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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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    Local Business

    Perfectionism vs Healthy Striving – High Performance Leadership Requires Understanding the Difference

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  • Leadership is challenging.

    In days gone by, it was enough for a leader to be the one who knew the most in the room. Today’s leadership requires levels of self-awareness, emotional and connectional intelligence that many leaders have not had the time or awareness to develop.

    Personal and professional development that assist a leader’s capacity to see “the potential in people and processes and the courage to develop that potential” is a journey; well worth your time and attention. One of the most significant challenges for leaders of today is to become aware of and managing what we believe. Our brains are busy making sense of so much information. It’s easy to jump to conclusions about ourselves, the people and the processes in our workplaces that are not 100% true.

    As leaders, raising our level of self-awareness helps us to check beliefs or stories that may or may not serve our organization well. One pit that many of us fall into, particularly if we are not aware that the pit it there, is perfectionism.

    Understanding the difference between perfectionism and healthy striving requires careful examination.

    Perfectionism is a “self-destructive and addictive belief system”.
    Healthy striving is a motivation that comes from a very different place and fuels the health of individuals and organizations.

    Perfectionism is “armour”, a defence mechanism, that has a way of hiding our best selves. It drives behaviour that ends up creating disconnection.
    Healthy striving has the reverse effect, empowering our most authentic voice, resilience, and greater connection in the workplace.

    The difference is subtle and isn’t necessarily observable.
    Our long term health and capacity as leaders depends on understanding and leveraging this distinction.

    Take your leadership and your organization to the next level with new thoughts, tools and awareness.
    Explore new ways to lead, parent and manage your relationships both in and out of work!


    Discover a Now’s The Time workshop this Wednesday evening.
    https://www.eventbrite.ca/e/perfectionism-or-healthy-striving-an-emotional-intelligence-workshop-tickets-53882990475

     


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    Local Business

    DIY BASIC VEHICLE SAFETY CHECKLIST

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  • Performing regular safety checks on your vehicle not only helps you get ready for unexpected weather but also peace of mind knowing your vehicle is prepared. Save this checklist for future use, enjoy!


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