Canadian Budget 2007

The Canadian federal government today brought down the 2007 budget. There are a number of changes for individual and business taxes plus some other items that we will address after examining the documents further.

Here are a few high lites:

Tax Items

Families

* A $2,000 child tax credit will provide up to $310 per child in tax relief.

* Increase in the spousal and other amounts will provide up to $209 in tax relief, ending the marriage penalty.

* Increase in the age limit to 71 from 69 for registered retirement savings plans and registered pensions.

* Eliminate the $4,000 limit on annual contributions to registered education savings plans (RESPs), increase the lifetime contribution limit to $50,000 from $42,000, and extend RESP eligibility to more part-time studies.

* Increase the maximum annual Canada Education Savings Grant to $500 from $400.

* The public transit tax credit will be extended to new electronic fare products and weekly passes used on an ongoing basis.

Business

* A two-year incentive for investments in manufacturing and processing equipment—50-per-cent straight-line write-off on new investments before 2009.

* The capital cost allowance rate for buildings used in manufacturing and processing will increase to 10 per cent from 4 per cent.

* Other capital cost allowance rates will also be increased and, together, will take Canada’s tax rate on new business investment from fifth-lowest in the Group of Seven (G7) to third-lowest.

* The lifetime capital gains exemption for farmers, fishers and small business owners will be increased to $750,000 from $500,000.

* Long-haul truck drivers’ deduction for meal expenses rises to 80 per cent from 50 per cent.

* Ensuring corporations pay their fair share of taxes by providing new resources to the Canada Revenue Agency to detect and close down tax avoidance through offshore tax havens.


Budget 2007 proposes a number of measures to help Canadian businesses , including:

* An independent review of Canada’s competition policy.

* A 20-per-cent reduction in paper burden for companies, including small businesses.

* $60 million over two years to streamline the regulatory review of large natural resource projects.

* A Global Commerce Strategy to advance Canadian business in global markets.

* A one-time $600-million payment to establish new, cost-shared savings accounts for farmers once agreement is reached with provinces and territories.

* Immediate one-time $400-million payment to farmers to address rising costs of production.

* A plan to create a Canadian advantage in global capital markets.

After we complete our analysis of the budget, we will be posting further opinions on certain issues.

Click on the title of this document to go to the government's budget pages.

Tax Department Back In Business on March 15th

Good news for those of you with tax refunds. CRA has announced that online services will be back up and running on Thursday, March 15th. We will be filing all returns that we have completed just as soon as the system is up. Keep in mind that there will probably be a rush at the beginning of filing so there may be some delay.

The following is the CRA update posted today.

Update: March 12, 2007

Canada Revenue Agency (CRA) Commissioner Michel Dorais today announced the Agency's timeline to bring services back on line.

"We have begun to bring some of our systems into production," reported Mr. Dorais. "We expect to have all of our taxpayer services, including EFILE, NETFILE, Change My Address and return processing back into full service no later than on Thursday March 15th, 2007."

The CRA is bringing back some of its temporary employees tomorrow morning to begin processing all outstanding files.

The security of taxpayer information is paramount for the CRA. The security and privacy of taxpayer data was protected and was never at risk during this preventive suspension of online services. A malfunctioning software patch is the cause of this service interruption.

CRA appreciates the patience and understanding of taxpayers during this interruption and is making every effort to restore full services as soon as possible.

Please check the CRA Web site at www.cra.gc.ca/update on a regular basis to see which services are available.

Some Answers To Some Questions

It is your right as a Canadian taxpayer to be just as confused as all of the other taxpayers. In keeping with that maxim, the Canada Revenue Agency has provided a "Frequently Asked Question" section regarding the current filing problems.

Rather that redundantly list all of text here, just click on the title above and you will be taken directly to the CRA website section with this information

Tax Problems Update - 2

Here is the latest update from the Canada Revenue Agency regarding their problems with their computer database and tax filings:

Update: March 9, 2007

Commissioner of the Canada Revenue Agency (CRA) Michel Dorais reported today that the CRA is making further progress in its efforts to resolve the computer database problem that prompted the Agency to suspend most online services for individual taxpayers earlier this week.

"Our solution is working and in the past 24 hours we have successfully restored several databases," said CRA Commissioner Michel Dorais. "CRA employees will be working through the weekend to continue to restore the rest, and we expect to make good progress."

