location, see Board, lodging, and transportation – Special work sites and remote work locations
Board and lodging allowances paid to players on sports teams or members of recreation programs
You can exclude up to $377 (for 2021) per month from income for a board and lodging allowance for a participant or member of a sports team or recreational program if all of the following conditions are met:
- you are a registered charity or a non-profit organization
- participation with, or membership on the team or in the program is restricted to persons under 21 years of age
- the allowance is for board and lodging for participants or members that have to live away from their ordinary place of residence
- the allowance is not attributable to any services, such as coaching, refereeing, or other services to the team or program
Do not report the excluded income on a T4 slip.
Board, lodging, and transportation – Special work sites and remote work locations
It is possible for an employee to work at a location that is both a special work site and a remote work location. However, the benefit can only be excluded from the employee’s income once.
Note
If the special work site is in a prescribed zone, see Board, lodging, and transportation at a special work site in a prescribed zone.
Special work sites
Generally, a special work site is an area where temporary duties are performed by an employee who keeps a self-contained domestic establishment at another location as their principal place of residence. Because of the distance between the two areas, the employee is not expected to return daily from the work site to their principal place of residence.
Note
A self-contained domestic establishment (SCDE) is a house, an apartment, or other similar place of residence where a person usually sleeps and eats. It is generally a living unit with restricted access that contains a kitchen, bathroom, and sleeping facilities. The SCDE must be separate from any other living unit in the same building. A room in a hotel, dormitory, boarding house, or bunkhouse is not ordinarily considered to be a SCDE.
Usually, the GST/HST and PST applies on meals and accommodations you provide to an employee. In certain cases, such as long-term residential accommodation of one month or more, no GST/HST and PST applies. Where the GST/HST and PST does apply, include it in the value of the benefit.
Board and lodging at a special work site
You can exclude from income the value of board and lodging, or an allowance (not in excess of a reasonable amount) for board and lodging, that you provide to an employee who works at a special work site if all of the following conditions are met:
- The employee’s duties required them to be away from their principal place of residence or to be at the special work site
- The employee had to work at a special work site where the duties performed were of a temporary nature
- The employee kept, at another location, a self-contained domestic establishment as their principal place of residence:
- that, throughout the period, was available for the employee’s occupancy, and the employee did not rent it to any other person
- to which, because of distance, the employee could not reasonably be expected to return daily from the special work site
- The board and lodging, or the allowance (not in excess of a reasonable amount) for board and lodging, you provided to the employee had to have been for a period of at least 36 hours. This period can include time spent traveling between the employee’s principal place of residence and a special work site
Note
You can only exclude from income an allowance (not in excess of a reasonable amount) paid to your employee for board and lodging if they incurred the expense.
Transportation
You can exclude from income the value of free or subsidized transportation, or an allowance (not in excess of a reasonable amount) for transportation expenses, that you provide to an employee who works at a special work site if all of the following conditions are met:
- the free or subsidized transportation, or the allowance, was for transportation between the special work site and your employee’s principal place of residence
- the employee’s duties required them to be away from their principal place of residence or be at the special work site for a period of at least 36 hours
- you (or a third party) provided board and lodging, or a reasonable allowance for board and lodging, to your employee for that period
Form TD4, Declaration of Exemption – Employment at a Special Work Site
If all of the conditions listed under Board and lodging noted above are met, you and the employee should fill out Form TD4, Declaration of Exemption – Employment at a Special Work Site. This allows you to exclude the benefit or allowance from the employee’s income. If you fill out Form TD4, do not include the amounts in box 14, “Employment income,” or in the “Other information” area under code 30 at the bottom of the employee’s T4 slip. After you fill out Form TD4 with the employee, keep it with your payroll records.
If all of the above-noted conditions are not met, do not fill out Form TD4. Treat the total amounts as part of the employee’s income. Make the necessary deductions and report the amounts on the employee’s T4 slip. This also applies to any part of an allowance for board, lodging, and transportation that is more than a reasonable amount.
Remote work locations
We usually consider a work location to be remote when it is 80 kilometers or more from the nearest established community with a population of at least 1,000 people.
