Josh Martin
Intermediate Accountant
Summer 2024 Newsletter
June 27, 2024
Accounting
Tax Updates
Agriculture Updates
Please note that while this section is agriculture-specific, the general business and tax topics in other sections contain important information that is also applicable to agriculture clients. Please ensure you consider the remainder of the newsletter.
Miscellaneous Business Updates
Human Resources Solutions
Wealth Management
Firm News
Please Note Our Summer Hours
The offices of Ward & Uptigrove will close Fridays at 12:00pm from July 5 through to August 30, 2024
Increase to the Capital Gains Inclusion Rate – Federal Budget 2024
This measure has received the most publicity since its announcement in the Budget. Budget 2024 proposed to increase the inclusion rate for capital gains realized on or after June 25, 2024 from one-half to two-thirds.
For individual taxpayers, the first $250,000 of capital gains for a particular year will continue to have an inclusion rate of one-half.
Some other important notes on this measure:
- For individual taxpayers, the $250,000 limit is an annual limit, not a cumulative limit
- For individual taxpayers, the $250,000 is per taxpayer, not a family unit
- For individual taxpayers, the $250,000 is not prorated for the short year in 2024
Draft legislation for this measure was released on June 9, 2024.
Up to June 24, 2024, Ward & Uptigrove worked with our clients to identify situations where it was advantageous to realize capital gains before the June 25, 2024 tax change.
On a go-forward basis, some strategies to consider include the following:
- For individuals, where possible, planning to use the lifetime capital gains exemption (described below);
- For personally held property, maximize the $250,000 annual limit by holding property jointly with your spouse (this would need to include beneficial ownership as well, not just title ownership);
- For personally held property, maximize the $250,000 annual limit by selling fractional interests over multiple years; and
- To access the $250,000 annual limit for individual taxpayers, corporate investments may be able to be moved to personal ownership in certain situations (for example, where a Company owes significant amounts to a shareholder).
Lastly, it is important to note that this change may now have a larger impact when a taxpayer dies, and capital property is not left to a spouse or common-law partner. In these situations, it is easier to exceed the $250,000 annual limit and thus this change may have a significant tax consequence.
Increase to the Lifetime Capital Gains Exemption (“LCGE”) – Federal Budget 2024
Where an individual taxpayer sells qualified small business corporation shares (i.e. active operating businesses that operate through a corporation and that meet certain tests) or qualified farm property, the individual may be eligible to claim the LCGE.
The benefit of the LCGE is that, similar to the principal residence exemption, capital gains taxation can be avoided (within limits) if certain requirements are met and subject to other considerations such as alternative minimum tax and impact to income tested benefits.
The amount of the LCGE is $1,016,836 in 2024 and is indexed to inflation. The Budget proposes to increase the LCGE to $1,250,000 (increase of $233,164) for dispositions that occur on or after June 25, 2024. Indexing of the LCGE will resume in 2026.
With the proposed increase to the capital gains inclusion rate, the tax savings from the LCGE has also increased. At the full $1,250,000, tax savings are approximately $446,000 in Ontario for a top rate taxpayer (excluding Ontario surtaxes and alternative minimum tax considerations).
As such, where applicable, it will be even more important to ensure your business is structured in such a way that you can access the LCGE on the eventual sale of your business.
Carbon Tax Rebate for Canadian-Controlled Private Corporations (“CCPC”) – Federal Budget 2024
What is it?
The official name for this proposed measure is the “Canada Carbon Rebate for Small Businesses”. The “small business” reference appears to be based on the number of employees of a business – being 499 or less.
The objective of this rebate is to return a portion of fuel charge proceeds from a province to eligible businesses, as outlined below. Ontario is one of the designated provinces for this rebate.
Who is eligible?
To be eligible for the retroactive payment with respect to the 2019-2020 to 2023-2024 fuel charge years, (a fuel charge year runs from April 1 to March 31), a CCPC must:
- Have employed one or more persons in a designated province in the calendar year in which the fuel charge year begins
- Have had 499 or fewer employees throughout Canada in that calendar year
- File a tax return for its year ending in 2023 no later than July 15, 2024
CCPCs do not have to apply for this rebate. Once the Minister of Finance has specified the payment rates for each designated province for the applicable fuel charge year, the CRA will calculate and automatically issue the rebate amounts to eligible CCPCs.
