T3’s, T5’s and T5008’s – What do they mean? These comments are related to investments that you own that are not part of your RRSP (Registered Retirement Savings Plan) or TFSA (Tax Free Savings Account). If you have investments in a mutual fund, you will receive a T3 or T5 whenever the mutual fund earns income that is reinvested back into the mutual fund. The income could be interest, dividends, capital gains, foreign income or other types of investment income. You will not have received this income as ‘cash’ into your bank. The difference between a T3 and a T5 is determined by the typeContinue Reading..
Did you know that if you own a business, you can deduct all annual license fees and business taxes you incur in the running of your business? You can also deduct annual dues or fees for membership in a trade or commercial association. (Visited 735 times, 1 visits today)Continue Reading..
If you have a business, there are two ways you might be able to deduct loan fees. First, if you own a business and have a business-related loan, you can deduct any fees you pay to reduce your interest rate. Second, if you pay a business loan off early, you can deduct any penalties or bonuses that your financial institution charges you for this early pay-off. (The fee or penalty can be treated as prepaid interest that you deduct over the remaining original term of your loan.) (Visited 220 times, 1 visits today)Continue Reading..
There are a number of things you can due to reduce your tax bill at the end of the year. To start, you can review income splitting opportunities to ensure you use up everyone’s basic personal amounts and other credits. (Just make sure you’re audit proof!) You can maximize your RRSP contributions through your regular pay cheques or with bonuses. (If you don’t remember your contribution limit, look at the Notice of Assessment the federal government sent you after you filed last year’s taxes.) (Visited 35 times, 1 visits today)Continue Reading..
If you are a volunteer firefighter or search and rescue volunteer, there is a tax credit available to recognize your efforts (available since 2011). Guess what? It can be as much as $3,000 a year! To qualify, you must complete at least 200 hours of eligible services with one or more agencies/departments in a year. You can start counting the hours on January 1 of each year. You must get a letter from the fire chief or delegated official which shows your eligible hours for that year. This is good to have in case CRA requests the letter through an assessment of your return. (Visited 214 times, 1 visitsContinue Reading..
Here are some common situations that create confusion when doing your personal taxes. They apply to investors, ordinary people and families. If you think any of these apply to you, give Rita a call to discuss your situation. (Visited 35 times, 1 visits today)Continue Reading..
If you want to reduce your tax bill, the more tax credits you have, the better. Tax credits act like coupons and reduce your tax owing. Here is a list of tax credits that may apply to you. (Visited 42 times, 1 visits today)Continue Reading..
Students enjoy some particular credits to reduce their taxes owing while in school. Some may also carry forward to future years and help reduce taxes owing in the first year or so after you graduate. This is particularly helpful if you have a large student loan to pay back. In some situations, credits can be transferred to your spouse or parent to reduce the tax burden on the household. Also, if you incur moving expenses to attend school or to begin a job, you may be able to claim the moving expenses as a tax deduction. (Visited 15 times, 1 visits today)Continue Reading..
Being chosen to act as someone’s power of attorney or committee is quite a compliment! This means someone trusts your judgment and skills. However, there are many rules and requirements to protect the person requiring this service. It is important that you understand the rules and obligations before you say yes. (They are not as intuitive as you might think.) (Visited 61 times, 1 visits today)Continue Reading..
Moving to a new home can be exciting (and sometimes a challenge). If you are moving for a new job or to attend school full-time, CRA wants to help you with those expenses. You can qualify to deduct moving tax expenses if your new home is at least 40 km closer to your new job or school than your old home. If you move this year and don’t have enough income to use up all the eligible moving expenses, you can carry the remaining amount forward to the next tax year. (Visited 13 times, 1 visits today)Continue Reading..
Manitoba offers a tax credit if you install biomass fuel energy equipment, geothermal heat pumps or solar energy. The credit will reduce the amount of income tax you must pay. The value of the credit was increased on April 13, 2011 from 5% and now ranges from 7.5% to 15% of your installation costs. (Visited 155 times, 1 visits today)Continue Reading..
