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Unexpected Medical Expenses - How to recoup your loss! C2online

Medical expenses can be an unexpected expense.  Ensuring that you take advantage of every claim opportunity when filing your income tax will save you money. 

We have wrote several times on missed medical claims.  A recent article written by CBC senior writer, John Hembry about 10 medical tax deductions that can save you money, caused us to provide our readers further information.

 He says, “Most people are aware they can claim the medical expenses tax credit, but many don’t keep a running tally because they simply forget or don’t think it will add up to worthwhile savings, tax experts say. For many people, that's a potentially costly mistake.”

Hembry talks about the disability tax credit.  Darlene Lafond from C2Online, a registered public accountant adds that we need to consider, what if a family member is dependent on another family member for food or shelter or clothing – any essential life support on a routine basis: You should discuss with them if they qualify for the dis ability tax credit T2201.They may not require the disability tax credit on their taxes but if the support person needs it, they may be able to transfer any unused disability tax credit to them just because they are providing essential life support, even if the person does not live with the person providing support. Learn more to claim at How to Transfer.

 In addition, Hembry talks about travel expenses related to individuals who live in rural communities and are traveling more than 40 km one way for medical reasons can claim the trips on their personal tax return for a medical deduction.  Keeping a diary of the trips taken for medical reasons to use for a medical deduction on their personal tax return. However, it is critical to know and record the total number of kilometers driven during the year for any medical purposes when you have traveled over 40 km one way. Need a form to help you claim, check out this form Deduct the travel.  Intuit’s Turbo Tax also provides you help how to claim.

Remember when you claim medical deductions on your income tax return to always consult with you an accountant and ensure the expense you are claiming is accurate and examine if you are missing any other claims.

 


Are Your Internal Financial Controls Fool-Proof? C2online

  

 Protecting your assets—real estate, machinery, equipment, supplies and most importantly, cash—is crucial to running a successful business. Putting financial controls in place is one way of encouraging integrity and honesty within the workplace.   

As a business owner, it is your responsibility to ensure the integrity and the credibility of your company and employees. This includes being knowledgeable about the types of fraud that can be committed by your employees, suppliers and even customers and preventative steps you can take.

Most types of fraud can be avoided by knowing the day-to-day financial details of your business. Over time, financial patterns develop which should be reviewed. Seasonality will affect activities like sales and expenses but the pattern should be somewhat predictable. Forecasts can also be valuable. Further analysis is warranted if gaps in revenue seem to develop and changes in the existing business were minimal.

To prevent fraud, internal controls need to be implemented.  Handling and managing cash is one area where this is a must. One solution it to make more than one person responsible for doing cash related tasks. Giving too much control to one employee opens the door for potential fraud to occur. For handling cash, clear lines responsibilities should be developed.

Employees should be made aware where their job responsibility begins and where it ends. The bookkeeper can be responsible to record all the business transactions in the company general ledger. Assign someone to deal with customers, another person who accepts money as payments for sale of goods or services, someone else who disburses payment to suppliers, and someone to do the banking and bank reconciliations each month. These are just a few of the many processes that occur before a financial transaction is complete.

The individual responsible for a particular process should manage each process consistently.

Having financial controls in place will provide greater peace of mind and allow you control over the solid financial management of your company.


The Zen of Preparing for the Year-End Financial Reports C2online

Each year as summer ends and fall is ushered in, the change in weather is accompanied by year-end preparation for many companies.


Before December 31st arrives, usually sooner than expected, bookkeepers and employees can use this checklist to help track and create year-end financial and tax reports:

 

1. Year-end inventory – Purchase supplies for doing the year-end inventory.  You may need racks, crates or boxes for finished products or labels for the items when doing the physical inventory count. You can even look for temporary storage units if necessary.  Develop a schedule for kicking off your inventory count.  Note the number of staff you’ll need to get this job done.

