*MAJOR TAX ANNOUNCEMENT MADE ON COVID- 19 RESPONSE by Prime Minister Trudeau on March 17*

✔ Canada Child Benefit increase by $550 per family on average to help parents with young children

✔ Emergency Care Benefit - for workers up to $900 every 2 weeks that need to stay home and don't qualify for EI

✔ Emergency Support Benefit - Government will support workers financially who do not qualify for EI and are facing unemployment

✔ Canadian Banks will be more flexible for delays on mortgage payments and other credit bills up to 6 months.

✔ Taxes will be delayed - you will have until June 1 to file income taxes, and until August 2020 to make payments

✔ Temporary Wage Subsidy - to eligible small businesses, 10% of wages for three months, to help employers keep their workers on the payroll. Not for profits and charities are included.

✔ Small businesses will be supported with Business Credit Availability Program

✔ For low-come Canadians, In May, the GST credit will be increased up to $300 and up to $150 per child

✔ Student loans- 6 months interest free pause on repayment

✔ Boosting funding for women's shelters & those experiencing homelessness

*as rules are ever fluid and changing please Listen to notices sent by Health Canada/Provincial/Local Governments.* to confirm validity.

Happy New Year!
As the last calendar year just ended,  its time to file and hand out T slips for the last tax year.
Below is a chart of upcoming deadlines to keep in mind.

CRA Deadlines - 2020

1. Enrolment in MSP remains mandatory for all BC residents. If you are not enrolled, you can submit an application at 
gov.bc.ca/MSP/applyforhealthcare.

2. Elimination of MSP does not forgive you from paying outstanding premiums owed. So make sure you are up to date with your payments for premiums due before Dec 31st, 2019

3. MSP beneficiaries must keep their MSP account information current. If your address or family structure changes, notify Health Insurance BC within 10 days. Visit addresschange.gove.bc.ca or gov.bc.ca/managingyourMSPaccount. 

For more information please visit: gov.bc.ca/MSP/premium-elimination

GST is applied on the sale of every newly constructed home. Remittance of the GST to the government is the responsibility of the seller, who's to charge the payable amount to the buyer as an addition to the purchase price. The seller is also able to claim the GST paid on expenses related to the property.

In cases where the purchased house is to be used as a primary place of residence, a partial GST rebate can be applied. The bottom line is that GST is applicable to every new home sale.

The area most people find confusing is that of renovated buildings and the applicable GST rules.

How does the CRA interpret renovation as it applies to buildings and GST? When a house has been renovated such that it looks new, what GST rule is applicable?

This blog post will try to give answers to all these questions.

We'd start off by trying to get a clear understanding of how the CRA determines the status of a house (new or old) as regards GST payment. And to do that, we'd first have to dissect and understand the meaning of a key phrase that holds all the answers we need  - substantial renovation.

What is Substantial Renovation?

A residential complex that has been substantially renovated is accorded the same GST treatment as a new building.

In this case, a residential complex is defined as a building or parts of a building that's primarily occupied by the individual owner or his/her family members.

So what does it mean to substantially renovate a building?

According to the official website of Canada, “substantial renovation” means:

"The renovation or alteration of a building to such an extent that all or substantially all of the building that existed immediately before the renovation or alteration was begun, other than the foundation, external walls, interior supporting walls, floors, roof and staircases, has been removed or replaced where, after completion of the renovation or alteration, the building is, or forms part of, a residential complex."

The website still goes on to state that:

"Generally, all or substantially all, is interpreted as meaning 90% or more."

Now, that sounds complex. Let me break it down into simpler bits that could be easily understood.

Think of a building made up of a living room, kitchen and five bedrooms. If just one or two of the rooms out of over seven or so rooms in this building is substantially renovated (such that drastic changes are made).

It doesn't matter how expensive this renovation was, the entire house won't be viewed as if it was substantially renovated. And it won't pass as a new house that needs full GST payments - as it doesn't meet the 90% or more clause.