We know that taxes are a certainty in life, but did you know there are some forms of income you don’t need to report on your income tax return? Instead, you can just enjoy your money! (Visited 33 times, 1 visits today)Continue Reading..
CRA has made great advances in the last few years to make it easier for you to pay your taxes owing for last year or to make installment payments for the current year. You can now pay taxes and installments by cheque (mail in or drop off, addresses & locations vary), at your bank (you need a remittance voucher first), with your credit card, online via your bank account (you access your bank account and set up CRA as a vendor) or access CRA and pay with your debit card online. (Visited 131 times, 1 visits today)Continue Reading..
The project must have begun or were entered into contract for, after January 24, 2009 and are completed and paid for by January 31, 2010. The improvements must be enduring in nature (not just a repair). They must be receipted and can include materials and labour. Keep any delivery receipts to prove the materials came to your property. You can not claim for your own labour. The credit can be applied to your home, condo, vacation home, cabin or cottage. If you own a condo, you may be able to claim for expenses incurred for renovations in the common areas. The dwelling must be ownedContinue Reading..
Effective January 1, 2012, the federal government made a very unpopular change to the rules regarding the CPP deductions. If you have employees between 60 and 70 years old, you will want to be familiar with these changes. If you are an employee between 60 and 70 years old, you will want to review these rules, particularly if you are contemplating retirement or a return to work after retiring. Note: if you are between 65 to 70 years of age, you do have an ‘opt out’ provision, but there are rules involved with opting out. If you’re unsure how the CPP rule affects you, contact Rita. (Visited 35Continue Reading..
If you are going through a marriage breakdown, there are important issues to consider when drafting your separation agreement, particularly if there are children involved. There are also tax consequences to consider. Here are credits you want to consider: Eligible Dependent Credit – approx $11,000 per year Amount for Children – approx $2,100 per child, per year (this credit expired in 2014) Child Fitness Amount – The federal fitness credit was removed in 2016, however some provinces have maintained the credit – please contact Rita if you need more information Child Arts Amount – maximum $500 per child per year (Visited 10 times, 1 visits today)Continue Reading..
Are your children taking music lessons? How about dance? If the program is at least eight consecutive weeks (five consecutive days for a camp) and develops your child’s artistic or cultural skills, you may qualify for the Children’s Arts Tax Credit. (Visited 7 times, 1 visits today)Continue Reading..
Planned giving is a systematic way of pre-planning your estate so the taxes are minimized and the estate value is maximized in a tax legitimate and efficient manner. IT’S NEVER TOO EARLY TO DO ESTATE PLANNING Estate planning should be done in conjunction with retirement planning. (Charitable giving is a component of both.) You are not limited to leaving a legacy for your children. There are also many opportunities to leave a social legacy to your community without adversely affecting the legacy of your children. Charitable giving allows you to contribute to the well being of future generations. (Visited 12 times, 1 visits today)Continue Reading..
CRA has specific requirements about what counts as a charitable donation tax receipt. Not knowing these rules and issuing incorrect receipts will cost your organization time and money. If a receipt is rejected by CRA, it may even mean that you could lose future donations from that donor. (Visited 70 times, 1 visits today)Continue Reading..
CRA recognizes that issuing charitable receipts in different circumstances may require different receipt formats. However, the basic rules regarding the information they require to be on receipts does not change. CRA has provided examples of donation receipts for different circumstances to help you issue correct receipts. Contact Rita if you would like her to review your charitable donation receipt format. (Visited 9 times, 1 visits today)Continue Reading..
Do you have a business that requires you to purchase a specific volume of product to qualify for compensation? If yes, and you do not purchase the minimum, is your compensation denied? Do you further wish to claim the product as a business expense? You cannot claim the product if you or someone else involved in the business personally consumes it. A business expense is any reasonable current expense you paid or will have to pay to earn business income. How then, can you claim the monthly product as an expense? (Visited 11 times, 1 visits today)Continue Reading..
