D1 3 PayASUG_SAP 2010 CPA based_with answer

Canada Revenue Agency
Americas’ SAP Users Group (ASUG) Conference
Montreal, October 2010
 Susan Sparling-McGinley
 Dian Hardiman
Today’s Topics - Susan
 Information Returns Program Update
 Changes to T4 Web Forms
 Pensionable and Insurable Earnings Review
Program Update
 T4A Redesign
Information Returns Program Update
Filing method
Information slips
filed in 2009
Information slips
filed in 2010
10% (13.9 million)
65% (94.7 million)
83% (121.5 million) 30% (43.4 million)
7% (10.4 million)
5% (8.1 million)
Information Returns Program Update
(T4 and T4A Internet Filed)
Tax Year
T4 slips
6.7 million
13.1 million
T4A slips
1.2 million
6.4 million
T4 Web Forms
Online, interactive
No software required
File 1 to 6 original,
amended or cancelled
T4 slips and summary
T4 Web forms:
Validates data in real-time
Calculates totals for T4
Print T4s for employees
Pensionable and Insurable Earnings
Review (PIER)
2010 Program Results
 119,848 PIER cases were generated containing
456,802 slips.
 21,362 cases were intercepted through the
merge process containing 199,470 slips.
 3,539 cases with 91,129 slips were removed
from the deficient listings without employer
contact as a result of the PIER merge macro.
Pensionable and Insurable Earnings
Review (PIER)
Development Update
 PIER on My Business Account
• For January 2012 we are planning to allow employers
with up to ten slips on their PIER report to view and
respond to their PIER report online
 Pensionable and Insurable Earnings
• Beginning January 2012 employers should complete
the pensionable earnings (box 26) and insurable
earnings (box 24) on the T4 slip at all times.
T4A Redesign
The 2010 version of the
T4A slip is now available
on the CRA Publications
T4A Redesign
When to use the new slip
 You can now use the new slip to report T4A information.
 You may still use the 2009 version of the slip until the end
of 2010, however, it is only available electronically.
Retiring allowance amounts
 Moving the reporting from the T4A slip to the T4 slip
Electronic filing
 XML amount tags currently in use will continue to be valid
during 2011
T4A Redesign
 You can use the current or the new version of the T4A
slip to complete an Amendment
 As of January 2011, the new slip and codes should be
New T4A codes for 2011
 Our data capture systems will be modified and fully
operational January 2011
 You can use the current or the new version of the T4A
 For 2011 and going forward, use the 2011 codes
Today’s Topics – Dian
 Transit Passes
 Non-Cash Gifts and Awards Policy
 Overtime Meals or Allowances
 Municipality or Metropolitan Area
 Education Benefits – Family Members
Transit Passes
Policy: (effective January 1, 2010)
No taxable benefit when:
 Transit passes are provided to employees (or retired
employees) working directly in transit operations for their
personal and exclusive use.
Taxable benefit when:
 Free or discounted passes are provided to:
• Employees’ family members.
• Municipal employees (and retired employees) not working
directly for transit operations.
• Pass is other than ferry passenger (walk-on) fares.
Transit Passes
 Loretta works as a
secretary in the mayor’s
office in Victoria.
 Her employer provides
her with a free vehicle
transit pass for the local
Which is correct?
a) No. This pass is for her
personal use and not for
a family member.
b) Yes. She does not work
for the transit authority.
c) Yes. It is a vehicle pass.
 Is it a taxable benefit?
Correct answers
 There are two correct answers b) and c).
 The pass would be a taxable benefit for Loretta
because she does not work directly for the transit
 If Loretta worked directly for the ferry company,
the vehicle pass would still be a taxable benefit
to her because it is not a passenger or walk on
Non-Cash Gifts and Awards
Policy: (effective January 1, 2010)
An employer can give tax free:
1. An unlimited number of non-cash gifts and
awards per year.
total Fair Market Value (FMV) of $500 or less.
2. One anniversary/long service award once
every 5 years.
total FMV of $500 or less.
Non-Cash Gifts and Awards
Applies to both categories:
 There is a $500 exemption.
 Only the amount above $500 will be taxable.
 FMV will determine whether exemption has been
 Items that have a small or nominal value are not
included when calculating the gifts and awards
Non-Cash Gifts and Awards
What is not included in the policy:
 Cash or near cash gifts and awards (i.e., gift certificates)
 Performance-related rewards (i.e., sales targets)
 Employer-provided social/special events
 Loyalty points
 Reimbursements
 Hospitality rewards
 Disguised remuneration
 Manufacturer provided gifts and awards
 Gifts or awards provided by a social committee that is not controlled
or funded by the employer
 Gifts or awards given to non-arm’s length employees or related
Non-Cash Gifts and Awards
1. Your employees receive an annual anniversary
award valued at $150.
2. Every five years, employees receive a long
service award, valued at $750.
What is the tax treatment of these awards?
Correct answer
 The annual awards in 1. are all taxable because
an employee may only receive one anniversary
award once every 5 years.
 $500 in 2. is exempt under the Long Service
Awards policy and the remaining $250 is a
taxable benefit and should be e remaining $250
is included in the employee's income.
Did you know …
The CRA has developed an interactive
questionnaire to help employers determine how
items they give their employees should be treated
under our Gifts and Awards and Long
Service/Anniversary Awards policies.
Overtime Meals or Allowances
No taxable benefit if:
 The employee works two or more hours of overtime
before or after his shift; and
 The overtime is infrequent or occasional in nature:
 Generally less than three times a week.