A location is considered an established community if it has essential services or those services are available within a reasonable commuting distance. Essential services may include access to:
- basic food store
- basic clothing store, with merchandise in stock (not a mail-order outlet)
- accommodation
- certain medical services
- certain educational facilities
Board and lodging at a remote work location
You can exclude from income the value of board and lodging, or an allowance (not in excess of a reasonable amount) for board and lodging that you provide to an employee who works at a remote work location if all of the following conditions are met:
- the employee could not reasonably be expected to set up and maintain a self-contained domestic establishment because of the remoteness of the location and the distance from any established community
- you did not provide a self-contained domestic establishment for the employee
- the board and lodging, or allowances (not in excess of a reasonable amount) for board and lodging, were for a period of at least 36 hours when one of the following situations applied:
- the employee had to be away from their principal place of residence because of their duties
- the employee had to be at the remote work location
Transportation
You can exclude from income the value of free or subsidized transportation, or an allowance (not in excess of a reasonable amount) for transportation expenses, that you provide to an employee who works at a remote work location if all of the following conditions are met:
- The employee’s duties required them to be away from their principal place of residence or to be at the remote work location for a period of at least 36 hours
- The free or subsidized transportation, or the allowance, was for transportation between the remote work location and any location in Canada. If the remote work location is outside Canada, you can exclude the allowance for transportation between that location and any location in Canada or outside Canada
- You (or a third party) provided board and lodging, or a reasonable allowance for board and lodging, to your employee for that period
If you need help determining whether a location qualifies as remote, see Interpretation Bulletin IT-91R, Employment at Special Work Sites or Remote Work Locations.
Form TD4, Declaration of Exemption – Employment at a Special Work Site
When there is an exemption for board, lodging, or transportation allowances you pay to employees who work at a remote work location, do not fill out Form TD4.
Payroll deductions
If you exclude a benefit for board, lodging, and transportation at a special work site or remote work location, it is not a taxable benefit. Do not deduct CPP contributions, EI premiums, or income tax.
Housing or utilities – benefit
If you provide an employee, including the superintendent of an apartment block, with a house, apartment, or similar accommodation rent free or for less than the fair market value (FMV) of such accommodation, there is a taxable benefit for the employee.
You have to estimate a reasonable amount for the housing benefit. It is usually the FMV for the same type of accommodation, minus any rent the employee paid.
In addition, the amount you pay on behalf of, or reimburse to your employee for utilities (such as telephone, hydro, natural gas, water, cable or internet) is also a taxable benefit. This is the amount that you include in the employee’s income as a utilities benefit.
If the employee occupies the accommodation for at least one month, the value of the accommodation is usually not subject to the GST/HST.
Special circumstances that reduce the value of a housing benefit
The following two factors may reduce the value of a housing benefit you provide to your employee:
- Suitability of size
Your employee may have to occupy an accommodation that is larger than they need (such as a single person in a three-bedroom house). To calculate the taxable housing benefit, you can reduce the value of the accommodation to equal the value of accommodation that is appropriate to your employee’s needs (in this case, a one- or two-bedroom apartment or house).
Note
If the accommodation you provide is smaller than your employee needs, we cannot allow any reduction in value.
- Loss of privacy and quiet enjoyment
If the accommodation you provide to your employee contains things like equipment, public access, or storage facilities that infringe on your employee’s privacy or quiet enjoyment of the accommodation, you can reduce the value of the housing benefit. The reduction has to reasonably relate to the degree of disturbance that affects your employee.
These two factors apply in the above order. If both circumstances apply to an accommodation, you should first reduce the value to equal the value of accommodation that suits your employee’s needs. Then, you should apply any reduction for loss of privacy and quiet enjoyment to that reduced value.
Housing or utilities – allowance
If you give your employee an allowance to pay for rent or utilities, include the allowance in your employee’s income as a taxable housing and/or utilities benefit.
Reporting the benefit
Report the taxable benefit for the utilities in box 14, “Employment income,” and in the “Other information” area under code 40 at the bottom of the employee’s T4 slip. Report the taxable benefit for housing in box 14 and in the “Other information” area under code 30.
Paying RRSPs to your Employees – What you Need to Know
Contributions you make to your employee’s RRSP and RRSP administration fees that you pay for your employee are considered to be a taxable benefit for the employee. However, this does not include an amount you withheld from the employee’s remuneration and contributed for the employee.
If the GST/HST applies to the administration fees, include it in the value of the benefit.
Payroll deductions
Contributions you make to your employee’s RRSPs are generally paid in cash and are pensionable and insurable. Deduct CPP contributions and EI premiums.
However, your contributions are considered non-cash benefits and are not insurable if your employees cannot withdraw the amounts from a group RRSP (except for withdrawals under the Home Buyers’ Plan or Lifelong Learning Plan) before the employees retire or cease to be employed.
Although the benefit is taxable and has to be reported on the T4 slip, you do not have to deduct income tax at source on the contributions you make to your employee’s RRSPs if you have reasonable grounds to believe that the employee can deduct the contribution for the year.
Administration fees that you pay directly for an employee are considered taxable and pensionable. Deduct CPP contributions and income tax. These are considered a non-cash benefit, so they are not insurable. Do not deduct EI premiums.