Canadian non-resident tax obligations

Who is a non-resident?

A non-resident is someone who:

  • normally, customarily, or routinely lives in another country and is not considered a resident of Canada; or
  • does not have significant residential ties in Canada; and
    • lives outside of Canada throughout the tax year; or
    • stays in Canada for less than 183 days in the fiscal year.

The most common types of income subject to non-resident tax are:

  • Pension plan and Old Age Security (OAS) payments
  • Registered Retirement Savings Plan (RRSP) and Registered Retirement Income Fund (RRIF) payments
  • Rental and royalty payments
  • Annuity payments
  • Trust payments
  • Dividend payments

What are your obligations?

You are responsible for deducting and remitting non-resident tax if you are:

  • a Canadian resident who pays or credits certain types of income to a non-resident of Canada
  • an agent or someone who receives certain types of income on behalf of a non-resident of Canada, from which tax was not withheld
  • a non-resident of Canada who receives certain types of income from a Canadian source, from which tax was not withheld

 Failing to deduct and remit non-resident tax on these payments may result in penalties and interest.

Open a non-resident tax account to take care of your obligations

It’s now easy and convenient to open a non-resident tax account.

You can access the new registration tool and open a non-resident tax account through any of the Canada Revenue Agency (CRA) online portals, including:

Do you or your employees use their vehicle for work? Here’s what you need to know

Do you or your employees use their personal vehicles for work-related travel? If so, you may provide them with an automobile or motor vehicle allowance to help cover expenses.

What is an automobile or motor vehicle allowance?

An automobile or motor vehicle allowance is any payment that you give your employees for using their own vehicle in connection with their employment. This payment forms part of their salary or wages. An allowance is a taxable benefit to your employees unless it is based on a reasonable per-kilometre rate.What are your responsibilities.

Determine if the allowance is reasonable

The Canada Revenue Agency (CRA) considers an allowance to be reasonable if the allowance is based only on the number of business kilometres driven in a year and if the per-kilometre rate is reasonable. Generally, a reasonable per-kilometre rate is one that is designed to cover an employee’s out-of-pocket costs.

What is a reasonable amount:

For 2019, a reasonable rate is 58 cents per kilometre for the first 5,000 kilometres driven and 52 cents/km after that. In the territories, the rate is 4 cents/km higher.

For 2018, a reasonable rate is 55 cents per kilometre for the first 5,000 kilometres driven and 49 cents/km after that. In the territories, the rate is 4 cents/km higher.

If the allowance is reasonable:

If you pay your employees an allowance that the CRA considers reasonable, do not include this amount as income on their T4. You also do not deduct CPP contributions, EI premiums, or income tax from the allowance.

If the allowance is unreasonable:

If you pay your employees an allowance that the CRA considers unreasonable, because it is either too low or too high, it is a taxable benefit. You will need to complete the following steps:

  1. Include the amount of the allowance in your employee’s income.
  2. Calculate payroll deductions (CPP deductions, EI premiums and income tax).
  3. Prepare and file T4 slips for your employees.

Provide your employee with a Form T2200if required

Where allowances are included in income, the employee may be entitled to deduct motor vehicle employment expenses. In order to deduct these expenses, the allowance must be included in income, and the employee must obtain a completed Form T2200, Declaration of Conditions of Employment, from you. The deduction of motor vehicle employment expenses is usually limited to situations where, the employee was required to carry out the duties of employment away from the employer’s regular place of business or in multiple locations. 

Where can you find more information?

To assist you in determining the taxability of a benefit, the payroll deductions you have to withhold, and how to report the amount on an information slip, the CRA publishes the following guides:

When you need a business number for Canada Revenue Agency program accounts

Certain business activities require a business number. You can register for:

  • business number: a unique, 9-digit number – the standard identifier for businesses. It is unique to a business or legal entity.
  • CRA program accounts: 2 letters and 4 digits attached to a business number – used for specific business activities that must be reported to the CRA.

When you need a business number:

You need a business number if you incorporate or need a CRA program account.

You might need a business number to interact with other federal, provincial, and municipal governments in Canada.

Getting a business number as part of other registrations:

You will get a business number if you:

  • register for any CRA program accounts needed
  • incorporate your business federally
  • register or incorporate your business with these provinces:
    • British Columbia
    • Manitoba
    • Nova Scotia
    • Ontario
    • Saskatchewan
    • New Brunswick
    • Alberta
  • register using Business Registration Online (BRO)

When you need a new business number

If you already have a business number and you want to change the legal ownership or the structure of your business, you may have to register for a new business number.

When you need CRA program accounts

Each CRA program account has its own rules and requirements about when you need to register.

