8. ANÁLISIS DE LAS VISITAS
8.3. EL CENTRO HISTÓRICO DE VALENCIA
Employees can only deduct expenses specified in the Act in computing their employment income. In general, employees may claim expenses if the employment contract requires them to pay their own expenses, if they are usually required to work away from their employer’s place of business, and if they do not receive a non-taxable allowance for travelling expenses.
Commissioned salespersons may deduct all of their expenses (except capital expenditures, professional dues and memberships in sports or leisure associations) up to the amount of the commissions received. The limit does not apply to depreciation and interest for an automobile.
Motor Vehicle Expenses
An employee required to work away from the employer’s establishment may deduct motor vehicle expenses if such expenses have to be paid by him/her under the terms of his/her employment contract and he/she does not receive a non-taxable allowance in respect thereof (see point 3 of this section). Use of a vehicle to travel from home to work usually constitutes personal use.
Calculation of Deduction
The maximum amounts eligible for capital cost allowance, interest and lease costs are as follows:
Capital cost Interest Monthly leasing costs
$30,000 + tax19 $10.00/day
The lesser of:
(Actual leasing costs + tax) × ($30,000 + tax) 85% of suggested retail price, before tax (minimum $35,294 + tax)
$800 + tax The deduction is calculated in the following manner:
Operating costs20 + Depreciation + Interest × Employment km Total km
or
Operating costs20 + Leasing costs × Employment km
Total km
The capital cost allowance rate for a motor vehicle is 30%. There are also certain specific rules that apply to the capital cost allowance calculation in the first and last years the motor vehicle is used depending on whether the capital cost before taxes is greater than the limit mentioned in the previous table.
If you claim automobile expenses, keep a log for each vehicle used for business.
Meal, Travel and Entertainment Expenses
Employees who are required to travel in the performance of their duties may deduct reasonable travel expenses (airline, bus, train or taxi fares), lodging (hotel) and food.
However, food costs are only deductible if the employee is required to be away for a period of at least 12 hours from the municipality where he/she normally works. The maximum deduction is equal to 50% of the amount paid or the amount that is considered reasonable under the circumstances. The limitation does not apply if the meals are included in the cost of the ticket (airplane, train and bus). Parking costs, insofar as they are not paid for parking at the employer’s establishment (daily or monthly), are deductible.
19 $33,863 in Quebec for automobiles acquired between 2008 and 2010, and $34,178 for those acquired in 2011 and $34,493 for those acquired since 2012.
Commission Employees
Commission employees can deduct the entertainment expenses paid to earn income. In general, the deduction is limited to 50% of the amount paid in this respect (see Section VI). Commission employees in Quebec do not have to respect the requirement of being away for a period of at least 12 hours to be able to deduct the costs of their meals with clients.
Transportation Industry
Transportation industry employees do not have to comply with the aforementioned 12-hour requirement, as long as they usually travel such a distance and for such a duration that they are required to spend the night away from the municipality.
For purposes of the deduction for meal expenses, a simplified method that requires no receipts is available. Accordingly, such employees can claim a deduction based on a fixed rate of $17 per meal. Employees who travel to the United States can deduct the Canadian dollar equivalent of US$17 per meal. For federal purposes, the number of meals is limited to one meal every four hours up to a maximum of three meals per day. For Quebec purposes, the number of meals is limited, based on the hours the taxpayer is away:
From 4 to 10 hours: 1 meal;
More than 10 hours but less than 12 hours: 2 meals; From 12 to 24 hours: 3 meals;
More than 24 hours: 1 meal every 4 hours, up to a maximum of 3 meals per day.
Taxpayers can still continue to use the detailed method and keep receipts. The employee can deduct 50% of this fixed rate or 50% of the actual costs incurred, depending on the method used. The deductible portion of food and beverages consumed by long-haul truck drivers is 80% (see Section VI).
Supplies
Employees are allowed to deduct the cost of supplies they are required to pay under their employment contract and that are required for their work and cannot be reused – paper, pencils, pens, paper clips, stamps, telephone directories, listings, fax expenses, long distance calls. Such costs do not include basic telephone service, cellular phone start-up costs, or the costs for computers or similar equipment. Interest on funds borrowed to acquire this type of equipment, depreciation and the cost of uniforms and tools are not deductible.
