Ontario introduced its new method of calculating statutory holiday pay at the beginning of 2018. The government’s reasoning being that the existing rule was too complicated, so needed to simplify it.
Under the previous rule, stat holiday pay would be calculated by taking the last 4 weeks’ pay and dividing by 20. Complicated right? The new rules say that you now take the previous week’s pay and divide by the number of days worked in the previous week. (Note that part days are equivalent to full days.)
This has led to some head scratching results. Let’s take two examples:
Jim works full weeks on a reduced schedule in order to look after his kids before and after school. He works 4 hours per day 5 days a week (total 20hrs) and is paid $20/hr – total of $400/week. Under the old system, Jim would be paid $80 for Canada Day as a stat holiday. Under the new system, he would also be paid $80 stat holiday. The $80 holiday pay represents the typical daily pay Jim gets – 4hs @ $20.
Jane, works full days, but only 3 days a week. 7hrs on Wed and Thurs and 6hrs on Friday for a total of 20hrs/week and also earns $20/hr – total of $400/week - the same as Jim. Under the old system, she would have also received $80 stat holiday pay – same amount as Jim, which makes sense given they work the same amount of hours per week, are at the same pay rate and earn the same in a typical week.
However under the new system, Jane would now receive $133.33 of stat holiday pay, ($400 / 3 days) which is $53 more than Jim! Jim can’t be too happy about that.
In addition, Jane works at another job on Mondays and Tuesdays, 7 hrs per day for 2 days at $20/hr. Under the new rules, that employer would also need to pay Jane $140 statutory holiday pay on Canada Day. So on Canada day, Jane has earned $273, basically two full days pay. Meanwhile a typical full time worker, 35 hrs/week at $20 would get $140.
Where is the logic in this?
Our office will be closed on Friday December 8th for a staff training and professional development day.
Ontario is implementing sweeping employment changes to increase the minimum wage and other workplace rules with respects to vacation time, leaves, and shift scheduling.
Minimum Wage will increase from the current $11.60 to $14/hr starting January 1, 2018 and to $15/hr on January 1, 2019. Minimum wage changes are summarized below:
Basic Minimum Wage
Students under 18
In addition, there will be vast changes to other employment rules beginning in 2018:
3 Weeks Vacation Pay after 5 years
Employees will now be entitled 3 weeks or 6% paid vacation after 5 years service. This extends the current 2 week or 4% minimum for all employees.
Paid Personal Emergency Days plus other Leaves
Employees will be entitled 10 personal emergency leave days per year, of which 2 will be paid. Formerly this was only a requirement for employers with over 50 employees. Now it applies to all employers.
Employers will not be allowed to request a doctors note from the employee for taking personal emergency leaves.
There are also changes to unpaid leaves of absences for situations involving family medical leave, death of a child and domestic violence.
Statutory Holiday Pay
The calculation for statutory holiday pay will be simplified
Penalties for Misclassifying Employees as "Independent Contractors"
Employers who misclassify employees as "independent contractors", in order to skirt labour laws, will be subject to fines, penalties and possible prosecution.
Equal Pay for Equal Work Provisions
The legislation would ensure that casual, part-time, temporary and seasonal employees are paid equally to full-time employees when performing the same job for the same employer.
Dear Mr Stanton,
As I am sure you are already very aware, the government's proposed tax changes, that have been painted as "closing loopholes for the rich", will severely impact the majority of small business corporations - of any size and wealth, including most of our business clients here in the Midland Penetanguishene area.
Small business owners take many risks, and already pay and administer a high load of tax when you take into effect payroll taxes, WSIB, higher property tax ….the list goes on. They also take on the administration of collecting and remitting taxes on behalf of the government. And now the government paints these entrepreneurs in a negative light and says they are unfairly taking advantage of loopholes.
I feel that the proposed rules to crack down on dividend sprinkling really need to be re-thought. The proposed rules, as they stand, would be a nightmare to administer as far as the reasonability tests proposed.
These rules would unnecessarily punish local doctors, who several years ago gave up rate increases with the province in order to be allowed to incorporate as a concession to the lower rates.
These rules will unfairly impact most small business corporations who may have one spouse not as involved in the day to day business, in order to raise children, and who generally is not eligible for E.I. maternity/paternity benefits.
These rules will greatly affect those small businesses that have relied on good years to put aside some funds to cover bad years. We don't know what the impact will be for clients who have sold their business and are left with the proceeds in their corporation to be used to fund their retirement. Will they now no longer be able to live out their retirement as planned or will the high proposed tax on passive investments gobble their retirement funds up? From information we have seen on the proposals, the tax on passive income in the corporation could be as high as 70%.
Perhaps instead of picking on small business owners and painting them as tax cheats, the government can look at the issue that top earners in Ontario are paying over 53% income tax on their marginal income. When you are giving more of your earnings to the government than what you are keeping, of course you will want to look for alternatives (including leaving the country).
Also many of the complicated tax "schemes" that the government is trying to subdue, are built around the fact that spouses can not share an income, due to spousal tax attribution rules. Why not look at allowing joint income tax filing for spouses (as is done in the US)? This would certainly make the playing field fair and simplify the tax system. It may have the effect as well as allowing one parent to possibly stay home to raise their children, instead of being penalized for staying home.
I wanted to take this opportunity to have my voice heard. I am sure you have heard from many other constituents and organizations in our community of North Simcoe, and hope you can take these concerns to the house of commons. We hope Mr. Morneau and Mr. Trudeau take the small business community's input seriously and re-think these ill conceived proposals.
