Authored by RSM Canada

Executive summary

The Canada Border Services Agency (CBSA) announces Assessment and Revenue Management (CARM) will become the official system of record used by importers and other trade chain partners in October 2024.

Implementation delayed for mandatory system for Canadian importation

The CBSA is in the process of introducing the CBSA CARM as the mandatory system of record to interact with the CBSA for commercial import shipments into Canada. To learn more about the CARM system and its potential implications for middle-market businesses, please see RSM’s article “New mandatory system for Canadian importation”. 

Originally slated to enter into use on May 13th, the CBSA has advised that the mandatory CARM adoption for importers and other trade chain partners will be delayed until October 2024. The CBSA cited as cause for the delay the potential impact on their operations should members of the Public Service Alliance of Canada, which represent over 9,000 employees of the CBSA, choose to strike. The Public Service Alliance of Canada launched a strike vote on April 10th.

Though the delay affords importers additional time to register for a CARM Client Portal (CCP) account and make related procedural changes, it is clear the CBSA intends to proceed with implementing CARM as the mandatory system of record. Those who import commercial goods into Canada should register their businesses in the CCP and delegate necessary authorities as soon as possible to avoid any potential delays and registration issues in October. Importers looking to use the Release Prior to Payment program should also ensure they are positioned to post the necessary security. For additional assistance with navigating the transition to CARM, please contact your RSM Canada trade advisory team.

This article was written by Cassandra Knapman, Jaime Seidner and originally appeared on 2024-04-24 RSM Canada, and is available online at https://rsmcanada.com/insights/tax-alerts/2024/implementation-delayed-for-mandatory-system-for-canadian-importation.html.

RSM Canada Alliance provides its members with access to resources of RSM Canada Operations ULC, RSM Canada LLP and certain of their affiliates (“RSM Canada”). RSM Canada Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM Canada. RSM Canada LLP is the Canadian member firm of RSM International, a global network of independent audit, tax and consulting firms. Members of RSM Canada Alliance have access to RSM International resources through RSM Canada but are not member firms of RSM International. Visit rsmcanada.com/aboutus for more information regarding RSM Canada and RSM International. The RSM trademark is used under license by RSM Canada. RSM Canada Alliance products and services are proprietary to RSM Canada.

Virtus Group is a proud member of the RSM Canada Alliance, a premier affiliation of independent accounting and consulting firms across North America. RSM Canada Alliance provides our firm with access to resources of RSM, the leading provider of audit, tax and consulting services focused on the middle market. RSM Canada LLP is a licensed CPA firm and the Canadian member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries. Our membership in RSM Canada Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources. For more information on how the Virtus Group can assist you, please call us at 855-206-5697.

The post Implementation delayed for mandatory system for Canadian importation appeared first on Virtus Group.

Capital Gains Tax Increase

Under the current rules, capital gains earned in a corporation are included in income at 50% and when you extract the cash out to yourself personally, the highest effective rate in Saskatchewan is 26.34% Saskatchewan.  With the proposed change announced in the 2024 federal budget, capital gains earned in a corporation will now be included in income at 66.67% and this increases the highest effective tax rate in Saskatchewan to 35.13%.  This change is anticipated to be effective for capital gains realized on or after June 25, 2024.

The 2024 federal budget also proposes changes to the taxation of capital gains for individuals.  They propose to increase the capital gains inclusion rate to 66.67% for individuals who realize capital gains in excess of $250,000 (in any calendar year) on or after June 25, 2024.  The first $250,000 continues to be included in income at 50% but anything above that $250,000 threshold would be included in income at the new 66.67% inclusion rate. 

Capital Gains Exemption Increase

They also propose to increase the lifetime Capital Gains Exemption (CGE) from $1,016,836 to $1,250,000, effective for gains realized on eligible property on or after June 25, 2024.

These changes may create situations where it may make sense to consider the timing of the realization of capital gains, either through the actual sale of assets or through a crystallization transaction.  Situations to consider would include, but are not limited to, the following:

• A planned sale within the next two to three years
• Significant accrued gains in situations where a deemed disposition would be triggered upon the passing of an individual
• The use of the capital gains exemption on a sale in 2024
• Anticipated emigration from Canada within the next two to three years

Inherent gains on property eligible for the CGE – qualified small business corporation shares or qualified farm property – creates a unique situation where accelerated realization of the gain would allow for the lower individual capital gain inclusion rate but not the increased CGE limit.

Capital Gains Scenarios to Consider

To illustrate this impact, we’ll provide a few scenarios showing the various taxable income calculations, assuming the full lifetime capital gains exemption is available and usable in each circumstance:

Scenario 1 – $1,250,000 capital gain

• If before June 25, 2024 – taxable income of $116,582.
• If after June 24, 2024 – taxable income of $0.

Scenario 2 – $1,600,000 capital gain

• If before June 25, 2024 – taxable income of $291,582.
• If after June 24, 2024 – taxable income of $191,667.

Scenario 3 – $3,000,000 capital gain

• If before June 25, 2024 – taxable income of $991,582.
• If after June 24, 2024 – taxable income of $1,125,000.

Capital gains eligible for the CGE greater than approximately $2,200,000 will pay less tax if realized prior to June 25, 2024. Capital gains eligible for the CGE between $1,016,836 and $2,200,000 will incur less tax by deferring the sale date until after June 25, 2024.