In a similar way, if a tonne of cash was spent to renovate the roof, staircase, external walls and foundation, but much wasn't spent to renovate much of the internal part of the building, the house would still not be seen as substantially renovated. No full GST payments here too.

Apart from the percentage of rooms covered, there are also other "fair and reasonable methods" that can be applied to determine if a building has been substantially renovated. Some of which include square footage renovated, compared to the total available floor space; square footage of wall and floor space renovated, compared to total available wall and floor space; etc.

All of this information is available in an (almost) easy to understand form concerning other scenarios like conversion, mixed-use buildings, guest/granny suites, major additions zee and the likes on the Canadian official site.

Let's Help You

If you're confused about how and if GST is applicable on a property being developed for resale, I would be happy to help. Call 778.801.5789 or email info@bloomaccounting.ca

If an employee worked on a statutory holiday, does he/she receive statutory pay?

The answer is not always, and depends if the employee is eligible. 

Statutory Pay Eligibility

In order to qualify for statutory pay rates both of these conditions must be met:

1) Must have been employed for at least 30 days before the statutory holiday; AND

2) Must have worked at least 15 of the 30 days before statutory holiday

For example, a part-time employee who worked less than 15 days out of the 30 days before the holiday and ended up working on the statutory holiday would be paid at normal rates and not qualify for statuatory rates.

How Much is Statutory Pay?

All eligible employees receive an average day's pay regardless if they worked on the statutory holiday. So if they did not work on the statutory day, they receive a day of paid time off. 

If an employee worked on the statutory holiday, he/she should receive an average days pay PLUS 1.5 times wages for the day.

For example if Margaret's regular rate is $20 / hour and she met the eligibility requirements above. On Canada Day she worked 8 hours.

Her Statutory Pay is calculated as follows:
$160 (average days pay) Plus $240  (8 hours x $30 ($20 x 1.5)) = $400 
Works out to be $50 / hour, or 2.5 Times Regular Pay

List of Canadian holidays in 2019

The British Columbia Provincial Sales Tax (PST) is a retail sales tax. It is charged on most goods and services that are acquired, purchased or brought into the province of British Columbia. 

Formerly called the Social Services Tax (SST), it applies to the purchase of both old and new products or services in BC. If a resident of BC buys or leases taxable goods from outside BC, the PST gets applied (and payable) when it is brought into BC.

In this blog post, we will be explaining how the PST applies to real property contractor within the construction industry in BC. If you are a contractor or subcontractor in the construction industry in BC, this is for you.

When done reading this blog article, you will be well informed on what the PST is all about, how it is applied, and how to go about it.

Before we take a deep dive into the meat and potatoes of this article, let us first define some key terms that relate to the BC PST.

What is Real property?

Real property is a piece of land or anything that is affixed to land, such that it becomes an integral part of that land (real property) afterwards. Typically, this includes structures, buildings and items such as equipment and machinery that are attached to structures and buildings via a means other than their weight.

Who is a Contractor?

According to the BC bulletin for real property contractors, anyone who engages in the supply, fixing or installation of goods that becomes a part of a real property is seen as a contractor.

This definition applies to all subcontractors and contractors alike within the construction industry. The rule of thumb to follow in determining if you are deemed a contractor (that’s duty-bound to pay PST) is a simple one.

If you check any of the boxes below, then you are a contractor:

• Supply goods and render installation services on said goods, such that they become part of real property, and…
• Supply goods in the line of providing you services to a client, such that it becomes a part of real property. Examples are electricians, plumbers, carpenters, fence builders, roofers, window installers, painters, etc.

Some other examples of contractors who are duty-bound to pay PST in BC are:

• Excavators
• Foundation contractors
• Kitchen installers
• Heating system installers
• Sheet metal contractors
• Siding contractors
• Sundeck builders
• And much more…

How Does PST Apply To Contractors?

As a contractor or subcontractor, in the course of rendering your services to clients, you are viewed as the end user of the materials being used to fulfil the contract. As a result of this, you are to pay the PST on such taxable goods - and NOT charge your client PST.

You are also mandated to pay PST on taxable goods acquired and used for fulfilling contracts on real properties that are outside of BC.