"Once we complete this phase of our recovery plan," said Mr. Dorais, "we will work out the schedule to bring online services for individual taxpayers back online."

The Agency confirms that all online services for business are still functioning. The CRA would like to remind businesses that all payments must be made as required on the prescribed dates. Installment payments by individuals are due as usual on March 15.

We are also attaching an article from CTV news on the subject for more background.

Computer glitch taxing Canada Revenue systems

Updated Fri. Mar. 9 2007 10:02 PM ET

CTV.ca News Staff

More than one million tax returns have been filed this year, but they are sitting on hold while Canada Revenue Agency technicians work around the clock on an unexplained computer glitch that was discovered last weekend.

Many agency employees have been sent home while others work around the clock to restore its electronic filing system after an unprecedented shut down.

The Canada Revenue Agency says the department is making progress with the system, but other sources report it could be late into next week before Canadians can even think about filing their taxes.

"We've made some really good progress and in the last 24 hours, we have resolved a number of issues," CRA spokesperson Jacqueline Couture told CTV Newsnet Friday afternoon.

"We're still in the process of restoring and testing the databases."

Meanwhile, Liberal MP Judy Sgro called on Revenue Minister Carol Skelton to return to Ottawa and attend to the problem.

"Millions of Canadians are waiting to file their tax returns and are depending on a timely refund of the money that is owed them by this government," Sgro said in a statement released Friday.

"Meanwhile, as her department is reeling in crisis, the Minister responsible is in Saskatchewan for a photo-op with the Prime Minister."

Skelton joined Prime Minister Stephen Harper as he announced an injection of $1 billion for Canadian farmers.

Skelton told reporters the computers are being slowly brought back online and tested.

"We've been monitoring day by day and hour by hour,'' she said. "Some of our people, I'm getting worried about them, because . . . some people have been working around the clock.''

Harper said the federal government is doing everything it can to fix the problems plaguing Revenue Canada, which occurred at the busiest time of year.

"All I can say is we're obviously ... on the backs of the department to get on with fixing this problem as soon as possible," Harper told reporters.

"This is a major administrative problem. It's going to be a few days until it is fixed but we're confident at this point that it can be fixed in a way that will not disrupt the deadlines for tax-filing," he said.

The prime minister said that he was assured by his top officials that they understood the gravity of the matter and that they were working round-the-clock to resolve the problem.

However, the Liberals are demanding the income tax filing deadline of April 30 be extended to accommodate for the inconvenience to taxpayers.

Revenue Canada has said that Canadians who owe taxes from last year are still responsible for mailing payment on time. For those paying quarterly, the next payment is due on March 15 and there will be no extension.

In addition to being unable to process electronically filed tax returns the Canada Revenue Agency is also unable to process mail-in applications because the information cannot be uploaded to their databases.

"Just as when you send your information online and it's put into the database, when we receive a paper copy that information also has to be inputted into our database," Couture said on Friday.

"They are still accepting the paper copies, it just means that it's at the same place as if you were Netfiling it, it can't be put into our database," she said.

Couture explained that Canadians who filed with Netfile before the system failed should have received a confirmation number, which ensures their information was received.

She also stressed that security protecting the sensitive data was not corrupted during the glitch.

"There is no risk. It really was an internal problem when we did some routine updates and maintenance on the weekend. For some reason, one of the databases sort of threw it off and one of the interconnections wasn't being made."

"It is definitely an internal problem. It's not a virus; there was no piracy or illegal activity done on our files."

For those client who are waiting to file, we make two suggestions:

1. Get your taxes completed. There is no good reason to wait so if you have all of your documentation and are ready for your return to be completed, get the information to us as soon as possible. We will complete your return and have it ready to file just as soon as the CRA systems are up and ready.
2. Sign up for our email updates. On this page, you will note a place where you can sign up for notification of updates to this page. In this way, you will be notified about any information about this problem as soon as we know.

We are continuing to monitor this situation and will keep giving you timely updates. Please check back.

Tax Problems Update

The following message was posted on the CRA website late yesterday:

Update: March 8, 2007

The Commissioner of the CRA, Michel Dorais, today confirmed that the cause of the problem has been identified and a solution is being implemented. "After identifying the problem and the solution," said Mr. Dorais, "we now have a clear recovery strategy that we have gradually started to put in place."

This phased approach to system recovery will enable the Agency to better understand and predict the date of return to full service delivery.