Crystallization transactions create taxable events to bump asset cost bases without any actual cash coming in.  Therefore the tax is owed but no cash is generated to cover it.  These types of transactions will be most useful when a sale is locked in or highly likely to occur shortly after the rule change date given the cash crunch involved and the cost of potentially accelerating the tax owing.

As the proposed changes to the taxation of capital gains don’t take effect until June 25, 2024, there is some, but limited, time for planning to efficiently minimize income tax.  If you have significant unrealized gains or are planning a sale in the short term, please reach out to your Virtus Group advisor to discuss what options are available.

The post Capital Gains Tax Changes: Do You Need to Take Action? appeared first on Virtus Group.

Major Changes in Tax Rules & Incentives

Capital gain inclusion rate increased

• Who is affected:
  • Corporations and trusts (all capital gains)
  • Individuals who realized capital gains over $250,000 annually
• What is changing: The inclusion rate is changing from 50% to 66.67%; capital gains up to the $250,000 threshold will remain at 50% inclusion rate for individuals
• Effective Date: Applies to capital gains realized June 25, 2024 and later (capital gains realized before June 25, 2024 remain at 50% inclusion rate regardless of amount)

Capital Gains Exemption maximum increased to $1,250,000

• What is changing: Maximum lifetime claim increases from $1,016,836 to $1,250,000
• Effective Date: Effective for gains realized June 25, 2024 and later
• Maximum will have indexed increases beginning in 2026

Canadian Entrepreneurs’ Incentive introduced to reduce tax rate on qualifying sale of shares

• What is the benefit:
  • Reduces applicable capital gain inclusion rate by half on eligible sales
  • Applies to sales of qualifying active corporation shares that have been held by the seller since the corporation was founded, held for at least five years, and represent at least 10% of total corporate votes and value
• Effective Date: Initial $200,000 limit available on January 1, 2025, increasing $200,000 per year until 2034
• Qualifications: Maximum lifetime claim of $2,000,000 of qualifying gain per individual, in addition to their lifetime capital gains exemption
• Not available for professional corporations and in certain industries

Housing Affordability & Construction

Home Buyers’ Plan expanded

• What is changing: Maximum individual withdrawal increased to $60,000 from $35,000
• Repayment period: 15 year repayment period begins 5 years after initial withdrawal for withdrawals made January 1, 2022 to December 31, 2025, extended from traditional 2 years

Purpose-built rental housing incentives

• What is changing:
  • Increased capital cost allowance depreciation rate to 10% from 4%
  • Property must have minimum of 4 private apartments or 10 private rooms/suites per building, and minimum of 90% of units held for long-term (12+ months) rental
• What qualifies: Conversion of non-residential buildings, or addition to existing buildings could qualify, but renovation of existing buildings would not
• Effective date: Applies to new construction beginning on or after April 16, 2024 and before January 1, 2031, and available for use before January 1, 2036
• Other details:
  • Expanded ability to deduct interest and financing expenses for arm’s length borrowing to build or acquire qualifying properties
  • Applies to corporate year ends starting October 1, 2023 and later

Supporting Small Businesses

Immediate expensing of “productivity enhancing” assets

• What is changing:
  • Broad categories of assets – patents and use of patented information, data network infrastructure and related softwares, and general-purpose electronic data processing equipment and related softwares – will be deductible at 100% rate in year of purchase
  • New and used assets can qualify, unless acquired from a non-arm’s length party, or on a tax-deferred “rollover” basis
• Effective date: Applies to acquisitions on or after April 16, 2024, and available for use before Jan 1, 2027

Canada Carbon Rebate for Small Business introduced

• What is it:
  • Provides rebate to Canadian Controlled Private Corporations based on number of employees in prior calendar year
  • Rate per employee based on location of employees and provincial fuel charge collected
  • 2019 – 2024 fuel charge year rebates will be available to CCPCs who have filed their 2023 corporate tax return by July 15, 2024
• Who receives it: Not available to corporations with more than 499 employees

Crackdown on Non-Compliant Taxpayers

New tool and expanded penalties available to CRA to combat non-compliance

• What is changing: A new “Notice of Non-Compliance” communication introduced that the CRA can issue that would extend the maximum time period the CRA has to reassess a taxpayer, or an individual non-arm’s length with the taxpayer, on issues related to the non-compliance notice
• What are the penalties:
  • Provides a penalty of $50/day that the Notice of Non-Compliance is outstanding, to a maximum of $25,000
  • New penalty on taxpayers where a Compliance Order is obtained by CRA, equal to 10% of the taxes owing for year(s) subject to the Compliance Order, if taxes owing was in excess of $50,000

Other Notable Announcements

• Mineral Exploration Investment Tax Credit – 15% ITC program extended to eligible agreements entered into on or before March 31, 2025
• Expansion of eligible expenses for Disability Support Deduction program
• Doubling Volunteer Firefighters and Volunteer Search and Rescue Tax Credits to $6,000
• Modernized and simplify Charity communications and donation receipt requirements
• Certain crypto-related businesses will be required to provide information similar to mainstream banking/financial institutions starting in 2026
• Consideration is being given to a new tax on vacant residentially-zoned land, with consultations to be launched later this year

Additional clarification and details of previously announced initiatives

• Changes to revamped Alternative Minimum Tax calculation
• Clean Electricity ITC and Clean Manufacturing Technology ITC criteria and eligibility
• Employee Ownership Trust qualifying conditions and expansion of similar rules to worker cooperative corporations

Conclusion

Many of the provisions announced in the Budget are not fully formed, and further details and legislation wording will become available in the future. Much like the additional information provided now for initiatives previously announced, future Department of Finance communication will be necessary before the full scope of these changes will be known.