When Do you Collect PST?

There are specific scenarios where you are not the end user and must collect PST on taxable goods. Listed below are some of those scenarios:

• If you install goods that do not become an integral part of real property. An example of this is supplying and installing a potted plant for a client in his building or structure.

• If you are a contractor, who sells goods without installation services, that is, you run a retail or wholesale facility that solely focuses on the resale of concerned goods.

How to Pay PST

You can remit the PST you owe, as well as those charged to clients, to the government through either of the following means:

• Online using eTaxBC
• Through your bank
• At a government office
• By mail or courier

You can use any of the channels listed above to remit your PST to the government if your business has $1.5 million or less in total Canadian lease and sales volume for the year in view.

For sales volume above that, the payment must be made electronically.

Need help filing? Call us at 604.801.5789.

The T5018 is an annual information return that is used by the Canada Revenue Agency (CRA) to stop or mitigate underground economic activities within the construction industry in Canada. 

Who Files a T5018 Slip?

The T5018 information return is to be filed by any corporation, partnership, trust or individual, that has construction as its source of primary business income. If your business generates more than 50% of its business income through construction activities, then you are required to file a T5018 information return.

Additionally, in a year, if you have made payments for construction services above $500 to subcontractors (or received credits from them), then you are also mandated to fill the T5018 slip. 

Process for Filing an Information Return Slip

Residency status determines the specific information slip that’s to be completed.

Subcontractors who are residents of Canada are required to report contract payments on a Contract Payment Information Return. This information return consists of a T5018 slip and summary, and it covers construction services executed within and outside of Canada.

Subcontractors who are not Canadian residents are to complete the T4A-NR information return, which includes a T4A-NR summary and slip.

Regardless of the information slip you are to file, it can be done either by yourself or your accountant on the CRA website. It can be done via the My Business Account portal or Represent a Client portal respectively. You can file as many slips as needed via these portals on the CRA site.

When Are You to File the T5018 Return Information?

You can file the T5018 on a fiscal-year basis, or calendar-year basis. Regardless of the reporting cycle you choose, the return is due six months post the reporting period.

If you want to make changes to your current reporting period, you will need approval from the CRA.

Should your business stop operating, you are required to file the information return within 30 days post-closure of the business.

What Are the Penalties for Not Filing Your T5018 Return Information?

There are strict penalties for late submission or failure to submit your return information after the expiration of the reporting period.

Each slip is counted as separate information return, and the CRA will penalize you based on the number of slips submitted late - or not submitted at all. The number of late days is used to calculate the penalty fee.

Interest will continue to accrue on the penalty sum until it is paid in full.

Additionally, any contractor that cooperate with a subcontractor to conceal financials, to avoid taxes, could face criminal charges. They could also be penalized with fines up to 200% of the taxes they tried to evade.

Conclusion

The T5018 is the primary means the Canada Revenue Agency (CRA) uses to track financial activity between employers and subcontractors to ensure that all earnings and taxes are paid correctly and on time.

If you need help with filing T5018 forms, feel free to contact us at 778.801.5789 or email to jluk@bloomaccounting.ca

Employer Health Tax  101

If you are a business in BC, you may have received a notice to register for the Employer Health Tax by May 15, 2019.

First off this only applies to businesses with $500K gross annual payroll or more in the last calendar year. 

If you run multiple businesses, note that the $500K threshold is shared amongst associated businesses. 

How to Register?

To Register: Visit the Etax BC log in page (same page you would log in to file PST) and you will find a link to register for Employer Health Tax. 

How Much is the Tax?

For every $1 above $500K, expect to pay 2.925% up to payroll of $1.5mil.
For every $1 above $1.5M, expect to pay 1.95%

Much like corporate tax, installments are required to be made if EHT is more than $2925.
In other words, if you have more than $600K in gross annual payroll, you will need to make quarterly installments. 

Here's a link to the Employer Heath Tax Calculator

CRA Deadlines in a Quick Chart - 2019

Wishing you all a Healthy, Happy & Prosperous Year!