The Province of Manitoba is working to reduce red tape for small businesses be removing the requirement of small suppliers to be registered for RST. (Retail Sales Tax) (Visited 51 times, 1 visits today)Continue Reading..
Using space in your home to operate your business allows you to write off a percentage of your home’s overhead including property taxes, insurance, mortgage interest and utilities. You can also write off a percentage of the regular (non-capital) repair and maintenance you make to the home. (Note: expenditures made in the business space for business purposes only, such as putting up shelves or painting, are written off completely as a business expense, not just a percentage). To qualify for business expenses, the space must be used for business purposes on a regular, ongoing basis (eg not the kitchen table). (Visited 60 times, 1 visits today)Continue Reading..
Owning a vehicle is costly, but if you use yours for business, you can write off a portion of its expenses. You don’t have to spend your days behind the wheel. If you need to drive to purchase office supplies, deposit cheques or go to meetings, these outings count. CRA auditors will always review your vehicle expenses and expect you to have proper documentation. (Visited 144 times, 1 visits today)Continue Reading..
Do you need to travel for business? Then you can deduct travel expenses you incur to earn business and professional income. Travel expenses include: public transportation fares taxis plane, train, bus fares hotel accommodation meals (Visited 13 times, 1 visits today)Continue Reading..
If you own a business, there are many costs you can deduct from your business income. LANDLINE TELEPHONE EXPENSES You are able to claim the entire cost of your telephone if it is used exclusively for business purposes. If it is a shared phone, you will need to determine a basis by which to allocate the cost of the phone to business and personal activities. Some methods of allocating the cost between business and personal use are: (Visited 129 times, 1 visits today)Continue Reading..
The underground economy is when you conduct business for cash — there are no written records. Not only can that prove disastrous for you if you need warranty work later, but it hurts legitimately operating business owners who contribute to the economy and pay their taxes. (Visited 9 times, 1 visits today)Continue Reading..
Reasonable expectation of profit is a concept used by CRA to determine if your business is operating for profit or for pleasure. CRA wants to determine if the business was undertaken in pursuit of profit and if so, is the business being carried out according to objective standards of business behaviour. If CRA determines the business is not being operated in a business like manner, they can deny any losses that you may have claimed. (Visited 32 times, 1 visits today)Continue Reading..
PIPEDA (Personal Information Protection and Electronic Documents Act), which was enacted in three phases, is now fully in force. It has a direct impact on any form of business organization that collects data on customers and/or has employees. This means virtually every business! There are 10 key principles or obligations for the collector of personal data under this act. (Visited 7 times, 1 visits today)Continue Reading..
If you are planning to open a business, you have many options for what type of business you can register. This information is a primer when trying to decide on a form of business organization. Consult Rita regarding your situation before deciding on a particular form. PROPRIETORSHIP This is a simple form of business organization. (Visited 84 times, 1 visits today)Continue Reading..
If you own a business, office expenses purchased for your business can be deducted from your taxable income. Office expenses include items such as pens, paper, toner and stamps. (Visited 19 times, 1 visits today)Continue Reading..
CRA has rules surrounding business meals. You can see their full explanation here: Meals in a Restaurant RESTAURANTS Restaurants are an excellent location to have business meetings. Often, you can discuss matters which you don’t want overheard at the office, or you can get away from the interruptions of the office. To claim the cost of a meal (plus taxes and tip) as a business expense, (Visited 41 times, 1 visits today)Continue Reading..
CRA is making life easier for business owners! You no longer need to wait to receive your access code to file your GST return online. The access code is now more like a password. If you don’t like the one assigned to you, its easy to change it. If you have questions, contact Rita. (Visited 8 times, 1 visits today)Continue Reading..