 

2. Tax Forms – Check to see which tax forms you’ll need for your year-end. Make a list to keep tabs on all the paperwork required.  Take note of all the needed supporting documents.

 

3. Tax and other licensing requirements – Begin a tax and licenses review.  Diarize all important dates for taxes and business licenses renewal or face late penalty charges.

 

4. Ask employees to update all their tax exemption requirements – Did any of your employees get married this year?  Did any employees have a baby or adopt a child?  Ensure their exemption status is updated so that they don’t get over-taxed

 

5. Begin creating next year’s budgets – Start a list of all potential capital expenditures next year and the associated costs.  This is a good way to avoid over-spending. Developing budgets for next year encourages communication between all departments so plans can be made for the upcoming year. 

 

6. Analyze your financial reports for the previous months - The end of the 3rd quarter of the year is the best time to re-assess your financial position to determine if your business will be in a profit or a loss situation at the fiscal year-end.

 

Keep on track with this checklist and be ahead of the game with your year-end!


7 Tax Tips That Can Save You Money C2online

Taxes and death are inevitable. We can’t avoid either of them. But, do we really have to pay so much to settle our tax obligations?

One way to maximize profits is to learn how to reduce taxes effectively. Any tax deduction properly recognized is a dollar saved and a dollar saved……

Below are seven tips that small business owners can implement to save money:

1. Plan ahead

You don’t have to wait until the 11th hour to see the impact your transactions have on your tax obligations. At crunch time, the chances of missing important factors, like the effect of asset acquisitions on your tax declaration, may be forgotten.

Plan ahead so you can analyze how various financial transactions will affect the taxes you pay.

2. Entertainment Expenses

Don’t forget to keep your receipts whenever you dine out with clients. These expenses are 50 percent tax deductible.

Check with your bookkeeper or accountant for exceptions. For example, if you take your entire staff out for dinner (no one is excluded), then the deduction is 100 percent.

3. Home Office Expenses

If you operate a home-based business, you can include some expenses related to your home office for tax purposes. This may include rent, utilities, repairs, etc. The idea is not to charge the full amount but a proportionate amount in relation to the size of your home office within your house.

4. Expenses incurred for doing business

Once you incur any expenses in the course of doing business, no matter how small, be sure to record them and keep all your receipts. Many of those expenses may be tax deductible. Check with your accountant or bookkeeper. Even small tax deductions add up.

5. Pay family members’ salaries

If your teenage daughter does simple administrative tasks, or your spouse helps you manage the business, make sure you pay them a salary. You should be able touse these expenses as tax deductions.

Of course, you should pay them an amount that has a value in direct proportion to what they do. Paying them more than what is reasonable just to get away with paying bigger taxes can cause problems with the taxman.

6. Depreciation expenses

You can amortize most capital expenses by allocating depreciation amount based on the useful life of the asset.

Be sure to talk to your accountant about the best amortization method and how it could impact your income statement and balance sheet in the long run.

7. Hire a professional accountant

If you are thinking about cutting costs you may want to hire a professional accountant. The value of their expertise may far exceed the amount you pay them in the short term.

Keeping your financial statements in order is an important part of your business. Working with an accountant and following their recommendations will help you increase the profitability of your company.

 

Photo credit: forwardcom  


HIRING CREDIT FOR SMALL BUSINESS (HCSB) Lisa Patrick
For 2011 and 2012 Canada Revenue Agency is granting up to $1000 credit on employment insurance premium of your employee costs.  HIRING CREDIT FOR SMALL BUSINESS. (HCSB)

The HCSB gives small businesses relief from the employer's share of employment insurance (EI) premiums paid in a year. It does this by crediting up to $1,000 on the payroll account, based on the increase in an employer's EI premiums paid in one year over those paid in the year before. 

Canada Revenue Agency is doing the paperwork to determine your qualifications: HIRING CREDIT FOR SMALL BUSINESS. (HCSB)

There is no application form to complete.