Mr. Dorais also confirmed that the system problem, which has caused a temporary halt to the processing of income tax returns for individuals, does not directly affect any of the CRA's services for businesses, such as My Business Account or the processing of corporate income tax returns. There are no problems with employer remittances of payroll deductions, Goods and Services Tax / Harmonized Sales Tax (GST/HST) remittances, or the Business Number registration system


Please continue to check back to this site for further updates. Also, you can click on the title of this post to go directly to the CRA website.

Tax Problems

Canada Revenue Agency (CRA) isn't working. Okay, they are working but not much else is. CRA has a messed up data base. The result is that individual tax payers can't file their taxes, even by paper. The following the the official notice posted on the CRA web site:

Online services - Update

The Canada Revenue Agency (CRA) is experiencing electronic system difficulties that prevent the public from accessing some electronic services for personal returns such as NETFILE, TELEFILE and EFILE. We have temporarily shut down public access to electronic services to ensure the integrity of taxpayer information.

The CRA has a team working to restore its systems to normal operations but it will be a matter of days before the system problems are completely resolved. The security and integrity of taxpayer data has not been compromised. This problem is not the result of illegal activity, computer hackers or a virus.

We have now traced the source of the problem to software maintenance conducted on March 4, 2007. We are currently working to bring all systems back online gradually.

Facts for Taxpayers

• Currently, you cannot file your personal return electronically by NETFILE, TELEFILE or EFILE. Until the problem is resolved, we cannot process returns filed on paper, or returns filed electronically before the system interruption. Refunds will be delayed until processing is resumed.
  
  
• We expect that all benefit payments, including the March 20 Universal Child Care Benefit and Canada Child Tax Benefit and the April 5 Goods and Services Tax / Harmonized Sales Tax Credit, will be made on time and without interruption.
  
  
• If you have already filed your income tax return electronically, the CRA will be able to determine whether the filing of your return was affected by this problem.
  
  
• It is too soon to speculate on whether the filing deadline will be extended. The CRA fully expects to restore all services well in advance of the filing deadline.
  
  
• Existing My Account users may still view their tax information, but are not able to process any transactions.
  
  
• Electronic services for businesses, including My Business Account, are not directly impacted.. There are no problems with employer remittances of payroll deductions, Goods and Services Tax/ Harmonized Sales Tax (GST/HST) remittances, or the Business Number registration system.
  
  
• While the system problem affects the processing of many incoming payments, GST payments can still be processed. You can continue to make your payments as follows:
  
  
  • In person at your financial institution.
  • Online using your financial institution's Internet or telephone banking service.
  • By sending your payment to the CRA by mail.

We will continue to provide updates as information becomes available. We appreciate your continuing patience while we resolve this matter.

In other words, nothing is working. There has been talk that the filing deadline might be extended but don't count on this. We advise you to get your taxes ready to file as soon as you can so that the filing can happened when the services are restored. Naturally, this means that you can't get your refund until the system is fixed.

There is no indication that any of the tax information is compromised. From information that we have been aware of for some time, we believe that this is a problem related to the 10 year program in place to migrate the CRA data base.

Here is a story posted on the CBC web site regarding the problem:

Tax department says online tax filing fix is a 'major' one

Last Updated: Wednesday, March 7, 2007 | 12:15 PM ET

CBC News

The Canada Revenue Agency says it now knows what caused the problems that led it to shut down its computer system for income tax filing, but warns it will still be days before it's fixed.

"Today is better than yesterday," CRA commissioner Michel Dorais told CBC News Wednesday. "We worked throughout the night and I'm pleased to say today that we've diagnosed the problem exactly."

Dorais said the problem began shortly after 20 maintenance operations were carried out on the weekend. On Monday, the tax department noticed "some irregularities" in its databases and quickly shut down all online access to Efile, Netfile and My Account. Dorais called it an infrastructure problem and said the data is completely secure.

"The databases are intact," he said. "It's not a virus. It's not an intrusion."

Dorais said the fix is a major one, involving 75 separate databases that handle individual returns. He said the databases are being gradually brought online but warned that the fix won't be immediate.

"We're hoping to solve the problem and to fix it fairly quickly," he said. But the databases that allow the e-filing of returns are "the biggest and most complex … so will be the last to come online."

So there you have it. Please come back to this page for further information. We will do our best to keep you up to date on the progress.