John Collins, CPA, CA
Partner
2022 Year End Newsletter
December 19, 2022
Accounting
Tax Updates:
Agriculture Updates:
Human Resources Solutions
Please Note Our Holiday Shutdown
The offices of Ward & Uptigrove will be closed from 3:00 pm on Friday, December 23rd and reopening in the New Year on Tuesday, January 3rd.
Underused Housing Tax Act – New for 2022
During the year, the Government of Canada enacted the Underused Housing Tax (UHT) Act. This Act implements an annual 1% tax on the value of vacant and underused residential properties directly or indirectly owned by non-resident, non-Canadians.
Unfortunately, the UHT Act will impact all our corporate, partnership and trust clients which own residential property. Given the broad application of the UHT Act, it is surprising it has not received the appropriate attention by Canadians.
Selected key facts:
- It applies on a calendar year basis (beginning with 2022).
- Applies to a person who is the owner of residential property in Canada on December 31st of the particular calendar year.
- Residential property held personally by a Canadian permanent resident or Canadian citizen (referred to “excluded owners”) would not be subject to the UHT tax or UHT annual return.
- Residential property held by a Canadian corporation wholly-owned by residents of Canada, a partnership, or a trust (all are defined terms) would not be subject to the UHT tax but will still be required to file the UHT annual return in order to be exempt from the UHT tax. Failure to file a UHT return may mean loss of the exemption and UHT being levied on the property.
- If a UHT annual return is not filed, a late filing penalty would apply of at least $5,000 for individuals and $10,000 for other entities. This penalty is an annual penalty and is not determined based on the number of days the return is late.
- The annual UHT return must be filed with the CRA by April 30th of the following year for all types of property owners. Fiscal years of corporations and partnership do not change this due date. The due date for the UHT tax is also April 30th.
- The CRA has not yet released the required form for the annual return.
There is much more to this legislation than the selected summary above. The purpose of this article is to inform our clients of this legislation and new filing requirement. We will send an update once the Canada Revenue Agency has released the forms for the annual return.
In January, Ward & Uptigrove will start to identify our affected clients. As we cannot guarantee we will be able to identify all our clients that will be impacted by the UHT Act, please contact your Ward & Uptigrove advisor if you:
- Own residential property personally and are not a Canadian permanent resident or Canadian citizen, or
- Own residential property through a Canadian corporation, partnership or trust.
New Trust Reporting Rules - Delayed to 2023
Since 2018, the Department of Finance proposed to implement a requirement for trusts to file a T3 Trust Income Tax and Information Return and provide additional information. The proposed rules were initially expected to apply to 2021 and subsequent taxation years. Since then, these rules have been delayed twice with the new trust reporting rules now applying to trusts with taxation years ending after December 30, 2023.
Two significant parts to these new trust reporting rules are the following:
- The introduction of enhanced reporting to the Canada Revenue Agency to disclose personal information on all the parties to trusts such as the trustees, beneficiaries, and settlor; and
- The introduction of trust reporting as it relates to bare trust arrangements.
Examples of where bare trusts could exist include, but are not limited to, the following:
- Parents on title to a child’s house for mortgage financing;
- Child on title to a parent’s house for ease of transfer on death and probate reasons;
- Parents or grandparents on investment accounts held in trust for children or grandchildren;
- Parents placing children’s name on financial accounts to look after their finances should they become incapacitated, either mentally or otherwise; or
- In the case of a bare trustee corporations.
With the recent delay of implementing these new trust reporting rules, taxpayers have one more calendar year to prepare for the above changes.
It is important to note with the new trust reporting rules, there will be two new penalties to consider:
- A penalty for not providing the required information of $25 per day with a minimum penalty of $100 and a maximum penalty of $2,500.
- Where a trustee has knowingly or in circumstances amounting to gross negligence not reported or made a false statement in relation to the trust reporting requirements, such person will be liable to a penalty equal to the greater of $2,500 or 5% of the highest fair market value of the trust property at any time of the year.
If you are aware of the existence of a bare trust arrangement, please let us know as soon as possible so we can properly gather all the required information in preparation for these new trust reporting rules.