We will endeavour to provide more detailed analysis when possible. Please contact your Virtus advisor with specific questions or to discuss your particular situation.

The post 2024-2025 Canadian Federal Budget Highlights and Analysis appeared first on Virtus Group.

The medical expense tax credit is a non-refundable tax credit that allows you to reduce the income tax you owe. It covers a wide range of medical expenses for you, your spouse or common-law partner, and your dependent children under 18.

Eligible Expenses

• Medical Expenses: Includes costs not covered by insurance such as dental services, prescription drugs, and vision care.
• Disability-Related Expenses: Expenses for those who need therapy, including devices and certain renovations made to your home to make it more accessible.
• Travel Expenses: If you had to travel at least 40 kilometers (one way) to receive medical treatment, you might be able to claim travel expenses.

How to Claim

• Gather Documentation: Keep all receipts for medical expenses paid for any 12-month period ending in 2023. Documentation should clearly show the service date and the payment made.
• Calculate Your Credit: The medical expense tax credit is calculated as 15% of your eligible medical expenses that exceed the lesser of $2,635 or 3% of your net income. 
• Claim the Credit:  Total medical expenses for you, your spouse or common-law partner and your dependents can be entered onto line 33099 of your tax return.  Using the formula above, you will calculate the medical expense tax credit to be included in line 33200.

Considerations

• Review Eligibility: The list of eligible expenses is extensive and updated regularly. Check the Canada Revenue Agency (CRA) website for the most current information. 
• Forgetting to Claim Travel Expenses: If you travel more than 40 km (one way) for medical treatments, these expenses can add up. Keep a detailed log of your trips, including parking, and accommodation.
• Overlooking Supporting Documents: The CRA may request documentation to support your claim. Keep all receipts and prescriptions in a safe place for at least six years.

Conclusion

Leveraging the medical expense tax credit can reduce your tax burden, especially if you or your family have had substantial medical expenses throughout the year. By keeping thorough records and understanding the eligible expenses, you can maximize your benefits. Always consider consulting with a tax professional to ensure you’re taking full advantage of this and other tax credits.

The post Understanding the Medical Expense Tax Credit appeared first on Virtus Group.

Authored by RSM Canada

Finance and accounting are essential aspects of every business, but they’re historically reliant on time-consuming and error-prone manual processes. Finance automation seeks to replace these processes with fully automated and modernized ones. Understanding the five levels of automation and the four key steps you can take toward digital transformation will help you ensure your efforts deliver the best possible results for your business.

What transformation looks like

Finance automation has the power to transform your entire finance and accounting function, from the staffing levels you need to the reporting you deliver, to your overall growth and efficiency. Here are some ways finance automation can benefit your business:

• Increased efficiency: Develop efficiencies by automating processes within finance functions to eliminate manual tasks, data entry and human errors while improving accuracy and operational performance.
• Data accuracy and consistency: Integrated and connected systems ensure you get consistent answers irrespective of the data’s source.
• Improved customer and employee experience: Customers enjoy a frictionless experience and employees are freed from transaction processing to focus on financial analysis and meaningful insights benefitting the organization and fulfilling resources.
• Reduced costs: Automating processes increases the productivity of existing staff and can provide future cost avoidance in the form of staffing and/or risk reduction.
• Powerful insights/increased transparency: Artificial intelligence (AI) and machine learning (ML) embedded in finance and accounting applications use historical data to offer recommendations to drive strategic decision making.
• Scalability for future growth: Many of today’s finance automation solutions are managed in the public or private cloud. For middle market businesses, the cloud offers the ability to scale up or down as business needs evolve without purchasing additional hardware or software. Cloud applications also provide the infrastructure to support a digital workforce, providing the ability to locate talent remotely.

Adjusting to change and challenges

In addition to building efficiency and optimizing processes, automation can adapt to trends that may influence the finance function at your organization. Some examples include:

• Disruption: Whether it’s due to changing customer expectations, new technologies, regulatory updates, economic conditions or new market entrants, moving your finance function toward a fully automated, data-driven approach will enable you to take preemptive action to meet industry disruption head-on.
• Regulatory shifts: Regulatory agencies are increasing their focus on customer protections, data retention policies and more fair treatment of disadvantaged communities. Automating regulatory compliance enables you to make centralized updates and ensure that these changes are reflected across your tools and applications.
• Skilled labor shortage: In a recent RSM survey, 58% of middle market businesses say that hiring is “very” or “extremely” challenging, and 68% say they are struggling to attract experienced talent. Automating processes reduces staffing requirements and can boost employee retention by engaging your existing talent in more interesting, fulfilling work.
• Process innovation: A plethora of new technologies such as generative AI, ML and big data can transform the finance function. Taking advantage of automation today will lay the foundation to make the most out of these new technologies as they become more widely utilized.

