Transaction Levy for Ontario Firms

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1 Contents About Transaction Levy for Ontario Firms Enabling Transaction Levy in System Settings Assigning a Law Society Number Adding a Transaction Levy Modifying a Levy Entry Reports Making a Transaction Levy Remittance Accounting for Transaction Levies About Transaction Levy for Ontario Firms Members of the Law Society of Upper Canada are required to pay a professional liability insurance levy for all real estate and civil litigation matters opened on or after April 1, You must submit a summary report with your transaction levy remittance. The levy on real estate and civil litigation matters (the transaction levy) is paid quarterly to the Law Society of Upper Canada. The amount is defined in PCLaw on the Provincial tab of System Settings. PCLaw recognizes that the GST on transaction levies for matters opened prior to January 1, 1999 are handled differently than those opened on or after that date. It also recognizes that the amount of the transaction levy is different on matters opened prior to January 1, PCLaw uses the matter opening date to determine how the transaction levy should be treated. Effective, January 1, 2010, the transaction levy for real estate transactions in Ontario will increase from $50 to $65. PCLaw recognizes this change, and will apply it automatically to all matters with a matter opening date of 2010 and beyond. A manual adjustment is not required within PCLaw. A levy on real estate and civil litigation matters is paid quarterly to the Law Society of Upper Canada. The amount is defined in PCLaw on the Provincial tab of System Settings. The levy is recorded in the Transaction Levy feature, and can be charged to one matter, split between two matters, or absorbed as a business expense. PCLaw uses the matter opening date to determine whether the transaction levy should be applied and at what rate. It is not necessary to change the amount or the GST category when you enter a transaction levy, PCLaw does this for you automatically. The GST rate for examples in this document is 5%. PST rate for the Province of Ontario is 8%. Transaction levies should be submitted on a quarterly basis. You must submit a summary report with your transaction levy remittance.

2 Enabling Transaction Levy in System Settings Options > System Settings > Provincial Tab Before using the Transaction Levy feature in PCLaw, the option must be enabled on the Provincial tab of System Settings. The System Settings > Provincial tab with the Ontario transaction levy enabled 1. Check Ontario to enable transaction levy entries for firms operating within the province of Ontario and to make additional fields within the Transaction (Ontario) and Volume Surcharge areas active. 2. Check Charge to Client to transfer the transaction levy cost to the client. 3. Accept in the Total box, the value of the transaction levy amounts for both Real Estate & Litigation inclusive of GST. 4. Accept in the Surcharge Percentage box, the percent paid for professional liability insurance. 5. Accept in the Average Gross Billings Over box, the amount exempt from professional liability insurance. 6. Type in the Managing Partner (or Sole Practitioner) box, the lawyer name to appear on the transaction levy reports. 7. Type in the Firm Contact box, the name of the staff member to contact if there is a need to follow up on a remittance. 8. Accept in the Liability box, the default account number of 2460 or select a G/L account nickname of your own. 9. Accept in the Firm Expense box, the default account number of 5770 or select a G/L account nickname of your own. 10. Click OK to save your work this session. Page 2

3 Assigning a Law Society Number Options > Lists > Lawyers and Rates To be able to charge a transaction levy, the lawyer must have a valid Law Society of Upper Canada Member number. This number is recorded in PCLaw in the Lawyer and Rates feature. A lawyer without a law society number will be reminded to enter one when recording a transaction levy. 1. Highlight the lawyer in the Lawyer and Rates window whose member number is to be added. 2. Click Change to proceed to the Change Lawyer Information > General tab. 3. Click the Provincial tab: 4. Check Use Transaction Levy in the Ontario area to enable the Law Society Member Number box. 5. Type in the Law Society Member Number box, the member number. 6. Click OK to return to the Lawyers and Rates window. 7. Repeat this procedure to add a member number to another lawyer. 8. Click OK in the Lawyers and Rates window to save your work this session. Adding a Transaction Levy Data Entry - Transaction Levy Transaction levy charges are added through the Data Entry pull-down menu. To help determine matters that are eligible to be charged, run a List of Clients report by each individual type of law. It is not necessary to change the amount or the GST category when you enter a transaction levy, to match the matter open date. PCLaw does this for you automatically. Page 3