Miscellaneous Tax Matters
Some Key Numbers for 2023
Some key amounts for 2023 that have been increased due to the 6.3% indexation increase:
- Tax Free Savings Account (TFSA) annual contribution limit $6,500
- Lifetime capital gains exemption limit (non-farming) $971,190
- Federal basic personal amount $13,521
- OAS repayment threshold $86,912
*for more numbers, see the table below
Interest rates for the first calendar quarter of 2023 will be increasing to:
- 4% for the prescribed rate (this is the rate used to calculate taxable benefits for employees and shareholders for interest-free and low-interest loans)
- 6% for refund interest for individuals
- 8% for arrears and instalment interest
As of writing this article, the 2023 automobile allowance rates have not been released by the CRA yet.
Immediate Expensing Reminder
As noted in our summer 2022 newsletter, the eligibility period for acquiring eligible property by a Canadian-controlled private corporate will end on December 31, 2023. Individuals and Canadian partnerships have one additional year, being December 31, 2024, to acquire eligible property.
The eligible property must be considered available for use by the above noted dates.
Ontario Annual Information Return – Corporate – Company Key Letters
As noted during our summer 2022 newsletter, we require the company key for all our corporate clients in order to be able to continue to file the Ontario annual information return. While our administrative team has been following up with our clients during the past year regarding these letters, we are still waiting on responses from many of you. If you have not provided us a copy of the company key letter, please do so as soon as possible.
Tax-Free First Home Savings Account – New for 2023
Included in Bill C-32, which is now considered law, is the Tax-Free First Home Savings Account (“FHSA”) that was first introduced in the 2022 federal budget.
The FHSA is a new registered plan that would give prospective first-time home buyers the ability to save up to $40,000 on a tax-free basis.
Some key elements to the FHSA:
- Like a Registered Retirement Savings Plan (“RRSP”), contributions would be tax-deductible
- Like a Tax Free Savings Account, withdrawals to purchase a first home, including from investment income generated in the plan, would be non-taxable
- There will be an $8,000 annual contribution limit
- The government expects that Canadians will be able to open and contribute to an FHSA at some point in 2023 and would be permitted to make the full $8,000 annual contribution limit
- Conditions to open an FHSA:
- Resident of Canada
- At least 18 years of age
- Must be a first-time home buyer, meaning that you have not owned a home in which you have lived at any time during the part of the calendar year before the account is opened or at any time in the preceding four calendar years.
- FHSA would have a maximum life of 15 years from when the account is opened. If it’s not used, it can be transferred to an RRSP account without impact an individual’s available RRSP contribution room.
There are many other rules to the FHSA. The above is intended to be a brief summary of this new registered plan that will be available in 2023.
Property Flipping Rules – New for 2023
Included in Bill C-32, which is now considered law, is the new anti-flipping rules for residential property that was first introduced in the 2022 federal budget. Starting January 1, 2023, profits from disposition of residential property that was owned for less than 365 days will be deemed to be business income and not capital gain that may then be eligible for the principal residence exemption.
Exceptions to this new proposed rule are the following:
- Death of the taxpayer or a related person to the taxpayer
- Related person joining the taxpayer’s household (such as birth of a child, adoption, or care of elderly parent) or the taxpayer joining a related person’s household
- Breakdown of marriage or common-law partnership of the taxpayer (if living apart for at least 90 days prior to the sale)
- Threat to the personal safety of the taxpayer or a related person
- Serious illness or disability of the taxpayer or a related person
- Eligible work relocations of the taxpayer or common-law partner (where the new home location is at least 40 km closer to the work location than the old home location)
- Involuntary termination of the employment of the taxpayer or their spouse or common-law partner
- Insolvency of the taxpayer
- Destruction or expropriation of the property
It is important to note that even if one of the above exceptions apply, or if the property was held for 365 days or more, it still remains a question of fact whether a gain on a residential property sale would be taxed as business income or a capital gain.
Disability Tax Credit Automatic Approval for Type 1 Diabetes
In June 2022, the federal government enacted a change to the Income Tax Act to expand the criteria for eligibility for the Disability Tax Credit (DTC) for individuals with either:
- Mental function impairment, or
- A life-sustaining therapy requirement.
With this change, any Canadian with type 1 diabetes will automatically be approved for the disability tax credit, under the expanded life-sustaining therapy category. This eliminates the previous requirement to prove care exceeding 14 hours per week.
