The 2012 CPP changes will affect individuals between the ages of 60 and 70 who work while receiving CPP retirement pensions. The overall summary of the CPP changes for January 2012 is described by Service Canada as:

1. Your monthly CPP retirement pension amount will increase by a larger percentage if you take it after age 65.

2. Your monthly CPP retirement pension amount will decrease by a larger percentage if you take it before age 65.

3. Employees under 65 receiving CPP retirement pensions will now have to make CPP contributions. These contributions will increase CPP retirement benefits.

4. Employees age 65 to 70 receiving CPP retirement pensions can now choose to make CPP contributions. These contributions will increase their CPP retirement benefits.

5. The number of years of low or zero earnings that are automatically dropped from the calculation of your CPP pension will increase

6. You will be able to begin receiving your CPP retirement pension without any work interruption

How will the CPP Changes in 2012 directly affect you?

Individuals who are Employed and/or Self-Employed

Now that you know what CPP changes in 2012 are, it’s crucial that you understand exactly how they are going to affect your personal income taxes. The changes will affect individuals who are between the ages of 60 and 65 and are working and receiving the CPP retirement pension by requiring them to contribute to the CPP. If you are an employee or are self employed, Canada Pension Plan contributions are mandatory until the age of 65.

If you are an individual between the ages of 65 and 70, and are either employed or self-employed, CPP contributions will continue to be deducted from your pensionable earnings until or unless you choose to stop contributing.

Employers

Employers also need to be aware of the CPP changes in 2012 and how they will change their corporate accounting and bookkeeping.  Employers must withhold and remit CPP deductions on pensionable earnings for all employees aged 60 to 65 and they must also withhold CPP deductions on pensionable earnings for all employees aged over 65 to 70 unless they have elected to stop contributing to the CPP.

As an employer, it is your responsibility to know your employees’ ages and birthdays, as well as ensuring that you see proof that your employee is receiving a CPP retirement pension. Under the new regulations you must also check if the employee has previously filed to stop contributing to the CPP with a previous employer.  If your current employee has filed in the past to stop contributing, you must request a copy of the filing for your records.

At our Vancouver accounting and bookkeeping services firm we are constantly on top of new updates to tax requirements in Canada. If you’re not sure if things have changed or what the changes will mean to you, contact our accounting and bookkeeping services office today to ensure that you’re informed. We can help you with all of your personal income tax, corporate tax, as well as your Vancouver accounting and bookkeeping needs.

In Canada, filing requirements are based on residency rather than citizenship. That means that if you live in Canada, you pay taxes, but if you’re a Canadian citizen living abroad, you’re not required to.  This isn’t the case in the U.S and that has caused some confusion and difficulty for U.S. citizens who live in Canada. If you’re a U.S. citizen living in Canada then you are required to file two sets of tax returns each year: a Canadian return because you’re living in Canada and a U.S. return because you’re still a U.S. citizen. Fortunately, this doesn’t necessarily mean that you will have to pay U.S taxes in Canada as there are several mechanisms that you can use to make sure that you’re not doubly taxed. Making sure that you know what they are can help save you some money and difficulties.

Earned Income Exclusion

You may be able to exclude up to $85,700 from income for U.S. tax purposes by completing Form 2555 and attaching it to your return. Form 2555 is a special form excluding foreign earned income from taxation in the United States.

Treaty Benefits

If you receive Social Security benefits from the U.S., these benefits are not taxable in the U.S. They are taxable only in Canada. You may claim a 15% deduction on Line 256 of your Canadian tax return.

Foreign Tax Deduction or Credit

By claiming a foreign tax credit on your U.S. return for taxes you are required to pay to Canada, you can also help to avoid paying double taxes. To claim the credit, you must complete Form 1116 and attach it to your U.S. tax return. You’re also able to claim the Canadian taxes you paid as an itemized deduction.

As a Vancouver Accounting and Bookkeeping firm, we are experts on issues surrounding taxes for U.S. Citizens living in Canada. While this information will help to keep you informed about your own tax filing requirements, it doesn’t mean that we recommend filing yourself. If you’re a U.S. citizen living in Canada we find that filing two sets of returns can be a frustrating (and sometimes difficult) process. Why not contact us and learn how we can help you file your U.S taxes in Canada and save yourself a headache?

Taxable or Non-Taxable? People don’t really know what’s exactly going on with the Harmonized Sales Tax. Here is a table to see what is taxable.

Source: “Harmonized Sales Tax in Canada British Columbia Edition” prepared by BC’s CGAs.

Please read it carefully. If you still have second thoughts regarding HST, please contact Acton Accounting and Bookkeeping.

On April 6^th a massive campaign to take down the Harmonized Sales Tax  (HST) in British Colombia  was headed by former premier Bill Vander Zalm called “Fight HST” . This campaign exists to fight against Premier Gordon Campbell in order to impose a public referendum on the HST. If Vander Zalm and his army of volunteers thrive, this movement will enter in history as the citizen’s first successful initiative to force BC to hold a referendum.

We all know this won’t be easy: the volunteers have to collect 10% of registered voters in each of the 85 provincial ridings for the petition within the next 90 days. In other words, they need 300,000 signatures to push back the tax reform.

What exactly is wrong with HST?

It is obvious that the reform will have a significant impact on consumers who will pay much more taxes on products and services (which are usually free from PST).

For the same reason, HST will hurt small businesses. Businesses who, in the future, sell services outside the province within Canada will become tax collectors for the consumers’ region. This can either boost the national economy or slow it down; Business relationships between 2 provinces will have to be well-balanced if we don’t want the provinces to depend upon each other and if we want to boost Canada’s economy.

Pro-HST

The original plan was to harmonize taxes in order to attract more investments within Canada and to be able to create a significant number of jobs in the country.

According to the BC government, there are some benefits for customers:

-  Some products will stay exempt from PST, such as gasoline, children clothing, books, diapers, and other products which are currently exempt from GST will stay out the reform.

- New home buyers purchasing a house worth more than $525,000 will receive a rebate estimated at $26,000. However, the purchase of used homes will be HST exempt.

- Families with an income of less than $25,000 will receive a special HST credit.

- HST is not supposed   to improve consumers’ costs for electricity or natural gas.

Rural industries will realize that it is important to save. This allows them to invest back in local job opportunities and encourage investments in BC.

Finally, if you are a Canadian taxpayer you will be saving money thanks to the HST, because of the reduced administrative costs incurred by the PST.

Overall, we’re not here to tell you what you need to think about HST. You already know from daily newspapers that the HST is a major concern these days. If you don’t know what to think yet, you can check out the opposing sides’ websites http://fighthst.com/ and http://www.gov.bc.ca/hst/.

In my opinion, the HST is more a question of politics rather than economics.

HST by Aranda Adams

Remember: the RRSP deadline for tax year 2009 is coming soon! On march 1st 2010, it will be too late to contribute to your RRSP, even if you’re still under the contribution limit of $21.000.

But what about the tax refund on your contributions? Well, you can calculate it yourself doing the maths! Your marginal tax rate times your total contribution for the year, and that’s it!

If you don’t have any clue at all, feel free to contact us.

Better late than never…