Martin Kretzschmann CPA CA
Chartered Professional Accountants
373 Midland Ave, Midland ON L4R 3K8
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On February 20th 2017, the Canada Revenue Agency starts accepting 2016 tax personal returns on its e-file system. This marks the official start of the tax season!
Make sure to get your returns in early to avoid the late rush. Personal tax returns should be filed before May 1, 2017 to avoid interest and penalties.
Please see our tax return checklist below for assistance in getting your information together:
It has been a longstanding administrative position with the Canada Revenue Agency, that you did not have to report the sale of your principal residence on your personal tax return if it was covered by the principal residence exemption for all the years you owned it.
This has now changed! On October 3rd, 2016, Finance Minister, Bill Morneau introduced new rules to tighten up mortgage lending and deal with some issues with foreign home buyers. However along with these, a change was also put through, that starting in 2016, now requires you to report the sale of your principal residence on your personal tax return in the year of sale. It will still be tax free if covered by your principal residence exemption, but will give the CRA more information to combat perceived "home flipping" in the current hot real estate market and likely reduce unreported taxable sales of homes and cottages.
This is a significant change in that if this is not reported, it may effect your principal residence exemption when trying to use it in the future on another sale, and the CRA can now go back and assess non reporting penalties if you do not report the sale of you principal residence starting in 2016.
From the CRA's information released on this change - "You will complete Schedule 3 and file it with your T1 Income Tax and Benefit Return for the year you sell the property. If the property was your principal residence for every year that you owned it, you will make the principal residence designation in your Schedule 3. In this case, the year of acquisition, proceeds of disposition and the description of the property are the information that will have to be reported. Schedule 3 will be modified accordingly. Form T2091 (or Form T1255) will still be required for the designation in the case the property was not your principal residence for all of the years that you owned it.
So you will now want to ensure that the disposition of your home, including information on when it was purchased and proceeds of sale, is reported or it may haunt you down the road.
We are moving our location just across the street at 373 Midland Ave. We have been busy packing everything up and unpacking. You can find us here after August 24th! Please come for a visit to see our new digs!
We have received a few calls from clients who have recently received threatening calls purporting to come from the Canada Revenue Agency (CRA) stating that they owe quite a bit of money or are being audited.
As a general rule, do not give any personal information over the phone or via e-mail. If you are not sure, ask the caller to identify themselves and to send you a letter in writing stating the facts and what they are requesting. Generally, unless you have signed up to receive Online mail from the CRA, the CRA would not e-mail you. They generally would initiate contact with you via a letter through the mail.
Note that the CRA is aware of fraudulent phone calls and e-mail scams that are and have been underway. Please see a link to their warning on this here. The CRA also has a page with other fraud warnings and examples of fraudulent telephone messages, e-mails and letters. See link to that page here.
If you are still unsure, you should bring any correspondence received to your accountant for their input and advice._
I recently attended a seminar hosted by CPA Ontario, on Cloud Computing....and it turned out to be very interesting.
Cloud computing is currently one of the biggest changes we have seen in how we use our computers and access and store our data in at least a decade. Although we may not realize it, most of us are already using the "cloud" in our daily lives.. Whether this means using internet banking, posting our pictures on Facebook, streaming music through iTunes or watching movies on Netflix. The presenter of the seminar related this change to computing reverting back to how things were done at the advent of computing back in the '70's. People would work on a terminal to access data which was saved on a large mainframe computer in a different room or different office. Similar to this we are now moving away from storing our data on our desktop, to having it stored in a large data centre somewhere else in the world and accessing it over our internet connection to our computer, laptop, tablet or smartphone.
As with most other programs, applications or "apps", accounting and bookkeeping has now also migrated to the cloud. The current popular bookkeeping programs, QuickBooks and Sage50 (Simply Accounting) now also have cloud versions.
QuickBooks Online allows easy migration of your current Quickbooks data to the cloud. One of the benefits is being able to access the data from any device, anywhere. Not just on your office desktop. It also allows easy sharing of data if there is more than one person who wants to access the books, for instance, the treasurer and executive director of a non profit organization. Not to mention the easy sharing of data with your accountant who can then make adjustments needed directly to your books . Password security allows this to be secure and you no longer need to worry about backups.
As far as thing being secure, supposedly the CIA is using Amazon's large data centers to store and manage their top secret data, so I'm betting the security at the data centres being used by most major retailers is a bit better then you locking the door to your office as you currently do to keep your desktop or laptop from being stolen.
One of the downturns of migrating to the cloud however, is that although they make it easy to upload all your data to their system, like in the case of QuickBooks, it does not look like it is a simple task if you want to move that data back to your desktop accounting system with certain cloud based apps. Hopefully this is something that will be improved.
Sage offers a cloud version called Sage One, which can be used on any device. As an example, this would allow you to invoice customers on the spot for service calls using your smartphone and e-mailing the invoice to them. Sage One is a bit different from QuickBooks Online as it integrates with your existing Sage 50 data that you keep on your desktop or laptop. The data from the cloud at the end of the day, or end of the week, can be downloaded back to your computer and to your full set of books you keep on Sage 50.
There are also other cloud based bookkeeping alternatives out there, including Freshbooks and Wave Accounting. Wave differentiates itself from the other accounting packages in that it is free and still offers a full double entry accounting system.
Most of these online cloud versions allow you to download your bank transactions directly from your internet banking right into your accounting program to save you time of manually entering every item. Some programs also provide the ability to be able to take pictures of your receipts with your smartphone, being able to store those as your tax support, and also, using optical imaging technology to upload these receipts to your accounting program, picking out the payee name and the amount you paid and have this automatically entered in your books.
Wow - technology!