The DTC is a non-refundable tax credit helping those who qualify, or their caregivers, to offset some of the costs associated with the disability. Qualification for the DTC can also open the door to additional federal and provincial programs such as the:
- Registered disability savings plan (RDSP),
- Canada workers benefit, and
- Child disability benefit.
CRA is encouraging all who qualify to apply prior to filing their 2022 personal income tax return (T1) to avoid any delays in assessment. A medical doctor is required to complete Form T2201 for submission to CRA. If applicable, in some cases the DTC can be applied to your prior years returns, as well.
Tax Planning – Agriculture
Each year, near the end of November and into December you should review if your taxable income will be higher than normal for 2022.
Please review the options below which could be used to minimize your tax liability:
- Prepaid Expenses - If you have the funds available, an effective way to defer taxes is to prepay for 2023 expenses prior to December 31st. Examples of common prepayments are for crop inputs and livestock feed.
- Asset purchases - If you were holding off an asset purchase until 2023, you might consider purchasing the asset before December 31st to take advantage of immediate expensing of asset purchases or accelerated capital cost allowance (CCA). You could have the ability to immediately expense the entire cost of the asset in the year you purchase the asset (excludes buildings, quota, concrete work). For the excluded assets you could have the ability to receivable an additional 50% CCA in the year of purchase. Please note the asset purchased must be “available for use” prior to the end of the year, to be entitled to this. The limit for immediate expensing is up to $1.5 million per associated group.
- Payables – Pay invoices in 2022 rather than waiting until 2023. Paying as many expenses as possible before year-end will result in more deductible expenses for 2022 and will reduce your taxable income for the current year.
- Holding inventory - Delay the sale of inventory (crops, livestock) until 2023. If you were planning on selling some inventory (crops, livestock) before year end but you do not need the cash flow until after year end, this can also be an effective method to defer taxes.
It is important to note that the options above act as a tax deferral, meaning you are reducing taxes in the current year, but you should expect to pay the taxes at some point in subsequent years.
If you need assistance with tax planning this year, please reach out to your Accountant to go over the options that works best for you.
Ontario Regional Opportunities Investment Tax Credit (ROITC)
Canadian-controlled private corporations are eligible to receive a 10-20% refundable tax credit if they purchase, construct or renovate a building (included in Class 1 or 6) over $50,000 and up to $500,000. The max credit available for additions in the periods below are:
- March 25, 2020 – March 24, 2021 - $45,000 tax credit
- March 25, 2021 – January 1, 2023 - $90,000 tax credit
This credit is available for each fiscal year in the qualifying period.
The building investment must be made in a designated region to qualify for the tax credit. The credit is issued based on the building location not the location of the corporation’s head office. Please note that any investment in Wellington County WILL NOT qualify for this tax credit as it is not in the designated region. A full listing of the designated regions are located on Ontario’s website.
If your company is a part of an associated group of companies, only ONE company in the group can claim the tax credit each year. The other companies in the associated group will need to elect in writing to waive their right to claim the ROITC.
Poultry and Egg On-Farm Investment Program (PEFIP)
PEFIP is a 10 year program to support on-farm investments in:
- increasing efficiency or productivity
- improving on-farm food safety and biosecurity
- improving environmental sustainability
- responding to consumer preferences (improving animal welfare, adopting alternative housing systems, transitioning to organic production, etc.)
Producers who held quota on January 1, 2021 must register with the program prior to submitting a project application. The registration process is to validate your license information and confirm your maximum funding.
Funding is determined by the amount and type of quota holdings. Young producers (35 years and younger on Jan 1, 2021) are eligible for an additional cost share.
Applicants may apply for eligible activities that started on or after March 19, 2019 and costs that were incurred on or after March 19, 2019. Applicants may submit more than one Project Application prior to the program end date of March 31, 2031 providing the applicant does not exceed their maximum funding.
For assistance with registration or submitting a project application please contact your accountant. For applications submitted to date, the timeline for receiving funding has been about six months.
The applicant guide can be viewed by following
this link.
Accounting for Biological Assets – ASPE Section 3041
The new section of accounting standards providing guidance on accounting for agricultural inventories is effective for fiscal periods beginning on or after January 1, 2022.
