Tax-News.com: EP's International Trade Committee Approves CETA

Tax-News.com: EP's International Trade Committee Approves CETA

by Ulrika Lomas, Tax-News.com, Brussels

25 January 2017

The European Parliament’s International Trade Committee has approved the Comprehensive Economic and Trade Agreement (CETA) with Canada.

A draft recommendation on the deal was passed by 25 votes to 15, with one abstention. Artis Pabriks, the rapporteur for the agreement, said: “By approving CETA today we take a significant step forward. In the face of rising protectionism and populism, Parliament is able and willing to act on behalf of European citizens.”

“Ratifying this agreement with Canada will enable trade to continue to bring wealth to both shores of our transatlantic friendship,” he added.

The agreement will be put to a full parliamentary vote at the February plenary session in Strasbourg. If approved, CETA could apply provisionally from as early as April 2017. As CETA was declared a “mixed agreement” by the European Commission, it will also need to be ratified by national and regional parliaments.

CETA was signed in October 2016, after a deadlock with Belgium’s French-speaking regions was broken. The Canadian Government introduced implementing legislation to its parliament the next day.

Upon entry into force, 98 percent of EU tariff lines will be duty-free for goods that originate in Canada. Within seven years, 99 percent of EU tariff lines will be duty free. Customs duties on industrial products traded between the EU and Canada will be eliminated after seven years. Nearly 92 percent of EU agriculture and food products will be exported to Canada duty-free. CETA also provides for the mutual recognition of certification for a wide range of products.

The agreement will not remove tariff barriers for public services, audiovisual and transport services, or for certain agricultural products, such as dairy, poultry, and eggs. CETA provides that the EU and Canada retain the domestic right to regulate.

In 2015, the EU imported EUR28.3bn in goods from Canada and exported to it EUR35.2bn. EU exports to Canada are expected to rise by more than 20 percent when CETA is implemented in full.

(Why?)

Published at Wed, 25 Jan 2017 00:00:00 +0000

Tax-News.com: Canadian Businesses Concerned Over NAFTA Changes

Tax-News.com: Canadian Businesses Concerned Over NAFTA Changes

by Mike Godfrey, Tax-news.com, Washington

25 January 2017

Uncertainty over the future of the North American Free Trade Agreement (NAFTA) will be a drag on Canadian business investment in 2017, according to research by the Canadian Chamber of Commerce.

The Chamber’s 2017 Crystal Ball Report warns that the year ahead will represent a time of uncertainty for Canadian businesses, as a result of the ambiguity surrounding the Canada-US trade relationship and international trends including a global slowdown, technological innovations, and the automation of many low-skilled jobs. The report was based on the results of a series of roundtables organized by the Chamber.

The report noted that uncertainty over NAFTA could cause businesses to hold off on large investments. Other concerns include Trump’s proposed Border Adjustment Tax and US corporate tax cuts. Were the US corporate tax rate no longer border-adjusted, American imports could no longer be deducted from revenues. The Chamber said this would mean that imports were taxed at 20 percent, which “would have the same effect as a 20 percent tariff.”

This would “distort the market, increase consumer prices, and create an uneven playing field for companies and consumers alike. Canadian manufacturers would be significantly disadvantaged and would lose sales. American businesses would have to scramble to readjust supply chains to favor domestic sources.”

Perrin Beatty, President and CEO of the Chamber, commented: “We’ve heard loud and clear from the Canadian business community that it has concerns about the global economy, particularly with regard to Canada-US relations, the renegotiation of NAFTA, and the future of other trade agreements.”

He added: “We’ve heard from businesses in all sectors that they are surprised by anti-trade sentiment and are concerned about a retreat from globalization in the years ahead. The consensus was that the rise of anti-trade, anti-immigration political parties is a global phenomenon and could be an important risk factor for Canada.”

(Why?)

Published at Wed, 25 Jan 2017 00:00:00 +0000

Tax-News.com: Canada Urged To 'Modernize' Internet Advertising Tax Rules

Tax-News.com: Canada Urged To 'Modernize' Internet Advertising Tax Rules

by Mike Godfrey, Tax-news.com, Washington

24 January 2017

A new report by advocacy group Friends of Canadian Broadcasting calls on the Government to close a loophole it says allows the tax deductibility of advertising expenses on for foreign internet-delivered media.

The report argued that “advertising purchased on foreign internet-delivered media that act as broadcast and newspaper services should not continue to be deemed a deductible expense under the Canadian Income Tax Act (ITA).”

