September 2,
2010
FATCA:
initial guidance issued
On August 27, 2010,
the U.S. Treasury and the Internal Revenue Service (IRS) issued initial, and lengthy,
guidance under new §§1471-1474 of the U.S. Internal Revenue Code (chapter 4).
Chapter 4 is designed to prevent U.S. persons from evading U.S. tax by holding
income-producing assets through accounts at foreign financial institutions
(FFIs) or through other foreign entities (non-financial foreign entities, or NFFEs). The law does so by imposing tough new
withholding tax requirements on “withholdable
payments” to foreign entities, which
generally take effect January 1,
2013, subject to exceptions for FFIs
that enter into agreements with the IRS to identify and report on their “U.S.
accounts” and for NFFEs that provide information about their “substantial U.S.
owners”.
The new guidance
takes the form of Notice 2010-60,
which explains in detail the terms that will be imposed by FFI Agreements and
the types of foreign entities that can receive payments without chapter 4
withholding. Read more.
The CRA announces payroll changes
The Canada Revenue Agency (CRA) recently announced several changes
affecting payroll reporting. We highlight three below.
Retiring allowance reporting
Starting in January 2011 (for the 2010 tax
year), retiring allowances will be
required to be reported on T4 slips rather than T4A slips. This will reduce the
burden of filing both slips for the same taxpayer.
Redesign of T4A slip
The T4A slip is being redesigned with a
view to simplifying reporting and increasing data quality. The fixed-field
design is being converted to a generic style,
similar to the T4 slip. The 2010 version of the T4A slip is expected to reflect
the redesigned look and to accommodate T4A reporting requirements for all tax
years. The new T4A slip is currently in draft format only. Employers should
start using the new form in early 2011 to report T4A information for the 2010
tax year. Until then, the current
T4A slip should be used for all tax years.
Employee
gifts and awards
The CRA has introduced a new tool to
assist employers in determining the taxability of employee gifts or awards. The
tool is in a question-and-answer format. It leads the user through the CRA’s
policy and reviews relevant topics,
including:
·
Cash or near-cash gifts and
awards
·
Performance-related awards
·
Disguised remuneration
·
Reimbursements
·
Employer-provided social/special
events
·
Loyalty points, such as frequent flyer points
·
Gifts or awards provided by a
social committee including prize draws
The questionnaire also takes into
account the comments included in Income Tax Technical
News No. 40 which discusses changes announced
by the CRA to its administrative policies with respect to taxable employment
benefits.
The Fiscal Monitor — expenses down and revenue up in Q1
The August 2010 edition of The
Fiscal Monitor, published by the
Department of Finance, provides an
overview of the federal government’s financial performance for the
April-to-June 2010 period (Q1). Over that time,
revenue was 3.7% higher and expenses were down 5.5%,
year-over-year. The government recorded a $7.2 billion deficit, which it reports "is broadly consistent with
the projected deficit of $49.2 billion for 2010–11 set out in Budget
2010." Read the
full report.
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& Touche LLP as an information service to clients and friends of the firm, and is not intended to substitute for competent
professional advice. No action should be initiated without consulting your
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