This new section will require a distinction be made between agricultural inventories and biological assets with each being reported separately on agricultural producers' financial statements. Agricultural inventories can be measured at their cost or net realizable value. Productive biological assets must now be initially measured at cost and in most cases will be recorded as long-term assets on the financial statements as opposed to being recorded as inventory and a current asset.
Productive biological assets are:
- Held for use in the production or supply of agricultural inventories or other productive biological assets (e.g. breeding livestock)
- Acquired or developed for use on a continuing bases with other than short productive lives (i.e. longer than one year) and
- Not intended for sale in the ordinary course of business
Agricultural producers’ financial statements will now include additional disclosure requirements for any biological assets and agricultural inventories. Transitional provisions will be considered for each client to reduce the administrative time in applying these new reporting standards. Your accountant will review the effect of the new standards with you during the preparation of your year-end financial statements.
Deadlines - AgriStability & AgriInvest
AgriStability: Deadlines for the 2022 program year
- June 30, 2022: Pay fee, submit New Participant Form or cancel coverage
- December 31, 2022: Apply for interim payment
- December 31, 2022: Pay fee – final deadline (20 per cent increase)
- June 15, 2023: Submit T1163 (individuals)
- June 30, 2023: Submit Statement A (corporations, trusts and special individuals)
- June 30, 2023: Submit Year-end report and Claim form
- December 31, 2023: Final deadline – Report your 2022 farm income to Canada Revenue Agency
AgriInvest: Deadlines for the 2022 program year
- June 15, 2023: For individual participation in AgriStability and AgriInvest, submit 2022 tax forms to Canada Revenue Agency
- June 30, 2023: For corporations, trusts and special individuals participation in AgriStability and AgriInvest, submit 2022 tax forms to Agricorp
- September 30, 2023: For participation only in AgriInvest, submit 2022 Statement A to Agricorp and 2022 T1163 to Canada Revenue Agency
Business – Leadership is a Competitive Advantage
As an entrepreneur, you and your team’s ability to develop and maintain relationships is a key factor for business success. In a labour market where candidates have so many employment options; effective leadership skills will help you build trusting relationships and keep your people engaged and motivated. Forbes’ article: “10 Essential Leadership Skills Every Entrepreneur Should Continually Hone” lists the following:
- Listening to Understand
- Emotional Intelligence
- Ability to Delegate
- Strategic Thinking
- Communication
- Financial Knowledge
- First principle Mindset
- Building Trust
- Self-Awareness
- Self-Development
W&U’s
Emerging Leaders Development Program helps participants elevate their leadership skills in all the areas listed above. For more information on our Emerging Leaders’ customizable program or to register for our February 2023 upcoming online program,
click here. With W&U’s integrated services, we are here to help you achieve your business goals.
Electronic Monitoring
As of October 11, 2022, employers with 25 or more employees are required to have a written policy on the electronic monitoring of employees. The policy must establish whether the employer engages in electronic monitoring of employees, and if so, how. The policy must also describe in which circumstances monitoring occurs, and for what purpose the information obtained through electronic monitoring may be used.
Employers are to provide the policy to staff within 30 days of starting in their position, within 30 days of policy in place, and within 30 days of any changes to the policy.
The policy, however, does not:
- Establish a right for employees not to be electronically monitored by their employer, nor;
- Create any new privacy rights for employees.
Contact
HR Solutions with any questions you may have about electronic monitoring in the workplace.
Minimum Wage Increase
Did you know minimum wage increased in Ontario as of October 1, 2022?
General minimum wage is now $15.50/our in Ontario.
Visit
Ontario.ca for details, or contact a W&U Human Resources advisor to learn more.
Retirement - Ready or Not
If you’re retired, or soon to be, you’re likely a Canadian baby-boomer. You are seeking more information about your retirement beyond merely finances, and advisors are uniquely positioned to provide you with additional retirement insight and planning.
Currently, Canadians aged 65 years old, can expect to live an additional 22 to 24 years, on average. Not only are people living longer, they are leading more active retirements. Achieving success in retirement no longer requires the bills to be paid, and to sit at home awaiting the arrival of the grim-reaper!
