The recent Federal Budget did not provide any new tax relief for the average business
owning taxpayer. The Finance Minister did reiterate all the previous years tax cuts and
additional indexing. A reminder that the small business tax rate threshold for Ontario
corporations will be rising to $280,000 for 2002.
The Budget did announce a tax deduction measure for apprentice mechanics tool
expenditures. Apprentices will be able to deduct from income the amount that their tool
costs exceeds 5% of their earned income or $1,000, whichever is greater. For
example, if an apprentice earns $30,000 per year and purchases $5,000 of tools the
apprentice can deduct $3,500 ($5,000 -$1,500) from their earned income for the year. This
deduction would save the apprentice approximately $875 of taxes. The apprentice will also
be able to claim an input tax credit for GST paid on tools.
STATUTORY (PUBLIC) HOLIDAYS
The new Employment Standards Act was passed into law in September. We had outlined the
major changes for Ontario Employers but unfortunately did not include the significant
change regarding Statutory Holidays. This change was clarified on the Ministry Of
Labours web site on November 27, 2001.
Under the new legislation employees are immediately eligible for Stat Holiday
Pay. For example, if you hire a part time employee for one week in the Christmas season on
December 20, you are required to pay Stat Holiday pay for Christmas and Boxing Day. The
only method to avoid this payout is to terminate the employee Dec 24 and hire them back
JOINT HEALTH AND SAFETY COMMITTEE
Under the Occupational Health & Safety Act companies that regularly employ more
then five people are required to have a Health & Safety representative. Companies that
regularly employ more then 20 but less then 50 people are required to establish a Joint
Health And Safety Committee. This committee must be comprised of at least two people, one
of which must be selected by the "employees" and not have management authority.
These committee members must enroll and pass the various safety certification courses.
Companies with more then 50 employees are required to establish Joint Health And Safety
Committee with a minimum of four people.
Both the Ministry of Labour and the WSIB have been actively reviewing companies to
determine compliance with the Occupational Health And Safety Act. There are substantial
fines for the company and the directors for non compliance. We recommend that each
of our clients review their safety policies and confirm compliance with the act. For
further information please see the web site at
EQUITY IN EDUCATION TAX CREDIT
A reminder that parents will be able to receive a tax credit for children enrolled in
private schools. For 2002 the tax credit will reimburse 10% of eligible fees up to $350
(child 6 and under) or $700 (children over 6). You should contact your school
administration to request a completed statement of information in order to
claim your credit on your 2002 personal tax return.
Unfortunately the vehicle deductions for 2002 remain the same as 2001. Kilometres can
be deducted at $.41/km for the first 5,000 km per year and $.35/km for additional km. The
capital cost limit for passenger vehicles remains at $30,000 and the monthly maximum lease
deduction is $800/month.
For further information please visit the FAQ section at
PAYROLL AND T4 INFORMATION
Simply accounting users should make a separate backup diskette of their payroll
information prior to changing the system using date to January 1, 2002. You can prepare
your T4's anytime in the new year by selecting the previous year T4 file option.. Please
note that for 2001 T4 filing you can use the internet option but it appears as though you
would be required to enter your information manually in order to submit the T4 Summary and
related T4's. For clients with payroll systems including Simply Accounting users it would
be much simpler, and more accurate, to print the T4's and T4 Summary and mail this
information to Revenue Canada.
For 2002 the Federal personal exemption amount has increased to $7,634 and the
Provincial personal exemption amount has increased to $7,686. Please adjust your payroll
ledger information accordingly.
For 2002 the CPP deduction rate has increased to 4.7% and the maximum earned income
amount has increased to $39,100. For 2002 the EI rate has decreased to 2.2% while the
maximum earned income amount has remained constant at $39,000.