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Tax Pulse by DMA Canada

by DMA Staff | Feb 08, 2016
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Welcome!
Welcome to the inaugural edition of Tax Pulse. Tax Pulse is a tax information periodic intended to be DMA Canada’s way of keeping its clients aware and current. Since taxation is a daily certainty, Tax Pulse will provide you a Canadian snapshot on property tax. Tax Pulse will touch on and inform of recent court cases on sales/HST, property taxes or others topics impactful on taxation and be a dependable resource of current tax happenings.

There will also be news blasts reminders at various intervals throughout the year.

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Property Tax – Maritime Provinces

Nova Scotia, New Brunswick and Prince Edward Island have annual reassessments with annual rights to appeal of a property’s assessment. As for Newfoundland and Labrador, they have a 3-year assessment cycle starting in 2016 with annual right to appeal but with 2 deadlines, 1 for the City of St. John’s and 1 for the balance of the province.

In Nova Scotia, notices of assessment were released on January 8th, 2016 with an appeal deadline 30 days after.  Therefore, the appeal deadline was February 8th and has passed as of this writing.

For New Brunswick, the notices of assessment are expected on March 1st, 2016 with an April 1st, 2016 appeal deadline. 

Similarly for Prince Edward Island, the notice of assessment is expected in the first week of May with the appeal deadline anticipated for the first week of August, 90 days after the release of the notices.

Newfoundland and Labrador’s next opportunity to file appeals is late fall.  Newfoundland and Labrador are in year one of a 3-year cycle but their notices of assessment and subsequent appeal deadlines for the first year were late fall 2015.  The anticipated 2016 release of notices of assessment for 2017 taxation assessment for St. John’s is late November or early December.  While the balance of the province, the anticipated notice release date is the first week of October and in both instances, the appeal deadline will be 30 days after the notices have been sent.

For further information, please contact:

Brad Foley

Director of National Accounts
Toronto, ON
800-309-2110 ext. 2959
bfoley@dmainc.com

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Property Tax – Quebec

There is a reassessment every year in the province of Quebec. However, unlike all the other provinces, Quebec is partitioned into three geographic zones each corresponding to a specific cycle. In 2016, it is Cycle 2's turn to be reassessed.

Cycle 2 consists of most major Quebec cities like Laval, Longueil, and Quebec City with the exception of the Island of Montreal. Please, click here for a complete list of all municipalities subject to upcoming Cycle 2 reassessment.

The notices of assessment have been mailed in late fall 2015.  As a reminder, the appeal deadline is April 30th, 2016.  One of the unique features of a Quebec assessment cycle is you can ONLY file your appeal for all 3 years before the deadline as there exists no annual appeal provisions in Quebec assessment legislation, and failing to meet that deadline, a tax payer is without recourse for the next 3 years.

For additional information, please contact DMA to receive our brief provincial property tax summary and overview.

For further information, please contact:

Francois Huot
Director of National Accounts
Toronto, ON
800-309-2110 ext.2954

fhout@dmainc.com


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Commodity Tax Update

HST Recapture Input Tax Credit rate changes for 2016

As outlined in DMA’s June 23, 2015 Informational Tax Bulletin, a reminder that effective July 1 2015, the recapture rate in Ontario has been reduced from 100 percent to 75 percent. The next recapture rate reduction will be on July 1, 2016 where the rate will be reduced to 50 percent.

Since July 1, 2010, large businesses with taxable and zero-rated revenues that exceed the $10 million revenue threshold during their last fiscal year have been required to recapture 100 percent of the 8 percent Provincial Component of the Ontario HST (13 percent) paid or payable on specified property and services.

The Recaptured Input Tax Credit (RITC) requirement applies to the following specified property and services:

  • Electricity, gas, steam and fuel (other than fuel for use in a propulsion engine) together with incidental delivery charges or regulatory fees

  • Certain telecommunication services, other than certain supplies including access to the Internet and toll-free telephone services such as 1-800 telephone services

  • Food, beverages and entertainment, to the extent that they are already subject to the existing input tax credit (ITC) repayment requirements (generally 50 percent)

  • Qualifying motor vehicles (whether purchased or acquired by way of lease, license or similar arrangement), along with parts and services acquired within 12 months of the vehicle's acquisition or bringing into Ontario (e.g., acquisition and installation of a vehicle anti-theft system), other than parts and service for routine repair and maintenance

  • Fuel (other than diesel fuel) that is for the engine of a qualifying motor vehicle described above even if the vehicle was acquired or brought into Ontario prior to July 1, 2010

As detailed in GST/HST Info Sheet GI-171, the RITC requirement will be phased out beginning July 1, 2015 as follows:

Period (Day on which the provincial part of the
HST becomes payable without having been paid
or is paid without having to become payable.)

