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Lost your tax papers? Now What? Lisa Patrick

If you are a taxpayer with only employment and investment income you may order from Canada Revenue Agency all your previous years paperwork.  
Now, it can take the government up to 2 years to get all the tax info keyed into your social insurance number from your employers and investment companies.
Call 1 800 959 8281, and advise them you have lost all your tax papers and explain you are an employed taxpayer.
Ask them to help you determine if they have what you need at this date on their computer database.
There is no need to visit an office, a phone call will provide the confirmation and mail service to your address will get you what they have.
 
If you have a personal taxpayer with a business and have lost all your tax slips and business bookkeeping, there is a solution but it is much more time consuming and possibly more expensive to get your information recreated.
Ordering your tax slips from the government is easy but it is the recreating of the receipts and statements for the business that will be time consuming and possibly expensive.
 
If the income you earned for the business is less than $3500 – maybe consider just reporting the income
a.                   There is no Canada pension plan costs
b.                   There is no tax cost for that income level.
If the total income you earned is less $11,000 – maybe still consider just reporting the income rather than trying to recreate all the bookkeeping.
a.                   There is no federal tax cost
b.                   The Canada Pension Plan cost is minimal (approx 5% cost of income over $3500)
c.                   The Provincial tax cost is minimal (approx 5% to 11% of income over $9000 to 16,000 of income) – depending on the province.
 
Brief Must do list for recreating bookkeeping paperwork:  This list will not provide the official papers but if your self reporting is reasonable; an audit from the Canada Revenue Agency may be fair and allow some claims.
1.                   get some documents from some authority indicating why the papers were lost.
a.       An accident from fire, flood, robbery, vehicle, water backup, etc. – insurance company, police
b.       Marital breakup, move, shipping problem, third party control lost them, etc -  letters or affidavit
c.       If you chose to not keep items, maybe you need to see a doctor and see if they would provide a letter indicating you lost your mind or you were ill!
2. bank statements, order to replace lost ones
    a.       identify the deposits that are not Income for the company with a description and source of such information.
                   i.      All deposits to your bank will be considered income to the business if you do not eliminate the personal non revenue deposits
    b.       identify the withdrawal amounts and what they were for
3. cash receipts – recreating the amounts you know you spent by writing the amounts and when and where you bought them.  If you have the item still, take a picture, document serial numbers etc. to support the claim.
4. charge receipts & statements – order to replace lost ones.
    a.       Identify the withdrawal amounts and what they were for
5. vehicle logs, repair bills that can be reproduced by your dealer, will support kilometers travelled to substantiate your gas purchases.
    a.      Customers distance from your business location will also support travel claims.
6. customer records and vendor records used to support the recreation of information.
 
There is no guarantee the aforementioned information will be accepted in great quantity but with a qualified tax practitioner representing you with the government and the truth is reasonably supported by events; we do suspect Canada Revenue Agency will be fair in there assessment.


Divorcing? Lisa Patrick

1.                   Getting all the financial information from both parties openly available to both is sometimes a lot of “fun”.  Asking for a copy of the tax returns and Government notice of assessments may not be enough.
GET the Tax slips ordered from Canada Revenue Agency.  A taxpayer may not claim a specific income or rrsp purchase but CRA will have a copy of tax slips that are filed by investment companies and employers.  Get your estranged spouse to sign a T1013 authorizing your accountant or lawyer to order all tax slips.
 
2.                   Child Support agreements written to indicate payments are required for a child results in a loss of opportunity to claim the child as a dependent.
Specific wording in a support agreement for dependents must be explored.  If you have two children – the solution is real easy.    Ask a lawyer to consider writing the agreement to reflect: support is paid by one taxpayer for only one child with other taxpayer required to pay for the other or have support payments rotate per taxpayer each other year.

Take some of the stress out of your life.. ask the right questions.

Darlene Lafond R.P.A.


Partnerships for business. Lisa Patrick

On January 1, 2011, new filing criteria for the Partnership Information Return will come into effect. The new filing criteria will apply to partnerships with fiscal periods ending on or after January 1, 2011. For partnerships with fiscal periods ending on or before December 31, 2010, the current criteria still apply. See Partnerships and Information return filing requirements for more information.