If you are eligible, the CRA will automatically calculate the amount of your HCSB using the
EI information from the T4 slips you filed with your 2010 and 2011 T4 information returns.
The amount to be credited to your payroll account will be greater than $2, but no more than
$1,000.

For more information, please search the following link at Canada Revenue Agency.
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/hwpyrllwrks/stps/hrng/hcsb-eng.html
HCSB for 2011 <http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/hwpyrllwrks/stps/hrng/hcsb-2011-eng.html#business_income>
HCSB for 2012 <http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/hwpyrllwrks/stps/hrng/hcsb-2012-eng.html>

DO REMEMBER TO INCLUDE THE CREDIT TO YOUR EMPLOYER REMITTANCES OR YOU WILL NOT BALANCE WHEN YOU DO YOUR T4 SUMMARY.
HCSB is business income

Remember, If you receive the HCSB, you have to claim that amount as income or reduce your EI expense when you file your business return, even if we transferred some or all of this credit to pay off a debt.

Contact us for more information

 

Darlene Lafond R.P.A.


10 medical deductions that can save you money Lisa Patrick

Tom McFeat  recently wrote an article in CBC News  about your medical expenses. In the article as a tax payer you were advised that ‘you do need to do some homework, in terms of keeping your medical expense receipts.’ It's something that is not easy to do over the course of a year unless you make a conscious effort to put the receipts aside.’

At C2online our tools will help you to ensure you maximize on these claims, save money and save time by simplifying the tasks for you:

Deduct your Gluten Free Groceries: You must calculate the incremental cost to ensure you receive the medical expense claim.  Incremental cost is the increased cost of purchasing a GF product as compared to the cost of a similar non-GF product. It is calculated by subtracting the cost of a non-GF product from the cost of a GF product. C2online provides the calculation in your worksheet for you.

Deduct the travel: If you are traveling more than 40 km one way for medical reasons, you can claim the trips on your personal tax return for a medical deduction.  Keep a diary of trips taken for medical reasons to use for a medical deduction on your personal tax return a medical critical to know the total number of kilometers your automobile was driven during the year for any medical purposes when you have traveled over 40 km one way. 

The article suggests you contact your drugstore for a complete list to save time – We have a form to request for medical receipts from your pharmacist.

Eligible expenses that you claim can get missed and this list states the ones most commonly missed.

Disability tax credit will provide those taxpayers that are the in-home caregivers to a parent or grandparent age 65 or older.  You need help to ensure that you are claiming this eligible credit correctly and receiving the appropriate amount of credit this tool will assist you.


Neglectful Employee's at The Canada Revenue Agency Lisa Patrick
We need our federal or provincial government to appoint a personal taxpayers advocate that understands the tax system Or publicize the resolution process more.

Since April 2011 we have been having to push Canada Revenue Agency to complete tasks on a file that at conclusion is worth about $15,000 dollars in refunds to the taxpayer.

The employees of the Canada Revenue Agency that has handled the file have neglected their job duties on several occasions.  A blatant neglect by several employees by professionals that are supposed to know more about taxes than the taxpayer.
 
If it had not been for our long term relationship (20+ years) with the parents of the taxpayer we would have lost the trust of the taxpayer.

The taxpayer was even told on one occasions that we, the tax preparer had made mistakes and misdirected them as to the eligibility of the refund that was anticipated.

Canada Revenue Agency actually issued a notice of tax owing but not the tax refund.  Canada Revenue Agency actually made it appear that the taxpayer now owed the government $1600.00 and not that the Canada Revenue Agency owed them $15,000.00

Darlene Lafond R.P.A.


The next time there is a federal election I would like to go public with this file.

Is there any provincial candidate that wants to help….


Disability Tax Credit - Transfer - How to? Lisa Patrick

Disability Tax Credit

If a family member is dependent on another family member for food or shelter or clothing – any essential life support on a routine basis: You should discuss with them if they qualify for the disability tax credit T2201.