The most common program accounts a business may need are:

Registering for a CRA program account will get you a business number if you don’t already have one. If you already have a business number, the CRA program account will be added to your business number. Your business will only ever have 1 business number.

Audit Shield Insurance for our Clients

Our firm will be instituting a new tax audit insurance program.  This will give our clients the opportunity to purchase Audit Shield Insurance to help cover any potential costs associated from audit queries from the tax department. 

What is audit activity?

Audit activity includes any audit, inquiry, investigation or review which is instigated by the Canada Revenue Agency (CRA)and other provincial agencies to ensure business and taxpayer compliance with various tax and legislative requirements such as Personal Tax, Business Audits, Payroll Audits, GST and Capital Gains Tax, amongst others.

How common are audits, enquiries, investigations or reviews?

The CRA and other government revenue bodies continue to focus on review and audit activity. These agencies are consistently provided with resources for this purpose.

What is the Audit Shield Fee Waiver Service? Why should I consider it?

Our firm’s Audit Shield Fee Waiver Service provides for the payment of professional fees incurred as a result of your filed return being selected for an audit, enquiry, investigation or review. The cost of being properly represented in these matters can be quite significant. Even if no adjustments are required, you could still be left with considerable professional fees if you are not protected by Audit Shield. It provides a fixed, cost effective solution to guard against these unbudgeted costs.

Who provides the Audit Shield
Fee Waiver Service?

Audit Shield is provided by our accounting firm and we hold an Audit Shield insurance policy (underwritten by Lloyds) which mirrors this service.

What filed returns/financial compliance obligations are covered?

  • Audits and reviews instigated by Provincial Agencies such as PST
  • Business Audits
  • Capital Gains Tax
  • Corporate Tax – full and area specific
  • Employer Audit Program
  • Employer Compliance Audits
  • Payroll Audits (T4)
  • Personal Tax (post Assessment T1)
  • Plus more!

Is the cost tax deductible?
Yes, a tax deduction can be ordinarily claimed for your Audit Shield Fee Waiver Service.

Who is covered?
All of our clients are invited to participate in the Audit Shield Fee Waive Service. Different levels of cover are available for T1s and businesses. In most cases individuals and other family entities can be covered with the business entities – for no extra cost. If you decide to participate, your cover commences one business day after your payment is received.

Is it mandatory to participate in the Audit Shield Fee Waiver Service?

No, Audit Shield is an option our accounting firm provides to you, our client. You have the opportunity to participate in or decline the offer.

What do I need to do to participate?

Please contact one of our friendly team members to discuss your participation and to arrange an acceptance form to be sent to you.

Canada Pension Plan (CPP) increase in 2019 and future years

Beginning 2019 CPP increase to grow to replace one third of the average work earnings you receive after 2019. The maximum limit used to determine your average work earnings will also gradually increase by 14% by 2025.

Your pension will increase based on how much and for how long you contribute to the enhanced CPP. The CPP enhancements will increase the maximum CPP retirement pension by up to 50% for those who make enhanced contributions for 40 years.

Changes to CPP contributions

You contribute to the CPP if you are over the age of 18, work in Canada) and earn more than $3,500 a year.

You only contribute on employment earnings between $3,500 and an annual earning limit (adjusted each year based on changes in the average wage in Canada). In 2019 this limit is $ 57,400.

The increase in contributions as a result of the enhancement will be phased in gradually over seven years in two steps:

Step 1: 2019-2023

From 2019 to 2023, the contribution rate for employees will gradually increase by one percentage point (from 4.95% to 5.95%) on earnings between $3,500 and the original earnings limit. fffffffff

Year Increase Increase Employer/Employee Rate
2019 0.15% 0.3% 5.10%
2020 0.15% 0.3% 5.25%
2021 0.2% 0.4% 5.45%
2022 0.25% 0.5% 5.70%
2023 0.25% 0.5% 5.95%

Step 2: 2024-2025

Starting in 2024, a second, higher limit will be introduced, allowing you to invest an additional portion of your earnings to the CPP. This new limit, known as the Year’s Additional Maximum Pensionable Earnings, will not replace the first earnings ceiling. Instead, it will subject your earnings to two earnings limits. This limit is referred to as the second earnings ceiling.

This new range of earnings covered by the Plan will start at the first earnings ceiling (estimated to be $69,700 in 2025) and go to the which will be 14% higher by 2025 (estimated to be $79,400). Like the first earnings ceiling, the second will increase each year to reflect wage growth.

Thus, if you earn more, you will contribute more towards your CPP benefits for the future.

Employers will pay the same increase in contributions as their employees. If you are self-employed, you will contribute both the employee and employer portions. This means once the phase-in is complete you will pay a contribution rate of 11.9% on earnings up to the first earnings ceiling and 8% on the second earnings ceiling. This will in turn increase your benefit amounts.