Ontario RITC recapture rate
July 1, 2010 to June 30, 2015 100%
July 1, 2015 to June 30, 2016 75%
July 1, 2016 to June 30, 2017 50%
July 1, 2017 to June 30, 2018 25%
July 1, 2018 and beyond 0%

As large businesses are required to account for RITCs in the GST/HST return for the first period in which the ITC becomes available, the change in rate will be reflected in the first return due for periods starting July 1, 2015. Large businesses will continue to report their RITCs on their GST/HST returns by completing schedule B of the GST/HST Netfile return, which will be modified by the CRA to include separate lines for each possible recapture rate (ex. 100 percent or 75 percent) when transactions straddle the July 1 transition date.

See attached link for G1-171.

Cancellation of the Newfoundland and Labrador HST rate increase 
As detailed in our Informational Tax Bulletin on December 23, 2015, the Government of Newfoundland and Labrador had asked the Government of Canada to cancel the proposed HST rate increase and the federal government has agreed to this request. As a result, the HST rate will remain at 13 percent after December 31, 2015. 

For further information, please contact:

Darryl Rankin, CPA, CGA

Director, Commodity Tax
Toronto, ON
800-309-2110 ext. 1530

drankin@dmainc.com

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Economic Obsolescence Summary Update

The Oxford dictionary defines the word “abstract” as something that is existing in thought or as an idea but not having a physical reality. As such, Economic Obsolescence is part of what can be considered abstract and consequently, easy to overlook or ignore. However, the consequences of Economic Obsolescence are very real and can have a serious impact.

Economic Obsolescence: one can’t touch it, feel it or smell it. However, it is definitely present, especially when better economic opportunities exist for an investment. As time passes, economic cycles come and go and so does Economic Obsolescence. It can manifest itself through a downturn in earnings, a margin compression, uncontrollable pricing and many other factors affecting a business financial health. Because Economic Obsolescence is external to the firm, it can improve or deteriorate. Consequently, it should be measured regularly.

The quantification of economic obsolescence is a process that can be arduous but should not be ignored since a successful appeal can result in a large percentage adjustment of the assessed property’s value. Additionally, assessing authorities, with their “one size fits all” approach, may potentially miscalculate the Economic Obsolescence rate of an industry and/or not apply adequately such rate to a property. As an example, a Canadian assessment authority declared that a specific industry showed no signs of Economic Obsolescence, even after the underlying globally traded commodity price declined by almost 40 percent which is a clear sign of Economic Obsolescence.

Below are some common pitfalls to anticipate and avoid when dealing with Economic Obsolescence:

  • Continuous operation does not discard Economic Obsolescence
  • New construction does not discard Economic Obsolescence
  • Improved utilization does not discard Economic Obsolescence
  • Depreciation tables do not account for Economic Obsolescence

DuCharme, McMillen & Associates Canada is an employee-owned company that has been in business for over 40 years with offices across Canada and the USA. Our team of professionals can advise you on the most efficient ways to address Economic Obsolescence. After all, why pay more than your fair share of property taxes?

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Upcoming Assessment Deadlines

February 8:
NOVA SCOTIA – Appeal deadline (annual cycle)

February 29:
ONTARIO – Vacancy application deadline

February 29:
ONTARIO – Municipal Act application deadline

March 7: Alberta Calgary – Appeal deadline (annual cycle)

March 11: Alberta Edmonton – Appeal deadline (annual cycle)

March 31:
ONTARIO – Appeal deadline (year 4 of 4-year cycle)

March 30:
NEW BRUNSWICK – Appeal deadline

April 1: New Brunswick – Appeal deadline (annual cycle)

April 30: QUEBEC – Appeal deadline (year 1 of 3-year cycle)

June TBD: Manitoba Winnipeg – Appeal deadline (year 2 of 2-year cycle)
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Hold the Date

March 8th: MONTREAL, QC – DMA Canada & Miller Thomson joint tax event. Please call us for details

March 17th: MISSISSAUGA, ON – Special Purpose Business Property Assessment Review (SPBPAR) Roundtable featuring MPAC. Please call us for details

April 28th: TORONTO, ON – DMA Property Tax & Commodity Tax Seminar. Tentative Date – details to follow

May 18th: MISSISSAUGA, ON – Expert vs. Advocate Roundtable discussion featuring Legal representatives. Please call us for details

June 9th: GTA, ON – DMA Canada Golf Day. Tentative Date – details to follow

Please do not hesitate to contact your local DMA office should you have specific questions or requests.