“While foreign services may provide access to Canadian creators, allowing tax deductibility for spending on such entities results in unfair competition with Canadian equivalents and lost revenues and jobs, as well as losses of Canadian programming and news,” it added.

Section 19 of the ITA establishes the tax deductibility of expenses incurred in advertising in the Canadian newspaper press, where the adverts are directed primarily at the Canadian market. It states that no deduction shall be made in respect of “an advertisement directed primarily to a market in Canada and broadcast by a foreign broadcasting undertaking.”

However, a 1996 CRA opinion stated that “a website is not a newspaper, a periodical, or a broadcasting undertaking.” According to Friends of Canadian Broadcasting, “the effect of this ruling is that all internet advertising is tax deductible, regardless of the nationality of the site.”

Friends of Canadian Broadcasting argued that technology has overtaken the CRA’s opinion. The group said that online advertising spending in Canada has grown from CAD562m (USD423.3m) in 2005 to a projected CAD5.6bn in 2016.

It claimed that re-interpreting Section 19 would result in between 50 and 80 percent of current internet advertising expenditures being deemed non-deductible. This could increase federal revenues by up to CAD1bn a year, it said.

(Why?)

Published at Tue, 24 Jan 2017 00:00:00 +0000

Tax-News.com: Trump Unlikely To Follow Through With Trade Threats: IMF

Tax-News.com: Trump Unlikely To Follow Through With Trade Threats: IMF

by Ulrika Lomas, Tax-News.com, Brussels

24 January 2017

The International Monetary Fund has said the US is unlikely to proceed with punitive trade taxes on Mexico, Canada, and China, due to the blow it would have on US economic output.

Asked about the matter, the Director of the IMF’s Research Department, Maury Obstfeld, said: “We think the prospects of a more expansionary fiscal stance coupled with tax reform justifies some upgrade of the US forecast, mostly for 2018. Now this is the short-term, and longer-term we would have to worry about other fiscal repercussions, for example, if world deficits rise.”

“The possibility of trade disruptions is a downside risk to this forecast; it’s an important downside risk. It is not in our baseline scenario largely because we think that at the end of the day countries will recognize that these actions are not in their own self-interest, especially when there’s a threat of retaliation by other countries.”

“On the other hand, this could happen, it would derail our baseline forecast, possibly considerably, because the outbreak of a trade war could be quite disruptive.”

He said: “In terms of trade policy, I would say there is not a similar unity of view within the US Government. And some of the polices that have been suggested would actually inflict quite a bit of harm on the US itself even without retaliation.”

President Donald Trump has proposed tariffs of up to 35 percent on imports from US multinational companies that move their production facilities out of the United States at the cost of American jobs.

The border adjustment tax, a proposed alternative to that proposal, would seek to improve conditions for US exporters and level the playing field with non-US exporters. It would see the US adopt a system similar to that under a value-added tax in respect of international trade, whereby tax rebates are provided for exported US goods and foreign goods would be subject to additional tax.

Other countries’ VAT systems provide for tax rebates on exported goods (through zero-rated VAT treatment), ensuring that VAT is incurred only on (both imported and domestically produced) goods supplied to final consumers in their domestic markets. To eliminate a disadvantage for US companies, which are not subject to this system and therefore have sales tax embedded in their overseas sales, a tax would be imposed on goods imported from countries with a VAT, and US taxes on exports would be rebated or waived.

(Why?)

Published at Tue, 24 Jan 2017 00:00:00 +0000

Tax-News.com: US Launches WTO Action Against Canadian Wine Sales

Tax-News.com: US Launches WTO Action Against Canadian Wine Sales

by Mike Godfrey, Tax-news.com, Washington

23 January 2017

The US has requested WTO dispute consultations with Canada regarding regulations in British Columbia that it says discriminate against the sale of US wine in grocery stores.

The US alleges that these measures discriminate against imported wine by applying different conditions of sale in grocery stores to wine from British Columbia and to imported wine, in contravention of Canada’s obligations under the General Agreement on Tariffs and Trade (GATT) 1994. It also claims that the regulations have adversely impacted US wine producers.

The request was made by the outgoing Obama Administration.

In a letter to the WTO, the US stated: “The BC wine measures provide advantages to BC wine through the granting of exclusive access to a retail channel of selling wine on grocery store shelves. The BC measures appear to discriminate on their face against imported wine by allowing only BC wine to be sold on regular grocery store shelves while imported wine may be sold in grocery stores only through a so-called ‘store within a store.'”

The letter added that the measures “fail to accord products imported into Canada treatment no less favorable than that accorded to like products of Canadian origin.”