How the rebate will be calculated?
The rebate amount will be equal to the number of persons employed by the eligible CCCPs in a designated province in that calendar year, multiplied by a payment rate specified by the Minister of Finance for the designated province for the corresponding fuel charge year.
Further CRA Comments
The CRA last updated its website for this rebate on June 21, 2024 with the following statements:
• “We will not be able to provide estimated rebate amounts until the Minister of Finance sets these payment rates
• In addition, it is too early to determine the exact distribution date. We will provide updates on the timeliness in the coming months”
Ontario Made Manufacturing Investment Tax Credit (“OMMITC”) – Ontario Budget 2023
What is it?
The OMMITC is a 10% refundable corporate income tax credit for eligible corporations (defined below) on qualifying investments (also defined below) in buildings, machinery and equipment for use in manufacturing or processing in the province of Ontario. The stated policy objective for this credit is “to help local manufacturers lower their costs, invest in workers, innovate and become more competitive.”
Who is eligible?
An eligible corporation must meet the following three requirements:
• It is a Canadian-controlled private corporation throughout the taxation year
• It is not exempt from Ontario corporate income tax for the taxation year
• It carries on a business in Ontario in the taxation year through a physical permanent establishment in Ontario (such as an office, a factory or a workplace)
What investments qualify?
Property that is included in the following capital cost allowance classes:
Class 1: Buildings acquired, constructed or, renovated and used for manufacturing or processing in Ontario that become available for use on or after March 23, 2023 and that are eligible for the additional 6% capital cost allowance. In order to qualify for this additional 6% rate, at least 90% of the floor space of the building must be used in manufacturing and processing and the building must have been acquired after March 18, 2007.
Class 53: For machinery and equipment to be used in the manufacturing or processing of goods in Ontario that are acquired and become available for use on or after March 23, 2023. For property acquired after 2025, qualifying investments will be property described in paragraph (a) of Class 43.
How the tax credit is calculated?
The tax credit for a taxation year is 10% of eligible expenditures for qualifying investments, up to a maximum of $2 million. The qualifying expenditures have a limit of $20 million in a tax year that is prorated for short taxation years and is shared among associated group of corporations.
How to claim the credit?
An eligible corporation can claim the credit for qualified investments acquired during a particular taxation year by completing Schedule 572, Ontario Made Manufacturing Investment Tax Credit, with its corporate income tax returns for such taxation year.
W&U comments
Schedule 572, and therefore the ability to claim the credit, only became available on May 21, 2024. During summer 2024, Ward & Uptigrove will be reviewing the 2023 and 2024 corporate income tax returns for our clients to identify clients that may have been eligible for this credit. In those situations, we will be amending the applicable corporate income tax returns to claim the credit.
Furthermore, there is the opportunity to combine the OMMITC with the Ontario Regional Opportunities Investments Tax Credit that we have covered in prior newsletters.
Capital Gains Inclusion Rate and Lifetime Capital Gains Exemption Changes
Please refer to the article in the tax section of our newsletter for information
here. Navigating how the budget changes could affect your operations is specific to your situation. To discuss impacts on your operation, please contact your accountant.
Program and Tax Credit Updates
- Poultry and Egg On-Farm Investment Program (PEFIP) is a 10-year program (ending March 31, 2031) to help supply-managed poultry and egg producers adapt to market changes resulting from the implementation of international trade agreements. Additional information can be found here. If you require assistance with the registration process or a project application, please contact your accountant.
- ACC loans – the interest free limit of the Advance Payments Program has been set at $250,000 for the 2024 program year. Further information on the Advance Payments Program and other loan programs offered by ACC can be found here or contact your accountant.
- Return fuel charge proceeds to Farmers tax credit – the 2023 payment rate is set at $1.86 (2022 - $1.73) per $1,000 in eligible farming expenses. The 2024 rate has not yet been announced.