Teachers’ Supplies
For federal purposes, teachers can deduct the cost of supplies they purchase in connection with their duties to the extent it can be demonstrated that the acquisition of the supplies is an express or implicit condition of their employment contract and that it was understood by the employer and the employee that the employee was required to pay these expenses.
Hairdressers
A salaried hairdresser can deduct expenses for the use of products (shampoo, conditioner, etc.) insofar as the employment contract requires that he/she provides them. Employees in this industry could also be recognized as tradespeople for the purposes of tradespeople’s tool expenses (see further on in this section) for the purchase of a hair dryer or curling tongs, for instance.
Workspace in Home
Office expenses are deductible if the employment contract requires the employee to have an office and pay the costs thereof. However, expenses related to the use of an office at home may only be deducted if:
the workspace is where the taxpayer mainly does his/her work; or
the workspace is used exclusively to earn employment income and used on a regular and continuous basis to meet clients and customers.
Reasonable maintenance, electricity and heating costs relating to the office (i.e. based on prorata portion of the space occupied) may be deducted. Property taxes, insurance premiums, mortgage interest and capital cost allowance may not be deducted. However, commission employees may deduct a portion of the property taxes and insurance premiums relating to the office. If the employee rents a residence, the portion of the rent for the area used as an office may be deducted. While the amounts cannot be greater than the employment income to which they relate, expenses that cannot be deducted in a year may be carried forward indefinitely.
Professional and Union Dues
The following table summarizes the tax treatment for the employee of professional and union dues:
Federal Quebec
CONTRIBUTIONS PAID BY EMPLOYER
Not a taxable benefit for employee if employer is
the main beneficiary
Taxable benefit on total amount paid by employer (commodity taxes included)
No deduction Employee can claim credit for:
–
–
Annual contribution (commodity taxes included)–
–
Amount paid to the Office des professions du Québec
Employee not entitled to GST/HST refund Employee not entitled to QST refund CONTRIBUTIONS PAID BY EMPLOYEE
Deduction of the amount including:
–
–
Annual fee to the professional order (including commodity taxes)–
–
Amount paid to the Office des professions du Québec
Non-refundable tax credit for:
–
–
Annual contribution (commodity taxes excluded) 21–
–
Amount paid to the Office des professions du Québec
Entitled to GST/HST refund if the employer is a registrant that is not a designated financial institution (e.g. bank, broker)
Entitled to QST refund if the employer is a registrant
The GST/HST/QST refund is taxable in the year
it is received
The GST/HST/QST refund is not taxable
Amounts paid for liability insurance required to maintain professional status are deductible.
Moving Expenses
When an individual moves within Canada to take up a new job, he/she may deduct eligible moving expenses incurred to move from the former residence, providing he/she moves at least 40 kilometres closer to the new place of work. Moving expenses incurred abroad may also be deducted if the individual is deemed to be a resident of Canada for tax purposes. In every case, the total deduction for moving expenses is limited annually to the employment income earned in the new work location. Any excess may be carried forward to subsequent years.
Eligible expenses include moving expenses, meals and lodging for the individual and his/her family, costs for moving furniture, costs related to leaving a residence and certain expenses for the acquisition of a new one. Moving expenses include the costs of maintaining a former residence that has been left vacant. These expenses include mortgage interest, municipal taxes, insurance premiums, heating and electricity, up to $5,000.
In calculating moving expenses, a taxpayer may elect to use a simplified method requiring no receipts. The method allows the taxpayer to claim a fixed rate of $17 per meal per person up to $51 per day, while moving his/her family to the new residence and to deduct $0.57 for every kilometre travelled from Quebec ($0.55 for Ontario and $0.49 for New Brunswick) for the use of a vehicle to get there.22 A taxpayer may of course continue to use the detailed method and retain receipts.
