April 2020 - PP News & Views
- Part V Withdrawn from CPA Canada Handbook
- Seeking Stakeholder Views on IFRS Exposure Draft
- Resources for Coping with COVID-19
- CRA Update on COVID-19
- PD News
- Advice from CRA on Personal Services Business
- What's New in B.C. Sales Taxes
- CPAB Releases Annual Inspection Report
Part V of the CPA Canada Handbook, also known as pre-changeover accounting standards, was removed from the CPA Canada Handbook – Accounting as of March 1, 2020. After a thorough review, the AcSB decided to remove this non-authoritative guidance, as it was replaced by the current accounting standards in Parts I to IV of the Handbook in 2011.
The International Accounting Standards Board (IASB) has issued an exposure draft, General Presentation and Disclosures, that aims to improve how information is communicated in financial statements, with a focus on the statement of profit and loss.
Proposed changes include:
- presentation of the statement(s) of financial performance;
- disclosure of information regarding management performance measures; and
- guidance on aggregation/disaggregation of financial information, including disclosure of unusual/infrequent items.
Register for one of the Canadian Accounting Standards Board’s virtual roundtables in April and May 2020 to provide your feedback on the IASB’s exposure draft. This is your chance to share your views directly with standards setters. We encourage members to take this opportunity to state whether you think the proposed amendments are appropriate for application in Canada. Register today.
CPABC is supporting members by providing regular updates and links to resources during these uncertain times. Visit our COVID-19 Updates and Resources for CPAs page on the CPABC website – here you’ll find information on tax and benefits programs from the provincial and federal governments, as well as guidance and resources for public practitioners.
CPA Canada is also supporting practitioners with their own Federal Government COVID-19 Tax Updates webpage. While CPA Canada develops technical resources, they have compiled a summary of external resources to help you understand the potential financial reporting and audit implications of the COVID-19 pandemic. Please bear in mind these resources were created by external organizations and were not reviewed, developed, or approved by CPA Canada – use with caution.
Both the provincial and federal governments are announcing new benefits and relief programs periodically with details to follow. We encourage all members to stay connected and watch for updates on both the CPABC and CPA Canada websites.
The Canada Revenue Agency (CRA) understands that individuals and businesses might be dealing with difficulties filing their income and benefit returns, and could experience cash-flow challenges in the coming months. In response, the CRA is applying the measures below.
Administrative income tax measures
In addition to the income tax filing and payment deadline extensions announced as part of the fiscal measures, unless otherwise noted, taxpayers may defer a number of other administrative tax actions required under the Income Tax Act (ITA) that are due after March 18, 2020, until June 1, 2020.
These administrative income tax actions include the filing of returns, forms, elections, designations, and responses to information requests. Payment and remitting requirements are not covered by this announcement.
- This measure also does not apply in respect of a prescribed form, receipt or document, or prescribed information, that is required to be filed with the Minister on or after the day specified, in respect of the form, receipt, document, or information, in subsection 37(11) or paragraph (m) of the definition investment tax credit in subsection 127(9) of the ITA.
- Payroll deductions and all related activities (except to the extent they relate to the reduction of remittances related to the temporary wage subsidy) must continue to be done on time.
Trusts, Partnerships and NR4 Information Returns
The deadlines for trusts, partnership and NR4 Information returns are all extended to May 1, 2020. This is due to administrative requirements in advance of the June 1st deadline for filing individual income tax and benefit returns.
To learn more about how the CRA is helping Canadians with the economic impact of the COVID-19 Pandemic, go to Helping Canadians with the Economic Impact of the COVID-19 Pandemic.
Given the current situation with COVID-19, in-person PD sessions are on hiatus. CPABC hopes to resume in-person PD offerings in May 2020 and is working on offering a number of sessions virtually if the in-person restrictions are still in effect.
In the meantime, the CPABC PD program has a number of online learning products that are available throughout the year. Members can find information about the online offerings by searching ‘Online On-demand.’
Do you have any incorporated clients who perform the duties of an employee? In certain industries, an individual may choose or be asked to incorporate for work. However, it is important they are aware of how being incorporated can affect their tax obligations. CRA offers the following advice to help your clients know their tax obligations.
If individuals register as a corporation and they are the only shareholder and likely the only employee, they are an incorporated employee. If they’re doing work for another corporation that would normally be done by an employee, the CRA might consider them a personal services business.
Personal services businesses don’t receive the same income tax deductions that are available to other corporations, such as the small business deduction and the general rate reduction. The corporation will be subject to the full federal and provincial tax rates on all taxable income. There is also an additional 5% tax for personal services businesses on their taxable income. The individual will also be responsible for the corporation’s GST/HST obligations as well as providing accurate T4 statements to all employees of the corporation.
In addition, personal services businesses are limited in the expenses they may deduct compared to other corporations. They cannot deduct common expenses including, but not limited to:
- office supplies;
- travel expenses;
- meals; or
- cell phone costs.
The only expenses a personal services business can deduct include the following:
- any salary, wages, benefit, or allowance the corporation pays to its incorporated employee(s); and
- legal expenses the corporation incurs for collecting amounts owing.
If you have clients operating as a personal service business who might have misfiled their tax returns, the voluntary disclosures program might be an option to help correct them if the clients meet the eligibility requirements. For information on reporting requirements for employees, self- employed individuals. and personal services businesses, see withholding and reporting requirements on CRA’s website.
The B.C. Taxpayer Fairness and Service Code is now available online. The Code explains what you can expect when you interact with the provincial Ministry of Finance.
The Canadian Public Accountability Board has released its inspection annual report for 2019, which can be downloaded from its website.