Finance automation maturity: A continuum

Many businesses have implemented a variety of finance automation solutions but haven’t achieved the nirvana of transformation. Often teams are overwhelmed by their options and/or have difficulty gaining the necessary stakeholder buy-in.

Remember that finance automation exists on a continuum. It’s important to keep moving forward, building momentum as you go, until you arrive at the highest level of finance automation: autonomous finance and accounting processes.

Here’s how RSM defines the five levels of finance automation maturity:

• Level 1: Manual. An organization uses older technologies such as Excel and email to collaborate and communicate. This outdated approach results in inefficient processes, errors and siloed data.
  • Example: Accounting personnel must manually enter general ledger data for intercompany accounts into Excel and manually compare debits and credits between accounts. Approvals are still done using pen and paper or email.
• Level 2: Digital. An organization has implemented a foundational layer of technology that provides improved visibility, collaboration, controls and standardization.
  • Example: A cloud-based solution is used to capture budget inputs, assumptions and formulas to forecast amounts for business decision making.
• Level 3: Optimized. An organization has stabilized its use of digital tools, achieving a high level of adoption and best practices with upskilled talent.
  • Example: Using an existing digital solution, an organization unlocks further functionality by integrating additional systems or data sources.
• Level 4: Automated. By maximizing automation within specific tools, platforms and integrations across the technology stack for end-to-end automation, an organization reduces—and may even remove—manual intervention.
  • Example: The digital solution automatically creates a journal entry for exceptions and posts the missing or incorrect data in the general ledger.
• Level 5: Autonomous. An organization’s technology environment includes multiple integrated solutions sharing data and triggering process completion without human intervention.
  • Example: The digital solution uses reconciled data to create payment files that are passed to an adjacent solution to initiate payment from the bank.

4 key steps toward maximum impact

For most organizations, the transformation journey begins with automating a single routine task. Then it can evolve to a broader focus. Those organizations that remain stuck in lower-level digitization and automation likely still will see some modest cost savings but will miss out on the opportunity to significantly affect business outcomes including revenue generation, profit maximation and business process reinvention.

A typical automation journey follows four core steps:

1. Task automation. Automating or digitizing a task using a single tool
2. Process automation. Using one tool or pairing multiple tools to automate an end-to-end process such as account reconciliation
3. Orchestration. Integrating multiple tools that talk to one another into a platform to automate the entire chain
4. Business operations creation and reinvention. Using multiple tools to connect to a variety of internal and external ecosystems

Making strides on the path to automation

Whether you have yet to embark on your financial automation journey or you haven’t achieved the transformation you were hoping for, continuous improvement should be your goal. As automation technologies continue to proliferate, your organization will need both a vision of what is possible and a road map for getting there in order to keep up with the competition.

This article was written by Jonas Melton and originally appeared on 2024-03-27 RSM Canada, and is available online at https://rsmcanada.com/insights/services/digital-transformation/transform-your-business-with-finance-automation.html.

RSM Canada Alliance provides its members with access to resources of RSM Canada Operations ULC, RSM Canada LLP and certain of their affiliates (“RSM Canada”). RSM Canada Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM Canada. RSM Canada LLP is the Canadian member firm of RSM International, a global network of independent audit, tax and consulting firms. Members of RSM Canada Alliance have access to RSM International resources through RSM Canada but are not member firms of RSM International. Visit rsmcanada.com/aboutus for more information regarding RSM Canada and RSM International. The RSM trademark is used under license by RSM Canada. RSM Canada Alliance products and services are proprietary to RSM Canada.

Virtus Group is a proud member of the RSM Canada Alliance, a premier affiliation of independent accounting and consulting firms across North America. RSM Canada Alliance provides our firm with access to resources of RSM, the leading provider of audit, tax and consulting services focused on the middle market. RSM Canada LLP is a licensed CPA firm and the Canadian member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries. Our membership in RSM Canada Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources. For more information on how the Virtus Group can assist you, please call us at 855-206-5697.

The post Transform your business with finance automation appeared first on Virtus Group.

Minimal tax changes, emphasis on spending

There were no new taxes or increased tax rates announced in the budget. The following details are related to corporate taxes, consumption taxes and tax incentives within the province:

Corporate tax

• Saskatchewan corporate tax rate for Small Business Deduction eligible income will remain at 1% until June 30, 2025, extended from June 30, 2024

Consumption taxes

• Additional resources have been added to identify taxpayers not complying with filing required returns and remitting required taxes
• Additional and increased penalties for non-compliance, late-filed returns and overdue payments
• Click here for full consumption taxes details

Tax incentives

• New Saskatchewan Critical Mineral Innovation Incentive (SCMII) – provides tax credits for 25% of eligible program costs deploying novel technologies in the critical mineral sector. Applicable to pilot projects and commercial scaling projects in the aluminum, cobalt, copper, gallium, helium, lithium, magnesium, nickel, rare earth elements and zinc industries. Shares $100M total funding cap with Petroleum Innovation Incentive. Full details here
  