 We will allow more on occasional basis to meet workload
 The value of the meal or allowance is reasonable.
 Up to $17.
Overtime Meals or Allowances
In the fall (2009), we changed our position in one
Example 2 - Meal allowance is not a taxable benefit
Phillip works in the shipping department of a mail order
company. The last two weeks in each month, a predicted
increase in orders causes him to work two nights of
overtime at the end of his regularly scheduled hours.
Phillip’s employer provides him with a meal allowance on
those evenings.
Overtime Meals or Allowances
 An employee works 3
hours of overtime once
a week for 3 weeks.
 Per his collective
agreement, the
employee is paid a $15
meal allowance.
 The employee brings a
meal from home.
 Is the allowance
Which is correct?
a) No. The allowance is
reasonable and the
employee only works
overtime once a week.
b) No. Because the
allowance is paid under
a collective agreement.
c) Yes. The employee
receives cash and no
requirement to purchase
a meal.
Correct answer
 The correct answer is a) No.
 The allowance is reasonable and the employee
only works overtime once a week. Since the
conditions in the policy are met, the $45 does not
have to be included in the employee’s income as
a taxable benefit.
 Nothing in the policy says the allowance has to
be used to purchase a meal on that evening.
That being said, there is sometimes a fine line
between a non-taxable allowance and additional
Municipality or Metropolitan Area
A meal allowance for travel within the municipality
or metropolitan area is not taxable if:
 The allowance is reasonable;
 The purpose of the allowance is to ensure the efficient
performance of the employee’s duties, and
 It is not an alternate form of remuneration.
** This policy does not apply to motor vehicle
Municipality or Metropolitan Area
Example 1:
 Your manager inspects and approves installed
security systems.
 He works from 8 a.m. until 4 p.m. each day.
 On Tuesday, he has a late afternoon inspection
and will receive a $15 meal allowance.
 Is the $15 a taxable benefit?
Correct answer
 The correct answer is YES.
 It does not appear that the meal allowance is
provided to allow the employee‘s duties of
employment to be completed in a more efficient
manner in the particular circumstances (which is
an important condition in the policy).
 It would appear the meal allowance is paid
because the employee is not able to get home
from work at his usual time.
Municipality or Metropolitan Area
Example 2:
 Andy repairs hydro lines.
 Today he is working an
hour away from the office
but within the city limits.
 His employer will pay him
a $25 meal allowance.
 Is this a taxable benefit?
Which is correct?
a) No. Andy uses the
money for lunch
because it’s too far to go
back to the office.
b) Yes. The $25 meal
allowance is not
c) Yes. He is not travelling
outside the city limits to
perform his duties.
Correct answer
 The correct answer is b) Yes. It is our opinion that $25 is
not a reasonable meal allowance for purposes of this
 Income Tax Rulings indicated in 2009-0333541E5 that for
the purpose of this administrative policy the CRA will
generally consider up to $17 for the meal portion of any
travel allowance as reasonable.
 This dollar value is taken from the overtime meal /
allowances policy.
 Even though a) would be correct by itself, it is only one of
the conditions that the employee has to meet. Because
the employee has to meet ALL conditions and doesn’t,
the other conditions no longer need to be considered.
The allowance will be a taxable benefit to Andy.
Education Benefits - Family Members
 Scholarships, bursaries, or tuition fees for
employee family members are not taxable to the
employee if for post-secondary education.
 Employers report the FMV on a T4A slip for the
family member.
Education Benefits - Family Members
 Your company offers
educational assistance
for your employee’s
 This money helps the
employee pay for private
secondary school
education for his child.
 Do you…
Which is correct?
a) Report the payment on
the employee’s T4 slip
as a taxable benefit?
b) Report the payment as
scholarship income on a
T4A slip in the student’s
c) Not prepare a slip
because the child can
claim the scholarship
Correct answer
 The correct answer is a) - Include the payments
on the employee’s T4 slip as a taxable benefit.
 If you provide scholarships, bursaries, or tuition
to your employees’ family members who attend
elementary or secondary schools, the FMV of
these benefits are still a taxable benefit to the
employee, and you have to include the amounts
in the employee’s income.
 The new administrative position only applies to
post secondary education.
Did you know …
In 2008, employers reported $15.7 billion in
taxable benefits on T4 slips.
$ 480 M - Housing, board and lodging (code 30)
$ 438 M - Travel in Prescribed Zone (code 32)
$ 889 M - Personal Use Employers Auto (code 34)
$ 80 M - Interest free/low interest loans (code 36)
$ 5.9 B - Security/Stock options (code 38)
$ 7.9 B - “Other” (code 40)
Did you know …
In 2012, CPP has to be deducted from employee’s
wages up to age 65 even if the employee is
receiving a CPP retirement pension.
Did you know …
 Benefit payments from a wage-loss replacement
plan are no longer pensionable.
 This change is based on a Federal Court of
Appeal decision for the Toronto Transit
Commission in January 2010.
Simplified logbook for vehicle expenses
 On June 28, Minister Ashfield announced a new
simplified logbook method that a business can
use to keep track of business travel.
 Not intended for calculating a taxable benefit for
the personal use of an employer provided or
employer leased motor vehicle (including
 It is for business persons who use a vehicle in a
business and claim motor vehicle expenses
relating to the business travel or commercial
activity OR input tax credits on GST/HST.
True or False?
Gift certificates and gift cards are ALWAYS taxable.
The correct answer is True.