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NO SOUP FOR YOU! Employees earning commissions need to go on a diet, implies CRA

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  • “NO SOUP FOR YOU” appears to be the message of the day from the Canada Revenue Agency (CRA) regarding business luncheons involving employees earning commission.

    This is a case of “don’t shoot the messenger”, I am only here to inform you, so please, holster your weapon.

    Consider the following scenarios:

    1) A corporation that takes out a client for lunch and has a salesperson attend and reimburses the cost will be able to deduct the expense of the meal, subject to a 50% cap on the expense and will not create a taxable benefit to the employee. (See: Guide T4130)

    2) A self-employed individual or partnership has the same benefit as in the first point.

    3) A self-employed commissioned agent, like insurance, or real estate, also has the same benefit.

    4) A transport employee that doesn’t receive an allowance, also has the same benefit of the above (subject to additional calculations and restrictions)

    5) A corporation provides a $17 meal allowance for an employee that is travelling away from the office, but still inside the metropolitan area, where the corporation is the primary beneficiary of the allowance, and the allowance is not an additional form of remuneration – receives the same treatment, and is non-taxable to the employee.

    But heaven forbid if you are a sales employee on commission, working in town, claiming your own expenses. If so, you only get to claim the meals that your client consumed up to the 50% cap and there is ‘no soup for you.’

    At the October 5, 2018 Association de planification fiscal et financière (APFF) [Tax and Financial Planning Association] Annual Congress in Gatineau, Quebec, the CRA pointed out that the 50% cap on meals expenses in Subsection 67.1(1) applies to the meal expense incurred, however Subsection 8(4) denies any deduction for the commissioned employee’s portion of those meals.

    Thus, if the commissioned employee takes one individual client out for lunch, and they eat the same thing, the commissioned employee only gets 25% of the meal receipt as a deduction.

    So from now on, Edmonton based commission employees will need to eat in Calgary and stay the night, and Calgary-based commission employees will need to eat in Edmonton and stay the night, because according to the the Department of Finance, and CRA’s interpretation, that makes good business, and tax, sense.

    Cory G. Litzenberger, CPA, CMA, CFP, C.Mgr is the President & Founder of CGL Strategic Business & Tax Advisors; you can find out more about Cory’s biography at http://www.CGLtax.ca/Litzenberger-Cory.html


    The CRA’s unofficial translated preliminary comment is below:

    “Paragraph 8(1)(f) provides that a taxpayer who was employed in the year in connection with the selling of property or negotiating of contracts for the taxpayer’s employer, may deduct in computing the taxpayer’s income amounts expended by the taxpayer in the year for the purpose of earning income from the employment subject to certain conditions provided for in that paragraph.

    Furthermore, subsection 8(4) provides, in particular, that amounts expended by an employee on a meal of the employee may not be deducted under paragraph 8(1)(f) unless the meal was consumed during a period while the taxpayer was required by the taxpayer’s duties to be away, for a period of not less than 12 hours, from the municipality where the employer’s establishment to which the taxpayer ordinarily reported for work was located and away from the metropolitan area, if there is one, where it was located.

    There is nothing in the Income Tax Act that allows the CRA to not apply subsection 8(4) where an employee’s meal was not consumed during a period while the taxpayer was required by the taxpayer’s duties to be away, for a period of not less than 12 hours, from the municipality where the employer’s establishment to which the taxpayer ordinarily reported for work was located and away from the metropolitan area, if there is one, where it was located”


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    Alberta

    Lack of pipeline access costs Canada $84 million a day. Alberta sharing real time cost with Canadians

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  • From the Province of Alberta – Province using “real time” counter to tally lost dollars and share with Canadians

    Alberta fighting to Keep Canada Working

    With pipeline delays now costing Canadians more than $80 million per day, Alberta is launching the next phase of the nationwide Keep Canada Working campaign.

    Alberta fighting to Keep Canada Working

    Minister Bilous introduces the next phase of the nationwide Keep Canada Working campaign.

    The latest push includes a real-time lost-revenue counter, which illustrates just how much Canadians will miss out on by keeping our energy resources landlocked. It is estimated that more than $6 billion in revenue has been lost across the country since the Federal Court of Appeal ruled against the Trans Mountain Pipeline expansion on Aug. 30. This money could have gone to build roads, schools and hospitals.

    The counter will be displayed digitally at locations near Parliament Hill in Ottawa, supported by advertisements in various formats from coast to coast.

    “From Day 1, we’ve been fighting for Trans Mountain. Under Premier Rachel Notley’s leadership, more Canadians than ever before support this project because they know we shouldn’t be selling our products on the cheap. There’s too much at stake. We will keep the federal government’s feet to the fire so that this project isn’t delayed any further.”

    Deron Bilous, Minister of Economic Development and Trade

    In early 2016, just four in 10 Canadians wanted to see the Trans Mountain Pipeline built. Thanks to Alberta’s nationwide efforts, that number is now seven in 10, as more Canadians recognize that creating good energy jobs and doing the right thing for the environment can go hand-in-hand.

    The current oil price differential is a stark illustration of why new pipelines are urgently needed. The government has also been engaging industry leaders on a number of different approaches to ease the differential, with more details to be announced at a later date.

    Background

    • Alberta has spent $10 million on this campaign, reaching over 10 million Canadians from coast to coast since it began in May 2018.
    • It’s estimated that the discount on Canadian oil caused by pipeline bottlenecks now costs producers and the Canadian economy as much as $84 million per day. This figure is calculated with methodology used by Scotiabank, and has been revised based on the current $45-per-barrel difference between WTI and WCS.


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    Local Business

    Red Deer Quality Inn & Conference Centre receives national award

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  • From Choice Hotels Canada

    Choice Hotels Canada Celebrates Top Performers 

    Quality Inn & Conference Centre Red Deer honoured with sales excellence award 

    Choice Hotels Canada has announced the national winners of the prestigious APEX Awards (Awards for Property Excellence) at the 2018 Choice Hotels Canada Fall Conference in Niagara Falls, Ontario.   The Quality Inn & Conference Centre Red Deer was presented with the national award for sales excellence.

    The award recognizes the outstanding sales efforts achieved by the property.  The criteria to qualify included engagements with Global Sales Canada, participation in opportunities like sales missions and training, response to RFPs and maintenance of high quality standards.

    Twelve top performing properties across the country were awarded national APEX Awards, which recognize stellar performance, ongoing commitment to guest service and community leadership. 

    “We are delighted to announce that Quality Inn & Conference Centre Red Deer has won a national APEX Award,” says Brian Leon, president of Choice Hotels Canada. “Their extraordinary achievement in sales excellence sets them apart and is an example to other hotels in our system.”

    For more than 10 years, the Quality Inn & Conference Centre has been a proud part of Red Deer and has welcomed thousands of guests from around the world.  The hotel is known for supporting 3 local public schools with their monthly “Three C’s Awards”, the Canadian Red Cross and affected families in crisis, Habitat for Humanity and Sleeping Children Around the World charity.

    For more additional information or to make your reservation at any of these award-winning hotels, visit www.ChoiceHotels.ca.


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    november, 2018

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    wed21nov5:30 pm- 11:00 pmFestival of Trees Preview Dinner5:30 pm - 11:00 pm

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