- Regional Opportunities Investment Tax Credit (ROITC) temporary increase in the rate (from 10% to 20%) for qualifying expenditures ended December 31, 2023. ROITC claims are now calculated at 10%. This credit applies to the construction, renovation or acquisition of eligible commercial and industrial buildings in certain regions.
CRA Key Interest Rates
The rise in interest rates has resulted in the Canada Revenue Agency (CRA) increasing the following interest rates:
- The interest rate on overdue taxes is currently 10%
- The interest rate used to calculate taxable benefits to employees and shareholders from interest free and low-interest loans is currently 6%
It is important to note that the interest the CRA charges is not tax deductible, making the interest more punitive. To avoid interest charges, you must pay all amounts owing on time, including instalments to the CRA.
HST New Housing Rebates
GST/HST New housing rebates allow individuals to recover some of the HST paid on purchasing, building or substantially renovating a house. There are separate rebate applications dependent on the intended use of the home; whether the buyer will be living in the home or renting to tenants. In addition, there are several application types which consider the structure of the purchase. Determining which application applies to your situation can require some analysis to ensure the correct application is completed. If you are currently building a home or considering building a home as an individual, a partnership or a corporation, reach out to your accountant to discuss your situation and eligibility for the rebate.
GST/HST Electronic Filing Requirement
For reporting periods that start in 2024, registrants are required to file returns electronically with the exception of charities and some select financial institutions. CRA will levy a penalty of $100 for a first offense of non-electronic filing and $250 for each subsequent return not electronically filed. This penalty will apply even if the return is a nil return or in a refund position. As a transition measure – CRA is waiving penalties for filing periods beginning on or after January 1, 2024 and before April 1, 2024.
Registrants are encouraged to use the options available to them:
- MyBusiness Account, registration requires a CRA security code to be mailed which can take up to 10 days to receive;
- NETFILE, requires user to have an access code or access to a previously filed HST return;
- TELEFILE, cannot be used for complex HST returns and requires an access code;
- Financial Institutions, most banks offer filing and payment options for business taxes;
- Authorized Representative, if Ward & Uptigrove is authorized on your CRA account, we can file HST returns on behalf of registrants.
Please reach out to your accountant if you have concerns to find the best solution for your business.
WSIB Electronic Filing Requirement
Similarly, WSIB has required electronic filing for reporting premiums. Employers are encouraged to use the options available to them:
- Online Services, can be set up quickly;
- MyBusiness Account, registration requires a CRA security code to be mailed which can take up to 10 days to receive;
- Financial Institution, most banks offer filing and payment options for employers;
If electronic filing is not an option for you,
contact WSIB directly to request an exemption.
HR Updates
HR & Health & Safety Legislative Updates
| Who is affected? | Effective Date | Description of change | What do I need to do? | |
|---|---|---|---|---|
| Federally regulated employers | 15-Dec-23 | Employers must provide menstrual products, including clean and hygienic tampons and menstrual pads in each bathroom or other private and accessible location controlled by the employer. They must also provide a covered container for the disposal of menstrual products in any toilet and stall. These products are to be provided at no cost to the employee. | Provide menstrual products in each bathroom or other private and accessible location controlled by the employer along with a disposal container. | |
| Employers covered by WSIB | Jan-24 | Updates to the following documents to reflect current indexed values; 2024 index factor of 4.4%. | Be aware of increases applied in line with cost-of-living increases. | |
| · Operational Policy Manual (OPM) documents 18-01-02 | ||||
| · Benefit Dollar Amounts – Accidents from 1998 and 18-01-03 | ||||
| · Benefit Dollar Amounts – Accidents before 1998. | ||||
| Increase to all benefit rates, to keep up with recent cost-of-living increases, including: | ||||
| · Clothing Allowance – Minor Damage / Major Damage | ||||
| · Non-Professional Escort Fee | ||||
| · Guide and Support Dog Allowance | ||||
| · Independent Living Allowance | ||||
| · Meal Allowance – Breakfast / Lunch / Dinner | ||||
| · Personal Care Allowance – General /Personal / Skilled Attendant Rate | ||||