Outgoing US Trade Representative Michael Froman commented: “The discriminatory regulations implemented by British Columbia intentionally undermine free and fair competition, and appear to breach Canada’s commitments as a WTO member. Canada and all Canadian provinces, including BC, must play by the rules.”

The request for consultations formally initiates a dispute in the WTO. If, after 60 days, consultations have failed to resolve the dispute, the complainant may request adjudication by a panel.

(Why?)

Published at Mon, 23 Jan 2017 00:00:00 +0000

Tax-News.com: Australia Disappointed By Trump's TPP Withdrawal

Tax-News.com: Australia Disappointed By Trump's TPP Withdrawal

by Mary Swire, Tax-News.com, Hong Kong

23 January 2017

Australian Trade Minister Steven Ciobo has said that US President Donald Trump’s decision not to ratify the Trans-Pacific Partnership (TPP) is “disappointing, although not unexpected.”

Ciobo said that he had “been speaking at length” with his counterparts in Japan, Canada, Mexico, Singapore, New Zealand, and Malaysia “on ways to lock in the benefits from the TPP, without the United States if need be.”

According to Ciobo, “a number of options are available to us and there is a strong desire to ensure the benefits of the TPP are not lost.” He added that discussions on an alternative will continue over the coming months.

“Ratification of the agreement is the strongest message we can send on the importance of the TPP. It would be a clear statement from the Australian Parliament that we reject protectionism and that open markets are the path to long-term sustainable job creation,” he stressed.

(Why?)

Published at Mon, 23 Jan 2017 00:00:00 +0000

Tax-News.com: White House Confirms US Could Withdraw From NAFTA

Tax-News.com: White House Confirms US Could Withdraw From NAFTA

by Scott Hamilton, Tax-News.com, Washington

23 January 2017

The White House website has indicated that the Trump Administration will renegotiate, and could withdraw from, the North American Free Trade Agreement (NAFTA) with Mexico and Canada, according to a list of six “issues” the new Administration has released that it intends to address.

It is said that President Donald Trump “understands how critical it is to negotiate the best possible trade deals for the United States. By renegotiating existing trade deals, and taking a tough stance on future ones, [he] will ensure that trade agreements bring good-paying jobs to our shores and support American manufacturing.”

“This strategy starts by withdrawing from the Trans-Pacific Partnership and making certain that any new trade deals are in the interests of American workers,” the White House website says. This includes a firm commitment “to renegotiating NAFTA.” However, “if our partners refuse a renegotiation that gives American workers a fair deal, then the President will give notice of the United States’ intent to withdraw from NAFTA.”

The President has already confirmed immediate action on NAFTA. In the White House on January 22, he stated the renegotiation will begin when he meets Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto shortly. It has been reported that the meeting with the latter will be on January 31.

The note reaffirms Trump’s “plans to show America’s trading partners that we mean business by ensuring consequences for countries that engage in illegal or unfair trade practices that hurt American workers. … The President will direct the Commerce Secretary to identify all trade violations and to use every tool at the federal Government’s disposal to end these abuses.”

On taxation, as part of “pro-growth tax reform… the President’s plan will lower rates for Americans in every tax bracket, simplify the tax code, and reduce the US corporate tax rate, which is one of the highest in the world. Fixing a tax code that is outdated, overly complex, and too onerous will unleash America’s economy, creating millions of new jobs and boosting economic growth.”

(Why?)

Published at Mon, 23 Jan 2017 00:00:00 +0000

Help your immigrant client face the taxman

Help your immigrant client face the taxman

immigrant-ethnic-client

Taxes can be confusing for anyone in Canada, and more so if you’re new to the country.

Read: This chart shows where your next clients will come from

But if your client is a newcomer, don’t let him put off the taxman. Your client must file a return to receive a refund or to take advantage of tax benefits and credits to which he may be eligible — not to mention to fulfil his reporting obligations.

The Canada Revenue Agency lists reasons to file a return here.

Your client becomes a resident of Canada for income tax purposes when he establishes significant residential and social ties in Canada. That could include having a home or a spouse or common-law partner in Canada. These ties are usually established the date your client arrives.

Potential benefits and credits include the Canada child benefit and the GST/HST credit. To receive benefits and credits, your client’s spouse or common-law partner must also file a return.

Also, if your client is a resident for income tax purposes, has a modest income and a simple tax situation, he may be able to get help from the community volunteer income tax program (CVITP). The program is a collaboration between CRA and community organizations across Canada. These organizations hold tax preparation clinics, where their volunteers can prepare and submit your client’s tax return for free.

