Monthly Archives: March 2014

Hiring Credit for Small Business

Did you know that the 2013 tax year gave many advantages to small businesses with employees? Small businesses that increased the amount of wages paid out on T4 Slips in 2013 are eligible for the extended Hiring Credit for Small Business (HCSB), which was laid out in the 2013 budget.  This credit was designed to absorb some of the expenses paid out by smaller companies in the form of employer contributions to EI premiums.  It’s an expansion of the program that was first instituted for the 2012 taxation year, and a limited-time offer, as the hiring credit will no longer be available in the current Federal budget.

The best thing about the HCSB is that businesses don’t need to do anything to claim it – it will automatically be processed by the CRA based on the EI premiums reported on T4 slips issued!

Eligible businesses are those with total EI deductions (the Employer component) under $15,000 who show an increase in premiums paid in 2013 over the previous year. Businesses that started operations in 2013 will have their 2012 contributions calculated as $0, in order to take full advantage of the credit.

The purpose of this credit is to promote hiring of new employees, or expanding the roles of existing part-timers.  The government acknowledges that the employer contributions to EI represent a deterrent to business owners, and the HCSB has been established (and expanded) with the goal of fostering job creation.

For more information about the Hiring Credit for Small Business, visit the information page on the CRA website.

The First Time Donor’s Super Credit – Charities get a Four-Year Kick-Start

super-credit

Did You Know? The Canada Revenue Agency has some good news for charitable organizations, and for taxpayers who haven’t been taking advantage of their charitable donation tax credits in recent years.

 

Starting with the 2013 taxation year, individuals who have not claimed a charitable donation tax credit in the previous five years will receive a bonus 25% credit on donations up to $1000 that they make in any one year between now and 2017.

Without the Super Credit, a charitable donation of $700 would receive CDTC of $145 (15% of the first $200 and $29% of the remainder.)  The First Time Donor’s Super Credit raises the total non-refundable tax credit by 25%, another $175.  The total credit received for a $700 donation would be $320.

For individuals, keeping track of charitable donations pays better than it used to.  Many people make donations, but never request a receipt, or just don’t bother reporting them because they’re “small potatoes”.  Well, the potatoes will be a little larger in one year, making it a tiny bit easier to keep the government’s hand out of your pocket!

For tax preparers, the change is a single line on the tax return that calculates the credit.  There are only a couple of small things to remember about it:

1)      Like the CDTC, the FDSC is non-refundable.  The maximum donation allowable is $1000.

2)      It can only be claimed once, in the first year that the CDTC is claimed between 2013 and 2017.

3)      The Super Credit is only available for financial contributions to charity.  You cannot claim services or goods donated.

4)      Only taxpayers who have not claimed a CDTC in the previous five taxation years qualify for the Super Credit.

5)      The credit can be shared between spouses, just like the CDTC.

To use the CRA’s online calculator to see how much the First Time Donor’s Tax Credit could affect a tax return this year, visit the online calculator. For a complete description of the new credit, visit the CRA website.