| · Bookkeeping Fees | ||||
| · Transportation Allowance | ||||
| Federally regulated employers | 01-Feb-24 | Employers are required to provide a statement of benefits to employees whose employment is terminated, which includes: | Upon termination of employment, ensure employees are provided with a statement of benefits. | |
| · Information on the employee’s rights to vacation benefits; | ||||
| · Wages; | ||||
| · Severance pay; and | ||||
| · Any other benefits and pay arising from their employment. | ||||
| Federally regulated employers | 01-Feb-24 | Increases to notice periods for individual terminations of employment: | Ensure terminated employees are provided with at least the minimum termination notice as required under the Canadian Labour Code. | |
| Continuous service completed | Termination notice | |||
| 3 months | 2 weeks (unchanged) | |||
| 3 years | 3 weeks | |||
| 4 years | 4 weeks | |||
| 5 years | 5 weeks | |||
| 6 years | 6 weeks | |||
| 7 years | 7 weeks | |||
| 8 years and more | 8 weeks | |||
| Be aware of changes to clarify the role of witness evidence in the adjudication of claims for traumatic and chronic mental stress. |
| Who is affected? | Effective Date | Description of change | What do I need to do? | |
|---|---|---|---|---|
| Employers covered by WSIB | Mar-24 | Minor revisions to clarify the role of witness evidence in the adjudication of claims for traumatic and chronic mental stress in the following: | Be aware of changes to clarify the role of witness evidence in the adjudication of claims for traumatic and chronic mental stress. | |
| · Operational Policy Manual (OPM) document 15-03-02, Traumatic Mental Stress | ||||
| · OPM document 15-03-14, Chronic Mental Stress | ||||
| Restaurant and service industry employers | 21-Mar-24 | Employers may not utilize unpaid "trial shifts, any and all work performed by a person, including through a trial period, qualifies the person as an employee under the Employment Standards Act. | Do not utilize unpaid trial shifts. | |
| Restaurant and service industry employers | 21-Mar-24 | Employers cannot make deductions from an employee’s wages or force the employee to return their wages to the employer in situations where a customer leaves an establishment without paying for goods or services (dine & dash/gas & dash). | Do not make deductions to employee wages for losses incurred from customers leaving without paying for good or services. | |
| Restaurant and service industry employers | 21-Mar-24 | Employers are required to pay employee tips or other gratuities only by cash, cheque payable only to the employee, or by direct deposit to an account chosen by the employee. | Only provide tips or other gratuities by cash, cheque payable only to the employee, or via direct deposit to an account chosen by the employee. | |
| Restaurant and service industry employers | 21-Mar-24 | If the employer has a policy in place with respect to the employer sharing in tips or other gratuities, the employer must keep a posted copy of the policy in at least one conspicuous place in the employer's workplace. | Post a copy of the policy in at least one conspicuous place in the workplace. | |
| All employers | 21-Jun-24 | Employers are required to pay vacation in a lump sum before the employee takes vacation, unless there is an agreement otherwise. | Review current payroll practices to understand how vacation pay is processed. Then review existing agreements; are current vacation pay practices outlined in employment agreements? Are these agreements current? Do other agreements exist? | |
| All employers that use recruiter/temporary help agency to support recruitment | 01-Jul-24 | Employers are required to ensure any temporary help agency or recruiter used has a valid license (even if the recruiter/help agency is located out of province – if they conduct recruitment in Ontario they are required to comply with licensing) | Verify recruiters/temp help agencies used have a valid license – if they do not have one, work with another recruiter/help agency. *W&U HR Solutions is licensed and available to support your recruitment needs. | |
| All employers | 01-Oct-24 | Minimum wage will increase from $16.55 per hour, to $17.20 per hour. | Increase employees being paid the current minimum wage ($16.55/hr) to $17.20/hr on or before October 1st. |
Did you know that HRS provides regular updates regarding legislative changes via our LinkedIn page? Click here to follow us!
Unlocking HR Resources for Canadian Agriculture Businesses
Agriculture businesses play a crucial role in feeding our nation and sustaining our rural communities. We know managing human resources can be challenging, especially for small and medium sized farms. Fortunately, there are valuable FREE resources available to support agricultural employers across Canada and specifically in Ontario.
