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www.ryanco.ca
Sound Tax Management in Difficult Times June 9, 2011 - - PowerPoint PPT Presentation
Sound Tax Management in Difficult Times June 9, 2011 - - PowerPoint PPT Presentation
Sound Tax Management in Difficult Times June 9, 2011 www.ryanco.ca Sound Tax Management in Difficult Times Rod Butcher, CGA, Director, Sales Tax Advisory, Ryan ULC Outline: 1. Commodity tax management 2. Assessment avoidance 3.
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Outline:
1. Commodity tax management 2. Assessment avoidance 3. Assessment mitigation 4. Payroll tax management 5. Property tax management
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Commodity Tax Management
- GST/HST/QST are each recoverable taxes for those in the private sector
- Rates are:
– 5% : Alberta, Manitoba, Saskatchewan, PEI and the Territories – 12% : British Columbia (currently) – 13% : Ontario, New Brunswick and Newfoundland & Labrador – 13.925% : Quebec (combined GST and QST) – 15% : Nova Scotia
- Loss of credit for tax paid to suppliers or on import is both a cash and income hit
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Commodity Tax Management
- Point of capture of the tax is at the weakest point in the organization
- Accounts payable staff usually entry-level
- Automation rarely possible except for employee expenses and allowances
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Commodity Tax Management
- Establish a project to back-comb through payables to recover missed tax
- Obtain flat file from IT of posting detail
- Filter for exceptions
- Investigate source documents for potential recovery
- Automate employee expense reports and allowance payments using CRA/MRQ-approved
factors
- Educate staff regarding posting routines
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Assessment Avoidance
- New HST:
– Where large businesses have operations in Ontario or BC, restrictions apply to recovery
- f provincial component of tax on fuel, automobiles, telecom, energy and M&E
– Penalties to apply if RITCs not observed – New billing rules for services and intangibles – invoice based on address of recipient, not where service performed – Transitional rules observance – New pension plan rules
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Assessment Avoidance
- Lack of export documentation for GST/HST/QST
- Lack of supporting documentation for input tax credits
- Insurance placed through non-resident broker/insurer
- New pension plan rules
- Not remitting on taxable benefits for GST/HST
- Not observing restrictions on recovery of GST or QST
- Failing to remit QST on insurance
- Incorrect use of 4.5% QST expense reimbursement factor
- Retail sales tax and computer software
- Retail sales tax and imports/inter-provincial transfers
- Retail sales tax and insurance provided by non-resident (e.g., through parent)
- Failure to collect tax as appropriate
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Assessment Mitigation
- Contest extrapolation based on sampling
– Population – Sample size – Period
- Determine if customers self-assessed
- Invoice customers for tax assessed
- Examine wash transaction relief for GST/HST/QST
- Voluntary disclosure
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Payroll Tax
- WSIB/WCB premium rates – reductions following business reorganization
- Payroll allocation – re-allocations among business units/jurisdictions
- Consolidated payroll reporting – check for errors after change to shared/central payroll ops
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Property Tax
- Property classification – reductions following change of use
- Tax application rebates – vacancy, demolition, renovation, etc.
- Assessment values – contest through reconsideration or appeal
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