They may not require the disability tax credit on their taxes but if the support person needs it, they may be able to transfer any unused disability tax credit to them just because they are providing essential life support, even if the person does not live with the person providing support.
 
Federal                                 provincial
Disability tax credit transfer                 line 318                        5848

If a disabled person lives with you….claim…
 
Amount for infirm dep over 18            line 306                        5820
Caregiver credit                                   line 315                        5840

*NOTE:  Do not forget to explore medical claim as well.

Adoption - Elgibility - What expenses can claim on your taxes. Lisa Patrick

For eligible adoptive families who have finalized their adoption, the federal adoption tax credit helps to offset some of the costs of adopting.

As a parent you can claim an amount for eligible adoption expenses related to the adoption of a child who is under 18 years of age. The maximum claim for each child is $11,128. You can claim these incurred expenses in the tax year that includes the end of the adoption period in respect of the child.

Canada Revenue Agency defines the adoption period as:

  • begins at the earlier of:
    • the time that the eligible child's adoption file is opened with a provincial or territorial ministry responsible for adoption (or with an adoption agency licensed by a provincial or territorial government); and
    • the time, if any, that an application related to the adoption is made to a Canadian court; and
  • ends at the later of:
    • the time an adoption order is issued by, or recognized by, a government in Canada in respect of that child; and
    • the time that the child first begins to reside permanently with you.

Expenses that can be claimed:

  • fees paid to an adoption agency licensed by a provincial or territorial government (an "adoption agency");
  • court costs and legal and administrative expenses related to an adoption order in respect of the child;
  • reasonable and necessary travel and living expenses of the child and the adoptive parents;
  • document translation fees;
  • mandatory fees paid to a foreign institution;
  • mandatory expenses paid in respect of the immigration of that child; and
  • any other reasonable expenses related to the adoption that are required by a provincial or territorial government or an adoption agency.

C2online provides several tools to assist you with your needs to keep all your claims organized to ensure that you maximize on your tax deduction. 

If you are unsure how to claim any of the above expense please contact us so we may assist you.



Salary or Dividends? Lisa Patrick

Wages vs. Dividends

If you own an incorporated business, there are two primary ways to pay yourself:

Salary and/or Dividends.

If you pay yourself a salary, the amount is a deductible expense to your company and is taxable in your hands. You will be required to deduct income tax and CPP premiums from your salary.

Some Advantages:

  1. Salary is treated as earned income for RRSP purposes.
  2. Salary is ‘provable income’ for financing purposes. If you are planning on applying for a line of credit or a mortgage, then paying yourself a salary will help you to qualify.
  3. Salary is subject to Canada Pension Plan (CPP) premiums. By paying into the Canada Pension Plan your entitlement to CPP will increase.

If you pay yourself a dividend, you must first understand what a dividend is.

Dividend is the return on investment from the business you invested in. They are payments made to company shareholders from the profits of the company.

They provide you the opportunity to have the income taxed in your corporation and then pay the after-tax earnings to yourself, as dividends, which is not deductible for the corporation.

Some Advantages:

  1. Dividends are taxed at a lower rate than salary. 
  2. Dividends are not subject to CPP premiums, which can add up to big savings.
  3. Dividends are administratively simple. You do not have the burden that you do with payroll.  To pay yourself a dividend, you simply write a cheque to yourself from your corporation.

4.    Can be paid to individuals who are not employees of the company (They must be shareholders).

5.    No payroll process.

NOTE: in order to pay yourself dividends your articles of corporation must allow for dividends to be paid.

When deciding it is not a cookie cut answer and every business must make a decision based on the information above and the further additional following information that is relevant to their business and personal finances:

1. # of employees - are you an employee of your company?

2. other personal income outsides of the business

3. profit vs loss

4. best income tax rate

5. whether RRSP contributions are a consideration

Before making any decisions please contact your tax accountant to discuss further.  In the event you do not have a tax accountant please contact us for a free ½ hour consult.


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