Some resources include:
- University of Guelph Foundations in Agricultural Management
- Offered online, this management course includes eight (8) modules and is specifically for the agriculture industry. Module four (4) is specifically related to HR, titled “Managing Your Most Valuable Asset - Your People”.
- Municipality of North Perth Agricultural Labour Resources
- The Municipality of North Perth has posted a list of links to resources for both Employers and Employees. These include a guide to the Occupational Health and Safety Act for Farming Operations, Agriculture Employees Protection Act as well as the Ontario Federation of Agriculture’s Farm and Labour Safety article, to name a few.
- Many of these can be accessed for free, with the exception of a few.
- WSPS New Free Agriculture Safety Resources
- WSPS has made new resources in four (4) different languages that cover common hazards in the agriculture sector. These include mobile friendly videos and infographics in Spanish, Thai, Vietnamese and English, covering ladders and heights, safely working with machines and safely working with tractors.
- They have also created a poster that can be posted in the workplace, giving employees easy access to these videos through a QR code. Click here for the poster.
- ESA Agricultural Employees
- The Ontario Guide to the Employment Standards Act (ESA) is a website that provides an overview of the ESA and detail on the different rules and standards that apply.
- Click here for the ESA Agriculture Employees poster. This poster is to be provided to employees and posted in the workplace.
Emerging Leaders Development Program – Fall 2024 Dates
The Emerging Leaders Development Program gives you the tools to confidently and competently lead your teams and avoid common leadership mistakes. Join us as we explore the skills required to be a great leader, manager, supervisor or team lead in an interactive program designed to set you up for success.
- Monday September 16 – In-person @ W&U 9:00-4:00 pm
- Thursday September 19 – virtual via Zoom 9:00 – 12:30 pm * optional Human Resources 101
- Monday September 23 – virtual via Zoom 9:00 – 12:30 pm * optional Health & Safety 101
- Thursday September 26 – virtual via Zoom 9:00 – 12:30 pm
- Monday September 30 – In-person @ W&U 9:00 – 4:00 pm
Learn more about the program and take advantage of the early bird pricing
here.
Wealth Management Updates
Navigating the Canadian Housing Market: A Path to Homeownership with the First Home Savings Account
Buying a house in Canada has become increasingly challenging in recent years. Skyrocketing real estate prices, higher interest rates and more stringent mortgage rules have made it difficult for many Canadians to afford their first home. In this landscape, saving for a down payment can seem like a daunting, if not impossible, task. However, the introduction of the First Home Savings Account (FHSA) offers a glimmer of hope for prospective homebuyers.
Advantages of the First Home Savings Account
The FHSA is designed to help Canadians save for their first home more effectively. Here are some key benefits:
- Tax-Deferred Growth: Contributions to an FHSA grow tax-free, similar to a TFSA. This allows savings to accumulate more quickly without the drag of taxes on investment income.
- Tax-Deductible Contributions: Contributions are tax-deductible, much like an RRSP. This can provide immediate tax relief, reducing your taxable income for the year you contribute.
- Tax-Free Withdrawals: Withdrawals from an FHSA are tax-free when used for purchasing a first home. This ensures that the entire amount saved can go towards your down payment.
Rules and Regulations
Understanding the rules governing the FHSA is crucial to maximizing its benefits:
- Eligibility: To open an FHSA, you must be a Canadian resident, at least 18 years old, and a first-time homebuyer.
- Contribution Limit: There is an annual contribution limit of $8,000, and a lifetime limit of $40,000, which allows for structured and substantial savings.
- Account Duration: Funds can remain in the FHSA for 15 years, after which they must be withdrawn or transferred to an RRSP or RRIF if not used for purchasing a home.
- Accrual of Contribution Room: Contribution rooms begins accruing when you open your account. By opening your account today, you will start accruing contribution room, even if you don’t plan on contributing this year. Next year, you could contribute $16,000.
An Opportunity for Parental Assistance
The FHSA also presents a valuable opportunity for parents looking to help their children achieve the dream of homeownership. Parents can gift children the money to make their annual contributions without any tax implications. This can significantly boost the savings rate and make the prospect of buying a home more attainable. With the combined efforts of personal savings and parental contributions, accumulating a sufficient down payment becomes a more realistic goal.