4 The Transaction Levy Entry window for entering new transaction levies 1. Select Real Estate to process real estate levies and to enable the Document Registered and Acting For boxes. Select from the Documents Registered drop down list, one of the following: Deed/Transfer (DT) Mortgage/Charge (MC) DT and MC Other. Select from the Acting For drop down list, the party for whom you are acting. 2. Select Civil Litigation to process civil litigation levies and enable the Documents Filed box. Select from the Documents Filed drop down list, the type of document. 3. Select in the Matter 1 box, the nickname of the matter that the levy will apply. 4. Select in the Matter 2 box, a second matter nickname to apply the levy to multiple matters. 5. Check Charge Client to transfer the charge to the matter(s). If two matters are selected, the charge is split evenly between both matters. 6. Accept the Pay GST default of Y. 7. Accept the Total default value for Real Estate or Civil Litigation, depending on the matter opening date. This field adjusts automatically. 8. Accept the Lawyer default for the matter s responsible lawyer. 9. Select in the Explanation box, an explanation code for the levy. 10. Accept or change PCLaw s default Entry Date. 11. Click OK to post the transaction. Page 4

5 Modifying a Levy Entry Data Entry > Register > Ledger tab Once a transaction levy entry is posted, it can be changed or deleted through the Ledger tab of the Register. To be able to modify or delete the entry, the entry must be in an open month and not included on an invoice to a client. 1. Type in the Matter box, the nickname for the matter. 2. Select in the Start Date and End Date boxes, the date of the levy entry. 3. Click Select to list transactions matching the matter and date criteria. 4. Highlight the transaction levy entry. 5. Click Remove to remove the entry. 6. Click Change to change the entry using the Correct Transaction Levy window. 7. Click Save and Close to save your work this session. Reports The Ontario transaction levy feature contains three reports, Transaction Levy - Detail, Transaction Levy - Summary, and Volume Surcharge Summary. This section provides only a summary of these reports. Transaction Levy - Detail Report Reports > Transaction Levy > Transaction Detail Use this report to show the individual transaction levies entered into PCLaw for a given period of time. Run the report quarterly to produce a list of transaction levy charges for your firm records. This report includes transactions created using the Transaction Levy feature. If your firm handles more than one of real estate, civil litigation, and private property matters, print the report separately for each category. Transaction Levy - Summary Reports > Transaction Levy > Transaction Levy Summary Use this report to provide a summary of the transaction levy entries for quarterly remittance purposes. In addition to telling you how much money to remit, you can use the report as a remittance form. Volume Surcharge Summary Reports > Transaction Levy > Volume Surcharge Summary Use this report to provide you with volume surcharge information. PCLaw calculates your average gross billings by dividing the gross billings amount by the average number of lawyers in your firm who are members of the Law Society of Upper Canada. If the average gross billings amount exceeds $125,000.00, PCLaw determines the volume surcharge by multiplying the average gross billings by the average number of lawyers. The result is multiplied by the surcharge percentage. Making a Transaction Levy Remittance Use the General Cheque feature to make your remittance to the Law Society of Upper Canada. Include a copy of the Transaction Levy - Summary with your remittance. The Transaction Levy - Summary should be dated and signed. Page 5