  
• New Critical Mineral Processing Investment Incentive (CMPII) – provides tax credits for 15% of eligible program costs for eligible projects. Projects must create value in new or existing aluminum, cobalt, copper, gallium, helium, lithium, magnesium, nickel, rare earth elements and zinc projects.  Shares $500M total funding limit with Oil and Gas Processing Investment Incentive. Full details here
  
  
• Expanded Saskatchewan Petroleum Innovation Incentive (SPII) – provides tax credits for 25% of eligible program costs and has been extended 5 years to March 31, 2029. Applicable to pilot projects and commercial scaling projects that demonstrate innovation or significant advancement in the Saskatchewan Oil & Gas industry.  Total funding is also increased to $100M from $30M. Full details here
  
  
• Expanded Oil and Gas Processing Investment Incentive (OGPII) – provides tax credits for 15% of eligible project costs and has been extended 5 years to March 31, 2029. Projects must create value in new or existing oil, gas, helium, lithium or chemical fertilizer projects.  Total funding is also increased to $500M from $370M. Full details here
  
  
• Expanded Saskatchewan Technology Start-up Incentive (STSI) – 45% tax credit program for eligible investors has been extended 1 year to March 31, 2027. Eligible start-ups expanded to include the cleantech sector, in addition to existing eligible agtech and digital sectors, and the annual total credits available is doubled to $7M. Full details here
  
  
• Extended Saskatchewan Commercial Innovation Incentive (SCII) – reduces corporate tax rate for 10-15 years on qualifying intellectual property commercialized in Sask. The program application peiod has been extended for 1 year to June 30, 2025. Full details here
  
  
• New Multi-Lateral Well Program – provides tax incentives to encourage new drilling of multi-later oil wells to increase oil recovery rates. The program applies to new wells drilled from April 1, 2024 to March 31, 2028. Full details here

Conclusion

View the Saskatchewan Finance press release and full budget details can be found here.

Please contact your Virtus Advisor to discuss any specific questions about the Budget or fill out the form below.

The post Saskatchewan Provincial Budget 2024-2025 Commentary appeared first on Virtus Group.

AgriStability Program Overview

At its core, AgriStability is a Business Risk Management program that guards against significant declines in farming income. It is a margin-based program, meaning it focuses on your profit margin, which is the difference between your qualifying revenues and expenses. Participation in the program each year requires enrollment, payment of a fee, and submission of specific forms within the program’s strict deadlines.

A critical aspect of AgriStability is understanding how payments are calculated. For the 2023 program year, if your production margin drops more than 30% below your historical reference margin, AgriStability covers 80% of that loss.

In other words, if your reference margin is $100 and your production margin for a particular year is $50, then you would qualify for a payment of $16 for that year (70% of $100 = $70 – $50 = $20 eligible loss x 80%). This calculation is central to the program’s design, offering a substantial safety net when you need it most.

Key Dates and Fees

• April 30th: Enrolment and fee deadline for the current year
• September 30th: Submission deadline for the previous year’s Agristability forms without penalty
• December 31st: Submission deadline for the previous year’s Agristability forms with a potential penalty if in a payout position , and deadline to pay registration for the current year with penalty.

Your fees are based on your previous year’s contribution reference margin, plus an administration fee of $55 . The fee is calculated as 0.45% of your contribution reference margin, multiplied by 70%. For new participants, fees are calculated using a three-year industry average.

Calculation of Production Margins

Production margins are calculated by subtracting allowable expenses from your allowable income, with adjustments for changes in inputs, deferred income, accounts receivable and accounts payable. Changes in crop and livestock inventories are also considered.

The reference margin is an average of your production margins over the past five years, excluding the highest and lowest years. If you don’t have five years of history, it is based on the last three years only. New farmers are provided with a reference margin that is created for them based on industry averages.

Program Benefits and Payments

Once your application is processed, you will receive a Calculation of Program Benefits statement that outlines how your benefit was calculated and any payments you are eligible for. The maximum payment for any given year is $3 million.

Advance Payment Options

• Interim Payments: Based on estimates of your previous year’s production and reference margins. Applications for this can be submitted by March 31st.
• Targeted Advance Payment: In years when specific sectors or regions need timely cash flow, governments may issue advance payments based on the industry average decline.

Benefits of AgriStability

AgriStability isn’t just a government subsidy, it is a comprehensive risk management tool. It offers a whole-farm approach, meaning it looks at your entire farming operation and not just parts of it. This is crucial because it ensures that you are covered for a wide array of risks that can impact your farm’s income.

Whether you are dealing with market fluctuations, declines in yields or unexpected increases in costs, AgriStability is designed to help you navigate these challenges. It is about keeping your farm viable when conditions cause your bottom line to drop substantially.

Program Management and Delivery

AgriStability is a joint effort between the federal and provincial governments. The cost is shared on a 60/40 split – 60% federally and 40% provincially. This partnership means that the program is tailored to work across the country while considering the unique challenges faced by farmers in each region.

Some provinces deliver the program provincially while others are administered by the federal government, so delivery of the program may vary slightly depending on where your farm is located.

Comparing AgriStability with AgriInsurance

AgriStability isn’t the only program available to help navigate challenging results. AgriInsurance is another key player in the agricultural support scene. However, while AgriInsurance focuses mainly on yield loss due to natural occurrences such as frost or excessive rain, AgriStability is much broader.