Setting Up an FHSA at Ward & Uptigrove Wealth Management
At our firm, we make it easy to set up an FHSA. Our experienced advisors can guide you through the process, ensuring that you understand all the benefits and rules associated with the account. We provide personalized advice tailored to your financial situation, helping you to make the most of this opportunity. Whether you're looking to open an account for yourself or contribute to your child's future home purchase, we are here to assist every step of the way.
While buying a home in Canada may seem out of reach for many, the First Home Savings Account provides a practical solution to overcoming this financial hurdle. By taking advantage of the FHSA’s benefits and utilizing strategic savings plans, homeownership can become a more attainable goal for Canadians. Contact us today to learn more about how you can get started on your path to owning your first home.
Ward & Uptigrove Wealth Management Partners with SPM Benefits
Ward & Uptigrove Wealth Management has recently partnered with SPM Benefits, a firm with over 20 years of expertise in the group benefits & retirement business.
Together we are able to provide solutions for:
- Small to medium size businesses
- Group Benefits: various funding & risk arrangements, Health care spending accounts
- Group Retirement benefits: RRSP/DPSP/RPP/TFSA or a combination
- All types of businesses & structures including sole proprietor, family owned & multi-corporation
- Customized and niche providers
If you are a business owner interested in learning more about providing group health & retirement benefits to your employees or having a complementary audit of your existing benefits plan, please contact Laura Long, CFP at 519-291-4803 ext. 2709 or email LauraL@w-u.on.ca
We are excited to be able to provide this additional service offering to our clients.
Need Help? Contact a Ward & Uptigrove Wealth Management Representative.
519-291-3040 or email info@w-u.on.ca.
Staff Updates
We are proud to congratulate the following staff members on their development and progression into new roles.
Agriculture Department
Progressions
Business Department
Progressions
Venice Dela Sierra
Intermediate Accountant
Brendan Gilles
Intermediate Accountant
Michael Uptigrove
Intermediate Accountant
Welcome!
We are thrilled to welcome the following new staff members to our team:
Zackry Boertien
Intermediate Accountant
Annalee Horst
Bookkeeper/Payroll Administrator
Lucas Horton
Intermediate Accountant
Brennan Kuepfer
Intermediate Accountant
Ethan teBrake
Intermediate Accountant
Accounting
When contemplating the next steps for your corporate ownership and succession planning, maintaining fairness among family members is often a main priority even though all families members may not be involved in the business. One crucial aspect often overlooked is estate equalization, particularly in family-owned or closely-held businesses. Unequal distributions of wealth can lead to the business being forced to sell necessary business assets, jeopardizing the future viability of the core operations and business altogether. However, with strategic planning and the implementation of corporate life insurance, businesses can ensure equitable outcomes while safeguarding ongoing business sustainability. Understanding Estate Equalization Estate equalization refers to the process of balancing inheritances among heirs, particularly when certain assets, such as business interests, are illiquid or disproportionately valuable. In the context of corporate ownership, ensuring fair vs equitable distributions becomes more complex due to the interplay of family dynamics, business operations, sweat equity and financial considerations. Without proper planning, disparities in inheritances can cause families disputes and undermine the integrity of the business.
On April 16, 2024, the Deputy Prime Minister and Finance Minister, the Honourable Chrystia Freeland, presented Budget 2024 – Fairness for Every Generation , to the House of Commons. No changes were made to personal or corporate tax rates. Some highlights include: A. Personal Measures Increase to the capital gains inclusion rate to 2/3, however individuals will retain the 1/2 inclusion rate on the first $250,000 of capital gains annually. Increase to the lifetime maximum capital gains exemption, and two new incentives on specific types of business sales. Modifications to the proposed amendments to focus the alternative minimum tax regime on high-income individuals. B. Business Measures Canada carbon rebate for small businesses that will begin by delivering payments to eligible CCPCs for five years of carbon tax. Accelerated capital cost allowance on purpose-built residential rental properties. Immediate expensing of certain productivity-enhancing assets, including computer hardware, acquired on or after April 16, 2024. C. International Measures Crypto-asset reporting framework that will require annual reporting by crypto-asset service providers on their clients’ activities using these assets.