6 Producing a Transaction Levy - Summary Reports > Transaction Levy > Transaction Levy Summary Use this report to provide a summary of transaction levy entries for the quarterly remittance. The Common tab for running the Transaction Levy - Summary report 1. Select Real Estate to include all transaction levies entered for this category. 2. Select Civil Litigation to include all transaction levies entered for this category. 3. Select the Start Date of the quarter to be submitted. 4. Select the End Date of the quarter to be submitted. 5. Check Printer to produce a hard copy of the report. 6. Click OK to produce the report. Creating the Remittance Cheque Data Entry > General Bank > Cheque When issuing a cheque for the remittance, choose the Provincial (Y) Category from the Pay GST selection list. Allocate the cheque to the Transaction Levy Payable (2460) G/L account. 1. Type The Law Society of Upper Canada in the To box. 2. Select the Date of the remittance. 3. Type in the Amount box, the remittance amount from the Transaction Levy - Summary. 4. If there are matters opened prior to 1999: In the Pay GST box, type or select Y. The Transaction Levy - Summary calculates the GST amount for all matters dated prior to Each matter opened prior to 1999 is required to pay $3.04 in GST per $50 in levies. In the GST box, type this amount. 5. If there are no matters opened prior to 1999: In the Pay GST box, type or select N. 6. Type in the Explanation box, Transaction Levy Remittance. 7. Leave the Matter column blank. 8. Leave the GST column blank. 9. Accept in the Explanation column, the default text from the cheque area. 10. Accept in the Amount column, the default value from the cheque area. 11. Select in the G/L Account box, the Transaction Levy Payable G/L (2460) account. 12. Click Print to print the cheque. 13. Click OK to save the cheque. Page 6

7 Accounting for Transaction Levies The manner in which a transaction levy affects the client ledger is dependent upon whether the cost is transferred to a matter, and if so, the matter open date. For Real Estate matters opened after January 1, 2010, the levy is $65, inclusive of PST. GST is added at the time of billing. For Real Estate matters opened between January 1st, 1999, and December 31st, 2010, the levy is $50, inclusive of PST, and exclusive of GST. GST is added at the time of billing For Civil Litigation matters opened after January 1st, 1999, the levy is $50, inclusive of PST, and exclusive of GST. GST is added at the time of billing. For matters opened between January 1st, 1996 and December 31st, 1999, the levy is $50 inclusive of GST. However, because of how GST calculates on top of PST, the actual cost billed to the client is $ For matters opened between April 1st, 1995 and December 31st, 1995, the levy is $25 inclusive of GST. This calculation is not displayed in the following examples. For matters opened prior to April 1st, 1995, a transaction levy is not applicable. PCLaw calculates these values automatically. The G/L accounts used in the following tables are the defaults provided on the Provincial tab of System Settings. Client Ledger Reports > Client > Ledger The Client Ledger displays the transaction levy value net of GST. For matters opened after January 1st, 1999: Client Ledger displaying a transaction levy opened after January 1st, 1999 When the matter is billed, the levy is treated in the same way as any other cost. Recording a Transaction Levy The following table displays the results of three transaction levies on the general ledger. The first is when the firm absorbs the cost. Second, the firm transfers the cost to a matter opened after Third, the firm transfers cost to a matter opened between 1996 and Client Disb Recov (1210) Trans Levy Payable (2460) Trans Levy Expense (5770) No matter - Real Estate No matter - Civil Litigation Real Estate after Jan 1st Real Estate Jan 1st Dec 31st 2010 Civil Litigation after Jan 1st, Between 1996 to How different configurations of a transaction levy post to the general ledger Page 7

8 Billing The following table displays the results on the general ledger after billing two matters with transaction levies. The first matter was opened after January 1st, The second was opened between 1996 and Accounts Receivable (1200) Client Disb Recov (1210) GST Payable (2400) How billing a transaction levy affects the general ledger Remittance Real Estate after Jan 1st Real Estate Jan 1st Dec 31st Civil Litigation after Jan 1st, Between 1996 to The following table displays the results on the general ledger after the quarterly transaction levy remittance. The value and method of the remittance are the same for levies where the firm absorbs the costs, and levies where the cost is transferred to the matter. Trans Levy Payable (2460) General Bank (10xx) GST Payable (2400) Real Estate after Jan 1st Real Estate Jan 1st Dec 31st Civil Litigation after Jan 1st, Between 1996 to How remitting a transaction levy affects the general ledger Page 8