AgriStability is designed to cover a wider range of risks, including drops in market prices or spikes in costs. Understanding the differences between these programs can help you determine the best way to protect your farm utilizing a combination of both of them.

Challenges and Criticisms

No risk management program is perfect, and AgriStability has its fair share of challenges and drawbacks. Some feel the program could be more responsive and/or easier to navigate. Understanding the program’s drawbacks is important for making informed decisions about whether AgriStability is right for your farm.

It is also important to monitor the program for any proposed changes and how those changes may create or reduce some of the program’s challenges as they relate to your farm.

Future Outlook and Proposed Changes

The agricultural sector is always changing, and programs like AgriStability are also always changing to try and adapt. There have been talks about updating the program to better meet the challenges of modern farms.

This could include changes in how payments are calculated, or adjustments to eligibility criteria. Staying informed about any potential changes from year to year can help you better plan for the future of your farm.

Conclusion

AgriStability is more than a simple safety net. It is an integral part of maintaining the financial viability of Canadian farms. With its comprehensive coverage and support, it plays a vital role in helping farmers navigate the complex world they operate within.

Staying informed and engaged with AgriStability can make a significant difference in the resilience and success of your farming operations.

The post AgriStability Program Overview: Is it Right for Your Farm? appeared first on Virtus Group.

Authored by RSM Canada

Executive summary

The Canada Border Services Agency (CBSA) recently revised its policy correcting errors in declarations of origin, tariff classification or value for duty to require multiple corrections.

The CBSA has recently revised its policy on correcting errors in declarations of origin, tariff classification or value for duty. In the newly released D11-6-6 memorandum, the CBSA outlined a new policy requiring subsequent corrections to previously corrected transactions on the same issue. Prior to this change in policy, explained below, it was unclear if subsequent corrections were required. The CBSA has now made their expectations clear from a policy perspective on requiring correction filings.

Legal Requirement and Prior Policy

Section 32.2 of the Customs Act (the “Act”) obligates importers, the owner of goods imported and certain other persons to correct declarations that are in error under the three trade programs: origin, tariff classification and/or value for duty. The correction(s) must be filed within 90 days of the person having “reason to believe” the declaration is incorrect.¹ Payment of duties owing as a result of the correction must be made as well. A correction is not required or allowed if the correction would result in result in a claim for a refund of customs duties.² This obligation to correct expires four years after the goods are accounted for under the Act.³

The prior policy required that one correction be filed per intersection of trade program affected and declaration.⁴ For example, Company X had one June shipment of widgets and previously corrected its declaration of origin for the widgets in this shipment. It can correct the tariff classification for its June widget shipment or the declaration of origin for its August shipment of widgets but it would normally not be required to file a second correction under 32.2 of the Act to the declaration of origin of the widgets in the June shipment.

Under the previous policy, the correcting party had two options for subsequent corrections involving the same trade program and declaration as the original correction. If the correcting party was aware of another issue which could create errors in the declaration when filing a correction for an initial error, they were encouraged to contact the CBSA to discuss. If a correcting party finds a subsequent adjustment for the same issue is necessary for an adjusted declaration, they can request, though are not obligated to request, a re-determination or further re-determination under section 60 of the Act within the prescribed time limits. The CBSA also employed administrative work arounds for these types of matters on occasion by encouraging corrections to be filed notwithstanding the policy limitation for subsequent corrections. This policy has presented challenges for both the CBSA and correcting parties where the original correction was in error and/or subsequently additional corrections for the same program area were required.

New Policy

In December of 2023, after a consultation with its stakeholders, the CBSA released a revised policy memorandum which changed the policy on subsequent corrections. Instead of having the obligation to correct once as outlined above, the importer is now required to file subsequent corrections for errors uncovered post the initial correction.⁵ No subsequent corrections are permitted where:

• a further re-determination initiated by the CBSA is made under section 59(1)(b) of the Act,
• the CBSA re-determines or further re-determines origin, tariff classification or value for duty on request of a relevant party under section 60 of the Act or;
• any other scenarios listed in section 61 of the Act. 

To explain this new policy, the CBSA provides the example of an importer who discovers that the values declared were under reported on its initial declaration and will also be further adjusted at year-end by way of a transfer pricing increase adjustment on the same goods.⁶ The importer now ends up making two corrections. The first correction is made within 90 days of discovery of the under reported value, and a subsequent correction is made within 90 days once the information about the year-end transfer pricing increase adjustment is available.  This is, in some cases, a change to a previous administrative acceptance by the CBSA that corrections were only to be filed once all values for the period were both final and accurate and that the correction for the “period” was for the totality of errors for that issue (in this example, value) that occurred in that period.

Potential impact of the policy change

The D Memorandum series is the CBSA’s interpretation of relevant law and regulations and other related operational considerations. These policies are from time to time subject to amendment. Affected parties should consult with customs professionals to stay up to date on CBSA policy, operational and legal developments. Importers, the owner of goods imported and other persons who have an obligation to correct should therefore be aware that according to the change in policy, the CBSA is expecting additional corrections be filed where applicable. In addition, affected parties who need to correct after the 90-day deadline has passed should review the CBSA’s Voluntary Disclosure program. This program allows for the non-imposition of penalties and punitive interest upon the approval and filing of an eligible disclosure.