Certain moving expenses paid by employers on behalf of employees are taxable benefits. Thus, the first $15,000 paid to an employee (or a related individual) to offset an actual loss incurred on the sale of a former residence in connection with an eligible relocation is non-taxable. Any amount paid to an employee in addition to this amount is taxable at 50%. An interest-free loan granted directly or indirectly to an employee to purchase a new home following a move confers a taxable benefit on the employee except for home relocation loans (see point 1 of this section) but some allowances paid by the employer are not taxable (see point 3 of this section).
Computers and Telecommunications
A deduction is available for leasing costs relating to a computer, a cellular telephone, a fax machine or other similar equipment, as well as the costs of calls made on a cellular telephone in order to earn commission income.
As a commissioned employee, you should lease computer equipment instead of buying it, since lease expenses are deductible while the depreciation and interest costs are not.
Legal Fees
Taxpayers may generally deduct legal fees paid in the year to collect salary owing or to establish their right thereto even if they have not yet collected the amount. Employees are also entitled to deduct expenses paid to collect or establish the right to a retiring allowance or a pension benefit.
Employees Working in Forestry Operations
An employee working in a forestry operation may deduct expenses incurred for the use of a power saw or brush cutter, if the conditions of employment require that he/she provides and maintains these tools and is not reimbursed therefor. In general, expenses include the cost of equipment, fuel, repairs, leasing costs, interest and insurance premiums. Expenses incurred for clothing or shoes acquired to protect the
22 Amounts for 2012. 2013 amounts will be available in January 2014. For updated rates and amounts, refer to the CRA Internet site at http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns248-260/255/rts- eng.html.
employee from job-related dangers are not deductible. However, allowances paid by an employer to acquire such clothing and shoes are generally not taxable.
Employed Musicians and Artists
Employed musicians can deduct expenses related to the use of the instrument to the extent they do not exceed the net employment income earned for the year as a musician. Eligible expenses include maintenance or lease costs, insurance premiums and capital cost allowance (Class 8 – 20%) on purchased instruments.
For federal purposes, artists may deduct their expenses in accordance with the rules for salaried employees or treat such expenses as expenses of an employed artist and deduct the expenses incurred to earn employment income from an eligible artistic activity up to the lesser of $1,000 or 20% of employment income from that activity.
Cost of Tools for Tradespersons
Tradespersons can deduct up to $500 per year for the cost of new tools acquired as a condition of their employment. However, in 2013, the first $1,117 ($1,110 in Quebec) of such costs is not deductible. 5. INCENTIVES FOR WORKERS
Canada Employment Credit – Federal
The Canada Employment Credit is a non-refundable tax credit equal to 15% of the lesser of $1,11723 or the employee’s employment income.
Working Income Tax Benefit – Federal
Low-income Canadian workers who are at least 19 years of age are entitled to a refundable tax credit up to 25% of earned income (employment or business income) in excess of a threshold amount, up to an annual limit. Disabled persons are entitled to a supplement. The benefit, which can only be claimed by one spouse, is based on the applicant’s net income, family situation and province of residence.24
The parameters of this tax benefit for 2013 are as follows:
Working income tax benefit
Province of residence Ontario and New Brunswick Quebec
Single with no children $ Family $ Single with no children $ Family $ Maximum benefit25 989 1,797 1,599 975
Based on earned income in
excess of 3,000 3,000 2,400 3,600
Reduction threshold (net income)
25 11,231 15,509 10,853 16,794
Benefit lost (net income) 17,827 27,489 18,850 21,668
Maximum disability supplement 495 514
An individual may apply for an advance payment of one-half of the benefit to which he/she is entitled for the year.
23 In 2013. Indexed annually.
24 For additional information and to estimate the amount to which you are entitled, go to the CRA Internet site at: http://www.cra-arc.gc.ca/bnfts/wtb/menu-eng.html.
Work Premium – Quebec
The work premium is a refundable credit comparable to the federal working income tax benefit that can be claimed by Quebec residents who receive work income, i.e. employment or business income, of at least $2,400 for a single person or a head of a single-parent family, or at least $3,600 for a couple, whether or not they have children. The credit is determined based on the family situation and the applicant’s income.26 An application for advance payment may be made for part of the premium provided certain conditions are met.
