Changes to the Small Business Deduction for Corporations
Corporate Tax Information
Keeping Books and Records - How long should I keep my Documents?
In a May 11, 2015 Technical Interpretation, CRA was asked about the required period for records retention. CRA noted the following:
1. A corporation’s permanent records (including Minutes of Directors’ and Shareholders’ Meetings, share registers, the general ledger, and any contracts or agreements necessary to understand the
general ledger entries) must be retained until two years after the corporation is dissolved.
2. In the absence of an exception, a corporation’s non permanent records must be retained for a period of six years after the end of the last taxation year to which they relate. For example, invoices for the purchases of capital assets must generally be kept for 6 years after they are disposed, not just 6 years after purchase. All non-permanent corporate records on hand at the date of dissolution must be retained for two years after the date of dissolution.
3. Permanent records of an unincorporated business must be retained for six years after the end of the taxation year in which the business ceased, while other records must be retained for six years after the end of the last taxation year to which they relate.
Tax Trips and Traps - Fourth Quarter - 2015
Scientific Research & Experimental Development (SR&ED) Investment Tax Credit
Corporations submitting scientific research and experimental development (SR&ED) claims with missing, incomplete, or inaccurately prescribed information regarding the tax preparation and billing arrangements in respect of those claims are now subject to a penalty of $1,000 per claim. If a third party is involved in preparing the claim, it will be jointly liable for the penalty. The new penalty applies to claims filed on the later of January 1, 2014 or the date of Royal Assent of Bill C-4.
Apprenticeship Training Tax Credit
Effective for expenditures incurred after March 31, 2014, the following information technology contact centre trades no longer qualify for the apprenticeship training tax credit: technical support agent, inside sales agent, and customer care agent. A transitional support program will be created for apprentices into these affected trades.
CCA Classification of Machinery and Equipment
Machinery and equipment purchased by a corporation after 2013, primarily for use in Canada, to manufacture or process goods for sale or lease may continue to be included in Class 29 instead of Class 43 and qualify for a 50% capital cost allowance (CCA) calculated on straight line basis, not a 30% CCA calculated on declining basis. This temporary measure scheduled to expire at the end of 2013 was extended by two years to the end of 2015. Any such asset acquired after 2015 will be included in Class 43 and qualify for a 30% CCA.
International Electronic Fund Transfers
Beginning in 2015, all banks, credit unions, caisses populaires, trust and loan companies, money service businesses, and casinos must report all international electronic funds transfers of at least $10,000 to the CRA within five working days of the transfer. The information reported includes amount transferred, transferor, transferee, facility acting as intermediary, and transaction details.
Synthetic Disposition of a Property
Corporations synthetically disposing of a property (i.e., involving an economic disposition through a forward contract, put-call collar, total return swap, etc. but not a disposition for tax purposes) to avoid paying income tax on the related capital gain are deemed to have disposed of the property at its fair market value and have redeemed it immediately for the same price. The new tax treatment applies to synthetic disposition arrangements entered into or extended after March 20, 2013.