If you are an employee, your CPP contributions will continue to be automatically deducted by your employer.

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Congratulations Sukhi Binning on Passing the CPA Exam!

Seniuk and Company is proud to announce that Sukhi Binning has passed her CPA exam.

Sukhi joined Seniuk and Company in 2016 as a staff accountant.  Over the last year and a half, she has been working hard to complete her CPA training. In December, she found out she passed her final exam to that she had writen in September to complete the CPA program. With all the hard work behind her, Sukhi looks forward to obtaining her official CPA designation in early 2019.

Sukhi Binning – All smiles!

“Seniuk and Company is very proud of Sukhi’s accomplishment,” stated Mike Seniuk Jr., Managing Partner. “We are excited to see her succeed and grow professionally. We look forward to celebrating many more accomplishments with her in the future.”

Mike Seniuk Jr. and Sukhi Binning

In her role at Seniuk and Company, she assists in providing clients with compilation, audit, tax and other accounting services. 

Having attended Grant MacEwan University in Edmonton, Alberta, Sukhi earned a Bachelor of Commerce degree with a Major in Accounting.  Sukhi loves to travel and is an avid soccer player.

Top Quickbooks Online Reports to Run Regularly

There are numerous QuickBooks Online reports that you should be consulting at regular intervals. I believe you need these five at least every month to provide you with invaluable knowledge on the current status of your business. They are:

1. Accounts Receivable Aging Detail – Displays a list of invoices that haven’t yet been paid, divided into groups like 1-30 days past due, 31-60 days past due, etc.

2. Budget/Prior Period vs. Actuals/Current Period – Just what it sounds like: a comparison of your monthly budgeted or prior period amounts and your actual current period income and expenses.

3. Unpaid Bills – Helps you avoid missing accounts payable due dates by displaying what’s due and when.

4. Sales by Product/Service Detail. Tells you what’s selling and what’s not by displaying date, transaction type, quantity, rate, amount, and total.

5. Product/Service List – An accounting of the products and/or services you sell, with columns for price, cost, and quantity on hand.

Getting started with Quickbooks Online – Part 2

We’ve already discussed QuickBooks Online’s ability to guess how transactions should be categorized (it’s not always right, but you can change incorrect ones). It also allows you to memorize transactions that recur on a regular basis; this also saves time and improves accuracy. There’s another way the site also uses automation to help minimize keystrokes: Bank Rules. Based on your input, it will scan incoming items and classify them, so you don’t have to. This can be very helpful when you regularly import transactions that share specific attributes.

Let’s look at how this works. Click Banking in the navigation toolbar, then click Bank Rules. Once you’ve created your own rule(s), they’ll appear in a grid on this screen. For now, click New rule in the upper right corner. Basically, you’re going to tell QuickBooks Online that when specific conditions are met, as you can see in the example below, it should take the specified action(s): assign a Transaction typePayee, and/or Category. You can also have the transaction automatically added to your books.

You can create Bank Rules in QuickBooks Online that will automatically assign a Transaction typePayee, and Category to imported items that meet specific conditions.

We suggest you meet with us if you’re going to take on this task. If your business processes a lot of transactions, Bank Rules can be incredibly helpful. But set them up incorrectly, and it could take many hours to untangle the errors.

Account Registers, Chart of Accounts

In this column and the last, we’ve been working with transactions as they come into QuickBooks Online directly from your financial institutions, before they appear in your account registers. When you clicked Add after you looked at—and perhaps modified—a transaction listed under For Review on the Banking page, you sent it to that account’s register.

Notice that the site’s registers look similar to their paper counterparts; you may remember recording checks and deposits in the back of your checkbook, if you’ve been in business long enough. There are two ways to see them in QuickBooks Online. When you’re on the Banking page, look over to your right. You’ll see a link labeled Go to Register.  Click it, and you’ll be taken to that page for the account that’s currently active.

You can also open your account registers from the Chart of Accounts. We don’t talk much about this element of financial management because it’s not something you should be modifying. Nevertheless, it’s the heart of your accounting system. It consists of a comprehensive list of your company’s accounts, divided into assets, liabilities, income, expenses, and equity (along with subaccounts). Transactions are assigned to the appropriate account and recorded in the General Ledger, which is another element of accounting that we don’t discuss because you don’t have to deal with it in QuickBooks Online.

You can view your company’s Chart of Accounts in QuickBooks Online, but we recommend you don’t modify it.

Click on the Accounting tab in the navigation toolbar, then Chart of Accounts. You’ll see your individual bank accounts listed here, along with a View Register link.