Individuals with a severely limited capacity for employment can benefit from the Adapted Work Premium, which is calculated using more flexible parameters than the Work Premium. Moreover, a supplement is added for long-term recipients giving up last-resort financial assistance during labour market integration. Deductions for Workers – Quebec
An employee may deduct an amount equal to 6% of his/her work income, including self-employment income, up to a maximum of $1,100 in 2013.
Tax Credit for Experienced Workers – Quebec
Individuals aged 65 and over27 are eligible for a non-refundable tax credit of 15.04% of their work income over $5,000, up to a maximum amount of income of $3,000. This tax credit can neither be carried over nor transferred to a spouse.
6. TIPS – QUEBEC
Quebec requires most employees who work in an establishment that serves food or alcoholic beverages, or delivers meals (excluding, among others, cafeterias and fast-food restaurants) and receive tips, to declare in writing the amount of such tips to his/her employer. This declaration makes it possible for employers to take into account tips received by employees (in addition to their regular salary) in calculating deductions at source. This requirement does not apply to the portion of the tips received when service charges are added directly to the customer’s bill.
7. TAX CREDIT FOR NEW GRADUATES WORKING IN REGION – QUEBEC
New college or university graduates who find a job in an eligible region within 24 months of graduating are entitled to a non-refundable tax credit equal to 40% of their eligible salary (annual maximum of $3,000; cumulative lifetime maximum $10,000 for graduates holding college or university diplomas28 and $8,000 for new graduates of a secondary school professional program).
8. EMPLOYMENT OVERSEAS
A Canadian resident working in a foreign country for a period of at least six consecutive months (30 days in Quebec) on a mining, oil or gas, agricultural, engineering or construction project and who is employed by a Canadian company (or a foreign affiliate thereof) is entitled to a tax credit (deduction in Quebec). Quebec also includes computerized, automated or data communications system installations, scientific and technical services as well as the management and administration of such activities.
26 To estimate the amount to which you are entitled, go to calculaide.gouv.qc.ca.
27 If the worker reaches 65 years of age during the year, only the work income earned after this time is eligible for the tax credit.
28 The $10,000 limit applies to individuals who begin a new job after March 20, 2012 ($8,000 for jobs that started before this date).
Tax Credit – Federal
For federal purposes, the credit makes it possible to eliminate the income tax payable on 60% of up to $60,000 of the employment income spread over 365 days.29 In New Brunswick, taxpayers are entitled to a credit of 57% of the federal credit, compared to 38.5% in Ontario.
Employment Deduction – Quebec
In Quebec, a portion of foreign employment income may be deducted for each consecutive 30-day period worked abroad. Allowances for foreign employment are completely tax-free provided they do not exceed 50% of foreign employment income. In summary, for the 2013 year, 75% of eligible income earned abroad may be exempt from Quebec income tax. Subject to certain transitional rules, eligible income will be reduced to 50% in 2014, 25% in 2015, and the deduction will be eliminated as of 2016.
9. FOREIGN SPECIALISTS – QUEBEC
Quebec grants a tax exemption for salaries paid to certain foreign specialists for a maximum continuous period of five years. Eligible employees include foreign specialists in an international financial centre, a stock exchange or a clearing house, professors employed by a Quebec university, certain specialists performing research in Quebec or those working in biotechnology development. Some foreign researchers at the postdoctoral level and specialists working in innovation activities, and in a new financial services corporation are also eligible.
Eligible individuals can deduct 100% of their salary for the first and second years of the five-year period, 75% for the third year, 50% for the fourth year and 25% for the fifth year. However, the percentage for the fifth year is 37.5% for specialists employed by an international financial centre, a stock exchange or a clearing house.
10. VOLUNTARY FIREFIGHTERS TAX CREDIT
Volunteer firefighters who perform at least 200 hours of service during a year are eligible for a non- refundable tax credit on an amount of $3,000. Volunteer firefighters who currently receive honoraria in respect of their duties as volunteer firefighters may choose between the tax credit and the existing tax