Those impacted by the change in policy should review their compliance strategy being mindful that the CBSA has a variety of tools it may employ to ensure compliance with their policies such as penalties, punitive interest and increased cargo exams to name a few. It is therefore strongly recommended to review situations that require corrections and subsequent corrections and map out an appropriate compliance strategy.

[1] It should be noted that “reason to believe” is not defined in the legislation. However, the CBSA outlines in D11-6-6 paragraphs 1 through 9 their current policy position regarding the circumstances where a person may have “reason to believe”. A bona fide, well supported difference of opinion is not necessarily an error that gives rise to reason to believe.

[2] Section 2 of the Act provides that, for this purpose, customs duties do not include the Goods and Services Tax (GST). Therefore, a reduction in customs value as a result of an error would still require a correction if the goods were duty free, but subject to the import GST or duty free and zero-rated for GST purposes on import according to CBSA’s policy guidance.

[3] Subsection 32.2(4) of the Act

[4] “’Reason to Believe’ and Self-Adjustments to Declarations of Origin, Tariff Classification, and Value for Duty Memorandum D11-6-6”, Canada Border Services Agency, April 12, 2013. See paragraph 28.

[5] “Memorandum D11-6-6 – Reason to believe and corrections to the declaration of origin, tariff classification or value for duty”, Canada Border Services Agency, December 2023 at paragraphs 35 and 36.

[6] Ibid.

This article was written by Jaime Seidner, Cassandra Knapman and originally appeared on 2024-03-20 RSM Canada, and is available online at https://rsmcanada.com/insights/services/business-tax-insights/subsequent-corrections-for-customs-a-customs-policy-change.html.

The information contained herein is general in nature and based on authorities that are subject to change. RSM Canada guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM Canada assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.

RSM Canada Alliance provides its members with access to resources of RSM Canada Operations ULC, RSM Canada LLP and certain of their affiliates (“RSM Canada”). RSM Canada Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM Canada. RSM Canada LLP is the Canadian member firm of RSM International, a global network of independent audit, tax and consulting firms. Members of RSM Canada Alliance have access to RSM International resources through RSM Canada but are not member firms of RSM International. Visit rsmcanada.com/aboutus for more information regarding RSM Canada and RSM International. The RSM trademark is used under license by RSM Canada. RSM Canada Alliance products and services are proprietary to RSM Canada.

Virtus Group is a proud member of the RSM Canada Alliance, a premier affiliation of independent accounting and consulting firms across North America. RSM Canada Alliance provides our firm with access to resources of RSM, the leading provider of audit, tax and consulting services focused on the middle market. RSM Canada LLP is a licensed CPA firm and the Canadian member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries. Our membership in RSM Canada Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources. For more information on how the Virtus Group can assist you, please call us at 855-206-5697.

The post Subsequent corrections for customs: A customs policy change appeared first on Virtus Group.

Authored by RSM Canada

Executive summary

To simplify your tax-filing experience, we have compiled the key tax filing and payment deadlines for the middle-market taxpayers. This article will serve as a one-stop solution for keeping track of the key tax deadlines approaching. By filing the tax return(s) and paying the taxes due on time, taxpayers can avoid delays to any refund, benefit, or credit payments they may be entitled to. In addition, complying with the due dates will help to avoid late-filing and/or late-payment penalties and interest.

Canadian tax filing and payment deadlines for middle-market taxpayers for 2024

With the approaching tax season, a taxpayer may have to file numerous returns to ensure tax compliance. In addition, with the fast-paced tax developments happening, keeping track of the annual tax filing and payment deadlines could be difficult. This article is a one-stop solution for middle-market taxpayers as it summarizes key tax filing and payment deadlines for the year 2024. The table below is not exhaustive but caters to the most common compliance relevant for middle market taxpayers.

Where the taxpayer omits filing and payment, late files and remits, additional penalties and/or interest kicks in leading to an additional cost burden on the taxpayer.

* As per the Canada Revenue Agency (CRA) guidance, when a due date falls on a Saturday, Sunday or public holiday recognized by the CRA, the return is considered filed and the payment is considered to be made on time if the CRA receives the filing, or if the payment or filing is postmarked, on or before the next business day. Therefore, in these instances, as the due date falls on a weekend or a federal holiday, the filing or payment deadline is the first working day following.

This article was written by Farryn Cohn, Chetna Thapar, Mamtha Shree and originally appeared on 2024-02-27 RSM Canada, and is available online at https://rsmcanada.com/insights/tax-alerts/2024/canadian-tax-filing-and-payment-deadlines-for-middle-market-taxpayers-for-2024.html.

The information contained herein is general in nature and based on authorities that are subject to change. RSM Canada guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM Canada assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.

RSM Canada Alliance provides its members with access to resources of RSM Canada Operations ULC, RSM Canada LLP and certain of their affiliates (“RSM Canada”). RSM Canada Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM Canada. RSM Canada LLP is the Canadian member firm of RSM International, a global network of independent audit, tax and consulting firms. Members of RSM Canada Alliance have access to RSM International resources through RSM Canada but are not member firms of RSM International. Visit rsmcanada.com/aboutus for more information regarding RSM Canada and RSM International. The RSM trademark is used under license by RSM Canada. RSM Canada Alliance products and services are proprietary to RSM Canada.