For more tips for clients, visit AdvisorToClient’s tax page. Not only is the website full of tailor-made content you can easily share, but some of the articles are also available in three other languages (Chinese, Hindi and Punjabi).

Further, check CRA’s website for more information for newcomers and to find out how to get a social insurance number. Also check out CRA’s video on Canada’s tax system, as well as its videos and webinars offering tax help.

read: CRA may be watching clients’ social media

(Why?)

Published at Mon, 23 Jan 2017 15:07:09 +0000

CRA may be watching clients’ social media

CRA may be watching clients’ social media

social-media-signs

When your client shares information with family and friends on Facebook or Twitter, someone else might be watching: the Canada Revenue Agency.

Read: CRA staff snooping on tax information

To cut down on tax fraud, CRA has been scrutinizing “publicly available information” like social media posts, particularly for Canadian taxpayers identified as high risk, reports CBC. That includes wealthy Canadians with offshore bank accounts.

CRA scrutinizes data related to electronic transfers of $10,000 or more, which results in a significant amount of information in countries where offshore tax evasion is a concern.

The tax agency increasingly uses big data. Business intelligence, which includes “mining accessible data,” is a key area of the CRA’s 2016-2017 planning and priorities report, CBC reports. Data analysis provides the agency with insight into taxpayer behaviours and allows the agency to focus on deliberate non-compliance.

Some people are crying foul when it comes to the CRA’s increased use of data — including Internet freedom advocacy groups like Open Media — because of privacy concerns.

“The CRA does practice risk-based compliance, so for taxpayers identified as high risk, any relevant, publicly available information relating to the specific risk-based factors for the taxpayer may be consulted as part of our fact-gathering processes,” a CRA spokesman told CBC.

Read the full story on CBC’s website.

Also read:

Essential tax numbers

Top tax credits and benefits for seniors

(Why?)

Published at Thu, 19 Jan 2017 17:47:03 +0000

Top tax credits and benefits for seniors

Top tax credits and benefits for seniors

sun-life-minimizing-tax-at-death-part-2

Use this list to help your senior clients ensure they claim the most common tax credits, deductions and benefits for which they’re eligible.

Read: Essential tax numbers

  • Pension income splitting — Those who receive a pension may be eligible to split up to 50% of eligible pension income with a spouse or common-law partner.
  • Guaranteed income supplement — If clients received the guaranteed income supplement or allowance benefits under the old age security program, they can renew the benefit by filing by the deadline.
  • Registered retirement savings plan (RRSP) — Clients have until December 31 of the year in which they turn 71 to contribute to their RRSPs.

Read: Navigate RRSP attribution rules

  • Registered disability savings plan (RDSP) — This savings plan can help families save for the financial security of a person who is eligible for the disability tax credit. RDSP contributions are not tax deductible and can be made until the end of the year in which the beneficiary turns 59.
  • Goods and services tax/harmonized sales tax (GST/HST) credit — Clients may be eligible for the GST/HST credit, a tax-free quarterly payment that helps offset all or part of the GST or HST they pay. To receive this credit, clients must file an income tax and benefit return every year, even if they didn’t receive income. If they have a spouse or common-law partner, only one of them can receive the credit. The credit is paid to the person whose return is assessed first.

Read: CRA tweaks process for accessing online tax info of businesses

  • Medical expenses — Clients may be able to claim the total eligible medical expenses that they, their spouse or common-law partner paid, provided the expenses were made over any 12-month period ending in 2016 and were not previously claimed. This can include amounts claimed for attendant care or care in an establishment.
  • Age amount — For clients 65 years of age or older on December 31, 2016, if net income was less than $83,427, they may be able to claim up to $7,125.
  • Pension income amount — Clients may be able to claim up to $2,000 if they report eligible pension, superannuation or annuity payments on their tax return.
  • Disability amount — If clients, their spouses or common-law partners or dependents have severe and prolonged impairments in physical or mental functions and meet certain conditions, they may be eligible for the disability tax credit (DTC). To determine eligibility, they must complete Form T2201, Disability Tax Credit Certificate and have it certified by a medical practitioner. Canadians claiming the credit can file online whether they have submitted the form to the CRA for that tax year or not.
  • Family caregiver amount — Those caring for a dependant with an impairment in physical or mental functions may be able to claim up to $2,121 when calculating certain non-refundable tax credits.
  • Public transit amount — Clients may be able to claim the cost of monthly or annual public transit passes for travel within Canada on public transit in 2016.

(Why?)

Published at Wed, 18 Jan 2017 14:28:40 +0000