To gain access to the investable assets today, and manage them into retirement, advisors should examine their clients in a broader, more complete perspective.
| Retirement Element | Ready to Retire | Not Ready |
|---|---|---|
| Vision | • Unified view of retirement by both partners • Active/equal trade-offs • No surprises • Guided decision-making for all Retirement Elements | • Costly and scattered decision-making for other elements (below) • Delayed decision-making for investments and accounts • Anxiety over end-of-work |
| Health | • Health considerations not informing Interests, Social or Lifestyle elements • Critical Illness, healthcare benefits and/or savings in-place | • Successful and active retirement unattainable if health matters are not addressed, fitness promoted • Unpredictable and high healthcare costs could financially cripple retirement |
| Interests and Social | • Activities and friends independent from work, or maintained by choice • Increasing curiosity for hobbies and relationships | • Little or no plans to fill approximately 2,000 hours per year previously spent at-work • Boredom leading to increased health risks |
| Lifestyle | • Activities of daily living planned for all life-stages • Living integrated with family and friends, along with mutual activities and family events | • Days passing from one to the next without purpose, interaction or accomplishment |
| Home | • Accommodation needs understood for various phases of retirement, mobility and wellness • Costs anticipated, free capital identified • Vacation home transfer planned, with life insurance if necessary | • Home does not match Interests, Social or Lifestyle needs • Costly modifications avoided that could improve quality of life • Inexpensive modifications not planned, destroying peace of mind and quality of life |
| Legacy | • Final wishes to be followed • Tax liability at time of transfer accounted for with insurance, for example, and/or planned • Wills, Powers of Attorney considered and constructed to fulfill final wishes precisely | • Unequal or missed distribution of assets and heirlooms • Tax surprises require disposition of assets (like family cottages) to pay terminal return • Tax bill nominally higher without planned giving while alive |
Without planning that includes more elements than just finances, retirement and the years leading up to it can be anxiety laden. The period that should be relatively carefree will be the opposite.
Financial planning is a critical element of all retirement plans, but an analysis that focuses solely on money will not prepare you for a successful retirement. Additional items like those mentioned above must also be addressed.
Retirement Planning Services - NEW!
The stress and worry of wondering if you are prepared for retirement can significantly impact your daily life.
Are you on the right track?
What are you missing?
Will you have to delay retirement?
A retirement plan, while seemingly daunting, does not have to be so intimidating, nor expensive.
Tamara Campbell, Wealth Management Advisor has been with Ward & Uptigrove Wealth Management (WUWM) for 7 years and is available to help you answer those hard questions.
At WUWM, you can now get a basic retirement plan for a discounted, flat rate of $999. You don’t have to invest, and you don't have to move accounts.
Peace of mind and savings you cannot afford to miss. Learn more here or contact WUWM.
RRSP Contribution Reminder
The RRSP Contribution Deadline is March 1, 2023.
What do you need to know?
- Contributions to your RRSP are deducted from your taxable income.
- Withdrawals are subject to income tax, or at death (unless the RRSP is transferred to a surviving spouse).
- Contribution amounts are based on your income level.
- 18% of your income can be deposited into your RRSP with the annual limit of $27,830 for the 2021 tax year and $29,210 for 2022.
- Contribution room from previous years that has not been used is carried forward.
- Contributions can be made at any time during the year, and until the end of February for the prior year’s tax return.
Contact your
Wealth Management representative with any questions you may have.
Ward & Uptigrove Wealth Management Introduces New President
The Partners of Ward & Uptigrove are proud to share that Luke MacLennan was appointed the new President of Ward & Uptigrove Wealth Management earlier this year. Luke takes over the role from Mich Landry who, after serving as the President of the organization for nearly 30 years, wants to reduce his workload, while still being able to be continue to serve his clients as their Wealth Management Advisor.
Luke joined Ward & Uptigrove Wealth Management in 2016, bringing over 10 years of experience in the wealth management industry. Previously, Luke worked with the firm’s related portfolio management company, Independent Accountant’s Investment Counsel Inc. where he served on the organization’s management team.
Looking ahead, Luke is excited to have the opportunity to lead the wealth management division of Ward & Uptigrove and will ensure the primary focus of the organization will be to continue to provide clients with the highest level of service.
Staff Updates
As 2022 comes to a close, we reflect on our 64th year of growth and progression with our staff. We are proud to congratulate the following staff members on their development and progression into new roles.
