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SMALL BUSINESS DEDUCTION (SBD) – REQUIREMENT TO CLAIM?

In a June 20, 2016 French Technical Interpretation (2016-0648481E5, Labarre, Sylvie), CRA confirmed that a corporation eligible to claim the SBD under Subsection 125(1) is not obligated to claim the deduction.

In some cases, a company may prefer to enhance the General Rate Income Pool by forgoing the SBD claim, enabling the corporation to pay out eligible dividends.

For further information see VTN Monthly Tax Update Seminar, Issue No. 421

EMPLOYEE BENEFITS – NEW FOLIO

On July 7, 2016, Income Tax Folio S2-F3-C2, Benefits and Allowances Received from Employment, was introduced to replace and cancel Interpretation Bulletin IT-470R(Consolidated), Employees’ Fringe Benefits, along with a portion of a few other publications. New information in the Folio include, among others:

  • a discussion of tax treatment of benefits by employee- shareholders and the capacity in which the benefit is conferred;
  • description of “benefits of any kind whatever”;
  • ways a benefit may be conferred and the timing of income inclusion;
  • the meaning of the term “primary beneficiary”;
  • a discussion of 3rd party benefits and discounts;
  • an overview of the exclusion from income for allowances provided to employees at special work sites or remote work locations; and
  • a discussion of “reasonable allowances”.

For further information see VTN Monthly Tax Update Seminar, Issue No. 421