As a reseller of product, you must deduct the cost of the items sold from the income you received when you sold the item. You cannot write-off your entire purchases for the year, but must hold unsold items in inventory. You must track the cost of the items you sell, and track the income that you receive from re-selling the product. (Visited 170 times, 1 visits today)Continue Reading..
CRA has a Small Business Job Credit. It is an annual credit up to $1,000 and is determined to be the difference between the EI premiums paid by the employer in last year vs the year before. So, if you paid more EI in 2015 than in 2014, you will receive a credit from the government for that difference, up to $1,000. CRA puts the credit in your RP account — so pay attention to it! Note: You are determined to be a small business for this credit if your total EI premiums are less than $10,000. (Visited 8 times, 1 visits today)Continue Reading..
A common dilemma for many businesses is how to get money for working capital, expansion or upgrading. Unless you’ve won a lottery or are independently wealthy, financing has to come from third parties. MORTGAGES Mortgaging existing assets such as a home is one option. If the equity is available, this option can provide a one-time boost to your business, but has inflexible repayment options that may not be suitable to your business. (Visited 6 times, 1 visits today)Continue Reading..
Are you contemplating the independence that a small business on the side may give to you? Or are you thinking about starting up a small business, then having it on the side when you retire? If yes, don’t forget to consider the advantages you will enjoy when operating a bona-fide business from your home. (Visited 23 times, 1 visits today)Continue Reading..
The importance of a well constructed and researched business plan is reiterated over and over to entrepreneurs, whether they are just starting out or are million dollar businesses. Preparing a business plan is an exercise in evaluating the impact of decisions before they are made. A business plan will help you with marketing and a budget. It provides away to evaluate future results against your goals. There are two significant parts to a business plan: the marketing plan and the financial plan. A financial plan helps clarify business goals and is a critical part when seeking outside financing. (Visited 14 times, 1 visits today)Continue Reading..
Has your business reached its market potential? Do you think exporting is your next big step? Before leaping into exporting, you need to do serious planning to ensure you cover all possible outcomes. QUESTIONS TO CONSIDER Are your production capabilities able to handle larger orders in a timely fashion? Do you have the necessary employee, technical and financial resources? Can you handle the time lag between paying suppliers and receiving customer remittances? (Visited 7 times, 1 visits today)Continue Reading..
Many business deals begin or become reality while at a hockey game or on the links. What expenses can you deduct for tax purposes? ELIGIBLE EXPENSES theatre, concert or athletic event tickets private boxes and hospitality suites at sports facilities cruises nightclubs, athletic or social clubs (Visited 186 times, 3 visits today)Continue Reading..
It may seem simple to have people work for you and just have them issue invoices to you for the work they do. You don’t have to worry about CPP, EI or any of that other payroll hassles, right? Wrong. There are many considerations in play when determining if a person is an employee or a contractor. If you get it wrong, and CRA says that the contractor is actually an employee, you will be on the hook for all the CPP and EI that should have been taken from their pay and you will endure penalties and interest. I have seen companies go out of business for making theContinue Reading..
A trademark is any word, figure, symbol or mark used to distinguish your business from others. A registered trademark is generally registered with a patent and trademark office. A trademark should be registered for your word, phrase or design if it is unique from others in the marketplace. A trademark differentiates your product or service from all others and registration provides protection if others try to use it. (Visited 5 times, 1 visits today)Continue Reading..
CRA requires corporations, under certain circumstances, to prepay their income taxes for the next year. Generally, if you owed more than $3,000 last year or will owe more than $3,000 this year, you are required to prepay your taxes in the current year. CRA will notify you when they require you to pay instalments. If you fail to move to instalments when required, you will owe interest and penalties. If eligible, you can choose to pay instalments (even if they aren’t required) so you can manage your bookkeeping and pay taxes as you earn income. For small corporations, you can pay installments quarterly or monthly. Call RitaContinue Reading..