Topics about Partnership

Reporting partnership income
Each partner files an income tax return to report his or her share of the partnership's net income or loss.
2010 and previous years filing requirements:
Partnerships that do not have to file a partnership information return (PIR) - T5013
Five partners or less throughout the whole fiscal period; and no partner who is another partnership.
Partnerships that have to file a partnership information return (PIR) - T5013
Six or more partners at any time in the fiscal period; or five partners or less throughout the whole fiscal period and one or more of its partners is another partnership.
The CRA is replacing the ABOVE requirement about the number of partners in a partnership with a requirement related to financial thresholds, and clarifying the requirements for the types of partners.

Effective January 1, 2011, a partnership that carries on a business in Canada, or a Canadian partnership with Canadian or foreign operations or investments, has to file a T5013 for each fiscal period of the partnership:

If, at the end of the fiscal period,
the partnership has an absolute value of revenues plus an absolute value of expenses of more than $2 million, or has more than $5 million in assets; or
If, at anytime during the fiscal period,
the partnership is a tiered partnership (has another partnership as a partner or is itself a partner in another partnership);
the partnership has a corporation or a trust as a partner; (common occurance!)
the partnership invested in flow-through shares of a principal-business corporation that incurred Canadian resource expenses and renounced those expenses to the partnership; or
the Minister of National Revenue requests one in writing.
Where can businesses get more information?

For more information, businesses can go to www.cra.gc.ca/partnership. More information will be added as it becomes available. Businesses can also contact the Business Enquiries line at 1-800-959-5525.

 


Wondering how to do a simplier GST return? Lisa Patrick

Cra provides a simplier method of the accounting for the GST.  This method also provides for a simpler GST return.  Most business types can qualify for this method.
You must contact the government in order to use this method.  
 
The Cra guide: GST Quick Method RC 4058 <http://www.cra-arc.gc.ca/E/pub/gp/rc4058/rc4058-10e.pdf>  can assist you if you desire researching.  Or Contact the government at 1 800 959 5525.
This means that you remit only a part of the GST tax that you collect, or that is collectible.

Darlene Lafond R.P.A., C.P.C.


Meals for Staff? What is eligible? Lisa Patrick

Criteria:
a.   if any work shift exceeds 12 hours (that would include travel time to job site) = one meal a day write “shift over 12 hours” on receipt
It is expected after a 12 hour work shift, the employer provide 1 meal to the employee.
The income tax act allows this meal to be a company expense with out consideration to including it as income to the employee.
Write “job site or contract or maintain day planner, ensure employees time sheet reflects the shift period.
 
b.   if any client visit included a meal:
write “client name, agenda, time” on receipt
 
c.  
 if any over night travel includes a meals:
 write “client name, agenda (purpose)” on receipt

Go to our free product and learn more.

Darlene Lafond C.P.C., R.P.A.


Employee Gifts?? Lisa Patrick

There are tax guidelines on how much you can give your employee - either in gift or in cash that may or may not result in a taxable benefit.
 
Please do look at the deal carefully every year as the government does change the rules.
There was major change effective January 1, 2010….
 
December 31, 2010 is fast approaching for the preparation of the T4s…
 
Please visit CRA website to get the spit from the horses’ mouth.
employer guide on benefits to employees <http://www.cra-arc.gc.ca/E/pub/tg/t4130/t4130-10e.pdf>
 
this is a section from the guide we believe you should read:
Gifts, awards, and long-service awards

Policy for non-cash gifts and awards

to help you determine if there is a taxable benefit for the employee.
Go to www.cra.gc.ca/gifts, select “Rules for gifts and awards,”
then select the “Q&A” icon.

C2online


Asset Sales (tanigble & intangible) Lisa Patrick

1.        asset sales matching the net value remaining for that asset for tax purposes – results in no taxable income.
Review the last tax year filed of T2 schedule 8 undepreciated capital cost allowance (UCC) to determine that tax free value.
 