Virtus Group is a proud member of the RSM Canada Alliance, a premier affiliation of independent accounting and consulting firms across North America. RSM Canada Alliance provides our firm with access to resources of RSM, the leading provider of audit, tax and consulting services focused on the middle market. RSM Canada LLP is a licensed CPA firm and the Canadian member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries. Our membership in RSM Canada Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources. For more information on how the Virtus Group can assist you, please call us at 855-206-5697.

The post Canadian tax filing and payment deadlines for middle-market taxpayers for 2024 appeared first on Virtus Group.

Authored by RSM Canada

Executive summary

The CBSA Assessment and Revenue Management (CARM) system will enter into use on May 13th, 2024. CARM will be the system of record to interact with the CBSA for commercial import shipments into Canada. Proactively ensuring necessary registrations and other requirements are met before May 13th will prevent interruptions in importing and doing business with the CBSA.

New mandatory system for Canadian importation

The Canada Border Services Agency (CBSA) has announced that the CBSA Assessment and Revenue Management (CARM) system will enter into use on May 13th, 2024. CARM will be the system of record to interact with the CBSA for commercial import shipments into Canada.

The CARM system introduces material procedural changes for importers. Proactively ensuring necessary registrations and other requirements are met before May 13th will prevent interruptions in importing and doing business with the CBSA. The CBSA has advised that importers trying to import commercial goods on May 13th without a CARM Client Portal (CCP) account will be ineligible to import. It is likely that some importers will not have registered for the CCP causing border congestion and potential supply chain disruptions. Importers should therefore consider increasing critical imports into Canada prior to May 13th to plan for this potential disruption.

Registration

Importers will need to register for a CCP account to continue importing activities. To complete the CCP registration process, the business will need the following information:

• A GCKey or the ability to use a sign-on partner (financial institution linked to the CBSA systems)
• Business Number (BN 9)
• Import/Export Program account (RM)
• Statement of Account and/or Daily Notice

Individuals at the business that require CPP access will need their own personal CARM profile. The level of access and authorization each individual will have to the business’ account can be controlled. The individual who initially registers the business will normally be the business account manager and have the highest level of access and authorization.

Delegation of authority

Importers can delegate their customs broker the authority to act on their behalf in the CCP. To ensure a smooth transition with the new system, importers should ensure this authority is delegated in CARM well before May 13th.

Release prior to payment privileges

Importers that participate in the Release Prior to Payment (RPP) program can have their imported goods released by the CBSA before payment of duties and taxes if sufficient security is posted. Importers may currently be utilizing the RPP security of their custom broker for the expedited release of their imported goods. However, once CARM becomes mandatory on May 13th, commercial importers will need to post their own financial security to participate in RPP. The CBSA has advised as long as importers have registered in the CCP, they will have 180 days to transition to meet the required financial security obligations to continue to enjoy RPP benefits.

Potential opportunity for rationalization

Given this system change, it is suggested that importers review all of their RM accounts and consider consolidating and/or eliminating any unnecessary RM accounts. Financial security requirements will need to be met for all RM accounts.

Recommended practices for use of CARM

There may be unexpected issues with CARM uncovered as it becomes available and used by a wider audience. To ensure a smooth transition, those who import commercial goods into Canada should register their businesses in the CCP and delegate necessary authorities prior to May 13th. Entities which are not registered in time will, according to the CBSA, be ineligible to import until CCP registration is complete. Importers looking to use the RPP should also ensure they are positioned to post the necessary security being mindful of the transition timelines for doing so. For additional assistance with navigating the transition to CARM, please see the CBSA’s resources¹ and contact your RSM Canada trade advisory team.

[1] “CARM: The new way to assess and pay duties and taxes on imported commercial goods”, accessible at: https://www.cbsa-asfc.gc.ca/services/carm-gcra/menu-eng.html.

This article was written by Jaime Seidner, Cassandra Knapman and originally appeared on 2024-02-20 RSM Canada, and is available online at https://rsmcanada.com/insights/tax-alerts/2024/new-mandatory-system-for-canadian-importation.html.

The information contained herein is general in nature and based on authorities that are subject to change. RSM Canada guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM Canada assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.

RSM Canada Alliance provides its members with access to resources of RSM Canada Operations ULC, RSM Canada LLP and certain of their affiliates (“RSM Canada”). RSM Canada Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM Canada. RSM Canada LLP is the Canadian member firm of RSM International, a global network of independent audit, tax and consulting firms. Members of RSM Canada Alliance have access to RSM International resources through RSM Canada but are not member firms of RSM International. Visit rsmcanada.com/aboutus for more information regarding RSM Canada and RSM International. The RSM trademark is used under license by RSM Canada. RSM Canada Alliance products and services are proprietary to RSM Canada.

Virtus Group is a proud member of the RSM Canada Alliance, a premier affiliation of independent accounting and consulting firms across North America. RSM Canada Alliance provides our firm with access to resources of RSM, the leading provider of audit, tax and consulting services focused on the middle market. RSM Canada LLP is a licensed CPA firm and the Canadian member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries. Our membership in RSM Canada Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources. For more information on how the Virtus Group can assist you, please call us at 855-206-5697.

The post New mandatory system for Canadian importation appeared first on Virtus Group.