Partner Announcement
We are excited to announce that, effective January 1, 2023, the Partnership will grow by three.
Jon Soltys, CPA, CA
Partner
Pete Verbeek, CPA, CA
Partner
Principal Announcement
We would also like to congratulate the following staff members on taking the next steps along their leadership journey. We look forward to seeing these individuals continue to develop and progress within the firm, and we thank them for their ongoing contributions.
Alicia McDonald, CPA, CA
Principal
Garrett Topic, CPA, CA
Principal
Mark Woynillowicz, CPA, CA
Principal
Agriculture Department
Progressions
Shayna Gibson
Accounting Supervisor
Business Department
Progressions
Venice Dela Sierra
Junior Accountant
Sharlene Dowdall
Accounting Manager
James Hruska
Intermediate Accountant
Ahmed Makhtoum
Intermediate Accountant
Cam Ridgway
Accounting Supervisor
Mark Tasker
Senior Accountant
Years of Service
Congratulations to the following staff members on reaching these career milestones. We thank you for your contributions and loyalty to the firm:
5 Years of Service
Chris Hawkins
Custodian
Tina Giesbrecht
Administrative Assistant
Haley McKinley
File Clerk
Tori Jamieson
Intermediate Accountant
15 Years of Service
Cheryl Laffin
Senior Bookkeeper
Dianne Nonkes
Bookkeeping Team Lead
Sharlene Dowdall
Senior Accountant
20 Years of Service
Curtis McLaughlin
Accounting Supervisor
25 Years of Service
Jackie Landman
Administrative Assistant
Pete Verbeek
Principal
Welcome!
We are thrilled to welcome the following new staff members to our team:
Amanda Bekkers
Intermediate Accountant
Beverley Bowman
HCSA Processor (HRS)
Hollie Card
File Clerk
Tammy Coffey
Administrative Assistant
Megan Ellis
Receptionist
Erin Kurt
Accounting Technician
Ahmed Makhtoum
Junior Accountant
Josh Martin
Junior Accountant
Myra O'Seasnain
Tax Manager
Leah Sterczer
Senior Accountant
Craig Vanderheyden
Intermediate Accountant
Firm Updates
We are excited by our continued growth, which means we are searching for qualified accounting staff to fill new roles. W&U offers incredible opportunities for personal and professional development through a long-standing mentorship program and competitive compensation packages.
We encourage all levels of accountants to reach out or join our talent community at
wardanduptigrove.com/careers. A CPA designation is not required in order to be considered. Please email
careers@w-u.on.ca if you or someone you know is looking for a change.
We are th rilled to announce Ward & Uptigrove was selected as a recipient of the Southwestern Ontario's Top Employers Award for 2025. The award is based on the following criteria: 1. Workplace, 2. Work Atmosphere and Social, 3. Health, Financial and Family Benefits, 4. Vacation and Time-Off, 5. Employee Communications, 6. Performance Management, 7. Training and Skills Development, 8. and Community Involvement! Here are some of the reasons why Ward & Uptigrove was selected as one of Southwestern Ontario's Top Employers (2025): Ward & Uptigrove increased its full-time workforce in Canada by over 13 per cent in the past year and lets everyone benefit in the company's success with profit-sharing -- the company also offers generous referral bonuses of up to $5,000 per successful candidate as an incentive for employees to recruit friends Ward & Uptigrove hosts three major social events each year, giving employees the opportunity to unwind and connect with food, beverage and entertainment covered by the firm's partners -- events include a post-tax season party (employees plus a guest), a fall golf tournament, and an annual holiday celebration Ward & Uptigrove matches employee donations in kind, and encourages them to lend a helping hand in the community with a paid day off to volunteer Emily MacRobbie, human resources manager at Ward & Uptigrove, says clients appreciate the close connections and sense of care their small-town environment fosters. “We’re big enough to attract and retain some of the best and brightest minds in the industry, while simultaneously being small enough that staff and clients are known on a more personal level,” says MacRobbie. “Employees really appreciate the flexibility the firm offers, such as work location (in office or hybrid) and hours of work arrangements. We keep a pulse on what’s happening and make sure we remain competitive with things like paid time off and flexible health benefits.” To learn more about career opportunities at Ward & Uptigrove visit www.wardanduptigrove.com/careers
Accounting
Accounting
