2%20Procedures%20and%20Administration

2%20Procedures%20and%20Administration - Chapter 2 -...

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Unformatted text preview: Chapter 2 - Procedures and Administration Required Filings Individuals: Individual tax returns Installment payments for individuals Source deductions (proprietorships and partnerships) Corporations: Source deductions Corporate tax returns Corporate installment payments Other Trust tax returns Foreign reporting requirements Source Deductions Individual Perspective As you know, employment income is paid by employers to employees Employers are required to deduct the following from gross pay: estimated taxes; Canada Pension Plan (CPP) contributions; and Employment Insurance (EI) premiums. Individuals may elect to have more deducted in order to avoid a large liability when the personal tax return is filed this may happen if the individual has significant non-employment sources of income. Source Deductions Individual Perspective Individuals may also request a reduction in the amount deducted if they have deductions they will be claiming (like RRSP contributions) this must be approved by CRA. There are other types of payments from which taxes may be withheld for example, death benefits, payments from Registered Retirement Savings Plans and Registered Education Savings Plans. In these cases, the payer must withhold prescribed amounts and report them to the CRA Source Deductions Employer Perspective The employer deducts the required amount from the employee, and then must remit these withholdings to the CRA. There are four classes of employers: Quarterly remitters very small employers Regular remitters New employers Employers with less than $15,000 on average per month for previous year Due monthly on the 15 th of the month following withholding Accelerated Remitters Threshold 1 Average of $15,000 -$49,999 per month for second preceding year Twice monthly on the 10 th and 25 th Accelerated Remitters Threshold 2 Average of over $50,000 per month for second preceding year Payments required four times per month Source Deductions Employer Perspective Penalties and interest are assessed for late remittances, on any amount exceeding $500: 3% if late 3 days or less 5% if 4 or 5 days late 7% if 6 or 7 days late 10% if 8 or more days late If amounts not withheld, 10% penalty applies immediately. The CRA takes this very seriously, as they consider the employer to be acting as a trustee on their behalf collecting the tax from the employees. Source Deductions Employer Perspective A second offence within the same calendar year results in the penalty doubling if the failure was made knowingly or through gross negligence....
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2%20Procedures%20and%20Administration - Chapter 2 -...

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