It’s great to get your children involved in your business. They can do many of the repetitive tasks that add no value if you do them. This frees up your time so you can be doing more value-added jobs. WHAT QUALIFIES? The work must be bona fide. Have a job description available to show what steps are required to perform each task. Have the children write up an invoice to show what they did and when they did it. The invoice should include the date, the times and what they did. It is to be in their handwriting and signed by them. (Visited 12 times, 1 visits today)Continue Reading..
You can deduct from your business income any expenses incurred to engage a professional. A professional would include people such as an accountant, lawyer or engineer. The work they do must related to your business and include advice. Questions? Contact Rita. (Visited 27 times, 1 visits today)Continue Reading..
There are many benefits you as an employer can offer to your employees. It’s important to consider the tax consequences for these benefits. You can see CRA’s details about Employee Benefits, but here is some basic information. GIFTS AND AWARDS An employer can give employees, on a tax-free basis, up to two non-cash awards annually for employment achievements, as well as two non-cash gifts per year for special occasions such as holidays, birthdays or marriage. The total value of these awards can’t exceed $500 per year, per employee, per category. (Visited 341 times, 1 visits today)Continue Reading..
Barter is increasingly more common as a way for businesses to trade services without actually having to pay hard cash for the service or product. In all cases, the revenue is recognized at the time of the provision of the product/service, not when a subsequent barter occurs. WHEN YOU ARE SELLING THE PRODUCT OR SERVICE All the regular business processes would be followed such as invoices issued or punched into the till. The payment method (tender) would be barter rather than cash/cheque/credit card. You would still add all the relevant GST/HST and any provincial sales taxes. These taxes must be remitted to the government inContinue Reading..
Audits are big business for CRA. Remember, Al Capone was not sent to jail for murder or bootlegging, but was charged and found guilty finally for tax evasion! There are red flags you should be reviewing in your tax returns to reduce the potential for audit. Remember though, that if the number is what it is, and you have met all the rules and have the documentation, you should have no fear of an audit. (Visited 30 times, 1 visits today)Continue Reading..
CRA has invested a lot of time and energy into developing top-notch audit teams. Your best bet in an audit is to rely on your good habits and the education you have developed over the years. Following the rules and having proper documentation will win each time in an audit. KNOW THE RULES (Visited 10 times, 1 visits today)Continue Reading..
Advertising and promotion expenses are incurred for almost every type of business on this planet. Who doesn’t need to promote themselves or their businesses? Any activity that you do to promote your business on various forums is an expense to your business. Here are some examples: (Visited 555 times, 1 visits today)Continue Reading..
A network is an interconnecting series of contacts with you, the small business owner, as its nucleus. Every person’s network is unique, and connecting your network to another can increase its value geometrically. The characteristics of a network will vary depending on the needs of the nucleus (your business). For instance, an accountant’s network would be saturated with contacts knowledgeable in taxation, finance and corporate law. A building contractor’s network would be loaded with plumbers, electricians and other tradespeople. A common characteristic to both networks would be the infusion of business advisors: knowledgeable, experienced people who can provide advice or be sounding boards for commonContinue Reading..
Many years ago, someone at CRA developed an online payroll calculator. Although CRA is very clear that it is only to be used to ‘confirm the deductions on your official statement of earnings’, more and more people are using it to calculate payroll withholdings for their employees. It is a handy tool to verify the amounts your employer is calculating, or to perform some ‘what if’ analysis on your own. Contact Rita if you have questions about payroll. (Visited 101 times, 1 visits today)Continue Reading..
Over the last several years, the government has enhanced tax credits for people with disabilities to give them tax advantages. Several opportunities have been created to set up special savings plans that grow tax free for the future benefit of the disabled person. Note: There is a difference between a disability and an impairment. If a person has an impairment, there can also be some tax advantages. Talk to Rita to decide which credits may be applicable in your situation. (Visited 8 times, 1 visits today)Continue Reading..