A Critical Concept

Again, you won’t have to deal with the Chart of Accounts, but it’s very important that you understand how to manage downloaded transactions as you move them into your bank accounts in QuickBooks Online. Mistakes here can trigger errors in reports and taxes, as well as create general confusion. We’d be happy to get you on the right path with this critical function.

Getting started with Quickbooks Online

QuickBooks Online was built to work with transactions downloaded from your online financial institutions. Here’s how to work with them.

The ability to import transactions from financial institutions into QuickBooks Online is definitely one of the best things about the site. You may have even signed up for that very reason. By now, you’ve probably already set up at least one connection. But are you using all of the QuickBooks Online’s tools? There’s a lot you can do once you’ve imported in data from your bank or credit card provider. We’ll explore these features in this column and the next.

First Steps

If you’re a new subscriber, you may not have established these critical links yet. It’s an easy process. Start by clicking the Banking link in the left vertical navigation pane. In the upper right corner, click Add Account and enter the name of your financial institution if it’s not pictured. Then follow the instructions you’re given on the screen. These can vary depending on the bank or credit card provider, but you’re always at least asked to enter the username and password that you use to log into each online.

Need help with this? Let us know.

Viewing Your Transactions

Once you’ve made a successful connection, you’ll be returned to the Bank and Credit Cards page. You should see a card-shaped graphic at the top of the screen for each account you’ve linked. Click on one. The table that opens is not your account register. The view here defaults to For Review, which refers to transactions you’ve downloaded. The All tab should also be highlighted; we’ll get to Recognized transactions later.

When you first download transactions into QuickBooks Online, before you’ve done anything with them, many will appear under For Review.

There’s a lot going on here, so don’t be surprised if you’re confused. Review each transaction by clicking on it. QuickBooks Online will have guessed at how it should be categorized, but you can change this by opening the list in the category field and selecting the correct one. It’s critical that you get this right since it will have an impact on reports and income taxes. If you need to Split it between multiple categories, click on that button found to the right.

If the transaction is Billable, check that box and choose a customer from the drop-down list. If you don’t see this box, click the gear icon in the upper right and select Account and Settings | Expenses. Check to see that Make Expenses and Items Billable is turned On (click on Off, then check the appropriate box to turn it on).

Next, determine how you want to process the transaction by clicking on one of the three buttons at the top of the transaction box. Do you want to accept it and Add it to that account’s register? Do you want QuickBooks Online to Find (a) Match for it (like a payment that matches an invoice, for example)? Or, do you want to Transfer it to another account? Once you’ve made one of these three selections, the transactions that you’ve added or matched will move under the In QuickBooks tab (where you can still Undo them) and will be available in the account’s register.

Other Options

You can save time by using QuickBooks Online’s Batch Actions tool.

Say you run across some duplicate or personal transactions that you don’t want to appear in the current account’s register. Check the box in front of each, then click the arrow in the Batch Actions box. Select Exclude Selected. They’ll then be available under the Excluded tab. You can also Accept or Modify multiple transactions simultaneously by using this tool.

So far, you’ve been viewing All your transactions. Click on Recognized to the right of it. These are transactions that are already familiar to QuickBooks Online because they’ve appeared before and/or have been matched, or because you’ve created Bank Rules for them (we’ll address that concept next month). You’ll need to address these the same way you did the transactions in the For Review section; you can either Add or Transfer them.

If you’re new to QuickBooks Online, this may all sound pretty complicated. It can be at first. But once you’ve worked with downloaded transactions for a while, you’ll understand the flow much better. If you’re not clear on the process from the start, it can lead to trouble. Contact us at your convenience. We’d be happy to sit down with you and go through it all using your own company’s data; the familiarity may help.

Phone Apps to Help With Your Business

Here are a few apps that can simplify your collaboration and tracking and even improve your productivity:

Pocket –

There is so much information to take in every day, it’s hard to get it all read when you first see it. How many times have you tried to find that article later with no success?

Pocket makes it easy to save all the articles, pictures and videos you find online so you can look at them later. It works on mobile or desktop systems and it’s free. Pocket will also strip out the ads, sidebars, and other stuff from the page to leave you just the text, images, and videos. Once you’re done, it’s a simple tap to archive, save or share.

Wunderlist –
Whether you and your team have a list of tasks to accomplish or you’re planning a business trip, Wunderlist is effective at keeping it all straight and up-to-date.

You can create as many task lists as you need and share them with up to 25 collaborators. Lists are live online, so when something gets completed, everyone knows.

Toggl –

Time is money, in business. So, effective time tracking is good for business. Whether you bill by the hour or are testing efficiency by logging time spent to complete tasks, Toggl helps you track every second with a single click – it even includes idle detection.