Tax Carnival Ecstasy – February 19, 2013

Welcome to the February 19, 2013 edition of Tax Carnival Ecstasy. In this edition we start with a post from David de Souza who looks at 3 Ways To Pay Less Tax On Your Savings. Kurt at Mymoneycounselor.com has tips on the best way to Choose a Tax Preparer. Have you ever wondered if You need to Pay Taxes on credit card rewards from reward points? William has the details. And finally, John Schmoll examines 5 Easy Ways to Save the Money you Lost Due to the Payroll Tax Increase. Hope you like the material, share on Facebook, tweet, bookmark, and come back soon.

deductions

David de Souza presents 3 Ways To Pay Less Tax On Your Savings posted at TaxFix Feed Update, saying, “This blog post will provide 3 tips on how you can maximise your tax efficiency on your savings.”

filing

Bill Smith presents Canadian Income Tax Filing Made Easy posted at 2014 Taxes, saying, “In recent years, the Canada Revenue Agency (CRA) has been expanding the methods available for you to file your income taxes.”

Bill Smith presents Filing Taxes with TurboTax Canada posted at 2014 Taxes, saying, “TurboTax Canada is designed to make filling less of a challenge no matter who you may be.”

Day 56 - Tax Time
Day 56 – Tax Time (Photo credit: absoblogginlutely)

[email protected] presents How to Choose a Tax Preparer posted at Money Counselor, saying, “The IRS’s “10 Tips to Help You Choose a Tax Preparer” overlooks a huge tip that could save you a bundle.”

Bill Smith presents District Court Rules That The TurboTax 2013 Ads Can Continue To Run posted at 2013 Taxes, saying, “The recent TurboTax 2013 television commercials focused on the accounting experience of the TurboTax 2013 staff while also pointing out the lack of experience of tax preparers from other major tax preparation companies.”

Bill Smith presents How You’re Wrong About Debt Consolidation posted at Debt Consolidation, saying, “With so many mixed messages presented by so many different sources, it can be difficult to know which to believe when it comes to finances.”

tax law

William presents Tax Time: Do You Have to Pay Taxes on Credit Card Rewards? posted at Card Guys Blog, saying, “So, the question becomes this: Are your credit card rewards actually considered income? As always, with our somewhat ambiguous tax code, the answer is: It depends.”

taxes

Bill Smith presents Getting Your Taxes Done with TurboTax Canada posted at 2014 Taxes, saying, “TurboTax Canada is the software that every person should take advantage of when it comes time to sit down and do your taxes.”

Bill Smith presents E-Filing Your Taxes With TurboTax 2013 posted at 2012 Taxes – Free Tax Filing Options, saying, “We are in the midst of the 2013 tax filing season. Every year since 1993; Americans have increasingly used e-filing software to file their tax returns. TurboTax 2013follow has perfected the process of contemporary electronic tax filing.”

John Schmoll presents 5 Easy Ways to Save Money Lost Due to the Payroll Tax Increase posted at Frugal Rules, saying, “The Payroll Tax Holiday went away at the beginning of 2013. Some families were prepared, some were not. This is a list of ways to help make up for that, or if you’re looking to live more frugal and save money in general.”

David de Souza presents Which countries pay the most tax? posted at Tax Credits, saying, “If you think that you pay too much tax in the US you should compare what you pay to other countries in the world. This blog post looks at which countries pay the highest tax.”

tips

Bryan presents Best Short Term Investments posted at Gajizmo, saying, “Even multi-billion dollar corporations are always trying to maximize the returns of their cash and short term investments, so why shouldn’t you? Here is a comprehensive list of all the best short term investment options, from online checking accounts, money markets and Treasuries to “I-Bonds”, corporate bonds, and property tax certificates. Find out the pros and cons of each and where you feel comfortable parking your cash for the short-term before you invest it at higher yields.”

That concludes this edition. Submit your blog article to the next edition of tax carnival ecstasy using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

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SR&ED and the Federal Budget

The Scientific Research and Experimental Development (SR&ED) program, introduced in the 1980s, is a federal tax incentive program administered by the Canadian Revenue Agency, which provided $3.6 billion in tax assistance for research and development in 2011. In the past year, the SR&ED or SRED program was reviewed by a panel led by OpenText’s Thomas Jenkins which led to a series of recommended changes to the program presented to the federal government. Despite dramatic speculations of program overhauls in anticipation of the budget, the SR&ED program continues to be one of the most lucrative R&D incentive programs in the industrial world, with the enhanced Investment Tax Credit (for smaller businesses) rate maintained at 35%.

Current eligible SR&ED expenditures are based on salary and wages, materials, overhead, contracts, and capital expenditures. The 2012 federal budget proposed four core adjustments to the program. The proposed changes are as follows: the Prescribed Proxy Amount (PPA) method of overhead calculation is to be reduced from 65 to 55 percent of direct labour costs by 2014; capital costs will no longer be eligible for the credit in 2014 and onward; eligible third-party contract payments will decrease from 100 to 80 percent in 2013; and the General Investment Tax Credit (for large corporations and foreign-owned companies) will see a five-percent reduction from 20 percent to 15 percent in 2014.

Capital-intensive industries will be affected through the first two recommended changes. SR&ED overhead costs are calculated by one of two approaches: a direct method approach, and an indirect approach using a percentage of labour (proxy) expenditures. The Prescribed Proxy Amount (PPA) is seeing a 10-percent reduction to 55 percent in a two-phase implementation; the PPA will be reduced to 60 percent in 2013, and 55 percent in 2012. The elimination of capital from the SR&ED expenditure base will have an impact on industries reliant on the purchase and upgrade of equipment and machinery.

Currently, 100 percent of eligible sub-contract payments can be claimed as SR&ED expenditures, which will be marginally reduced 20 percent effective 2013. The largest SR&ED program savings will accumulate from the reduction of the general rate investment tax credit, applying primarily to larger corporations and foreign-owned entities. The general ITC was reduced from 20 to 15 percent.  The recommendations will have limited effect on small- and medium-sized Canadian Controlled Private Corporations (CCPCs), as these companies will retain the enhanced 35-percent ITC rate on the first $3 million of expenditures. Overall, the changes to the SR&ED program will contribute to a simplified process, supported through additional funds allocated to improving the administration of the program.

This article was written by Mahrie Boyle, SR&ED and OIDMTC Team Specialist with NorthBridge Consultants.