2.        Using the sale of assets in a corporation can result in more net money to the shareholders than a sale of shares by a shareholder.
Selling assets at a profit (gain) over the assets initial costs; result is an income to the company that qualifies for a capital gain…
 
The non taxable part of a gain (currently 1/2 of the gain) accumulates to the capital dividend account
  (1/2 of a gain (non taxable portion) tangible asset capital gain & 1/2 of gain (non taxable portion) intangible assets gain (good will) accumulates to the capital dividend account (cda))
(caution; if the assets book value was ever depreciated that depreciated portion will go back into income)
 
The CDA (capital dividend account) provides the opportunity to avoid taxable dividends; issue non taxable dividends from the value in the capital dividend account:
Depending on what other personal income expectations for the year are:
Exploring whether the corporation may issue a non taxable dividend from the capital dividend account…
 
Tax strategy when the corporation plans on paying the non taxable dividend to its shareholders.
T2054 - Election for a Capital Dividend Under Subsection 83(2) <http://www.cra-arc.gc.ca/E/pbg/tf/t2054/README.html>


A Curriculum to promote professionals for the 21st century! A business expense?? Lisa Patrick

Did you know that ...

Only 3% of people in Western society have clear, written goals. 

A study was conducted on students in the 1979 Harvard MBA program. In that year, the students were asked, "Have you set clear, written goals for your future and made plans to accomplish them?" Only three percent of the graduates had written goals and plans; 13 percent had goals, but they were not in writing; and a whopping 84 percent had no specific goals at all.

Ten years later, the members of the class were interviewed again, and the findings, while somewhat predictable, were nonetheless astonishing. The 13 percent of the class who had goals were earning, on average, twice as much as the 84 percent who had no goals at all. And what about the three percent who had clear, written goals? They were earning, on average, ten times as much as the other 97 percent put together.

Although  most company’s will claim the cost to train their staff as a business expense,  the claim of the time to get the training can not be claimed by the  individual on their personal tax return if the tuition was not paid to a  federally certified educational institute.
(educational tax credit is based  on hours committed to a course curriculum that provides skills for a job)  
 
Federal certification  as an “educational institute for professional training” may be represented as  a curriculum to promote professionals for the 21st century.
Need  certification for
1.                   necessary  for claiming the time and the training cost as a personal tax credit
2.                   necessary  to claim as an educational credit if employee tuition paid but not the time to  attend the course.
3.                   necessary  to claim as an education credit if employee wants to qualify for the  textbooks tax credit available to personal tax credit.

Certification of Private Educational  Institutions
Purpose of Certification  
The  purpose of certifying private educational institutions under Sections 118.5  and 118.6 of the Income Tax Act is to allow students, 16 years of age or more,  to qualify for Tuition and Education Tax Credits.  
Eligibility  Criteria
·        To have a business  name and give the courses or training in Canada.
·         To be a private school or college, a  professional organization or business providing courses, other than courses  designed for university credits.
·         •To offer a qualifying educational  program, that is courses specifically designed to furnish a person with skills  for, or to improve a person’s skills, in a recognized  occupation.
NOTE: The following are examples of educational programs  that do not qualify: conferences, workshops, seminars, courses designed  for personal development, general knowledge, religion, adult basic education,  literacy, tutorial, job interview techniques, preparation for exams and  courses paid by employers.
·        To  be provincially licensed as a private vocational, trade school or the  equivalent, if that is a requirement of the province where the courses are  given.
I BELIEVE IN ALBERTA THIS IS NOT REQUIRED.
·         To submit a written request for  certification by the Minister of Human Resources and Social  Development:

  Application - Certification Kit <http://www.hrsdc.gc.ca/eng/learning/canada_student_loan/MCL/app.shtml>  This is the “recent” application kit for federal certification that will  provide you the authority to issue tuition receipts and education credits for  tax purposes.  

Or contact us to learn more...

Lisa Patrick
CEO, C2online.ca
 

 


CPP Benefits - Common law spouse has died. Lisa Patrick

Call 1-800-277-9914.  Explore the widow pensions (survivors pension).  In most cases if you can prove a common law or martial relationship; even if you are not living together; and no other spouse applies the benefits may be allocated to you. 

Please note a divorced spouse is NOT eligible.

If you have any questions contact us.

 


Dividends Paid - Avoid Canada Pension Plan Lisa Patrick

Dividends paid to a shareholder avoid Canada Pension Plan costs….but this does not save the corporation any tax!
 
If you want to pay less Canada pension on wages from your corporation, consider some income to be paid as the rental costs the corporation paid to you the shareholder.

This will result in any excess rental amount you are paid; after you claim a deduction for the portion of the household costs that corporation uses, you will not require the payment of any Canada pension plan for wages as it is NOT a wage from the corp.

Darlene Lafond C.P.C., R.P.A.


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