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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.

Cash is King, Build your pile of Cash! Lisa Patrick

“Cash is King”, how many times as an Entrepreneur have you heard that?  It is true, when you run out of cash - you are out of business.

You can make sure that your business survives by strategizing to ensure you are maximizing on all the corporate income tax deductions available and ensuring that you are aggressively monitoring and allocating your cash flow appropriately to grow that pile.

Many sole proprietors and partnerships use the strategy to incorporate their businesses because of the tax advantages that an incorporation will provide when their business has grown large enough for the incorporation to be worthwhile. The best known of these tax advantages is the Small Business Tax Deduction.  Income of a Canadian corporation is taxed at a special “reduced” rate.  The small business Corporate net tax rate is 11%.  Other types of corporations that don’t qualify for the small business rate are taxed at 19.5%.

When is it worthwhile to incorporate? When you have a significant income that offsets the costs or expenses of the corporation, BUT you need to leave enough cash/revenue of your earnings to benefit from the corporate tax deferral.

Secondly, in order for businesses to strategize and ensure that they have all their tax advantages available to them - below are some opportunities to maximize on deductions for consideration:

Home based businesses can utilize the business use of home deduction and deduct a portion of many home related expenses, your property and your mortgage interest by comparing the time you spend in your home as an office and the amount of space that you utilize in that time.

Collect ALL your receipts that you spend money on – this includes the parking meter, the bag of coffee, the 10 pencils you bought, all those little things will add up at the end of the year.  Account for ALL the money you spend on purchases that are business related.   Ensure that you have the appropriate receipts to record and file to maximize on your business income tax deductions.

Your vehicle is viable to your business. Without vehicles you and your employees would have a hard time getting to work and your business might not be able to function. By planning ahead and preparing a strategy for your vehicles you will ensure that you are maximizing on the deduction and ensuring you increase your pile of cash.  Remember to record your receipts and your kilometers so your bookkeeper & your accountant have all the information they require.

A convention provides you the opportunity to work on your business in an environment where you are not caught in the day-to-day life of managing your business.  Critical aspects of your business are overlooked and you could be missing out on tax-deductible savings you could be enjoying.  In fact, if you don't take the time to analyze your business you could be missing out on thousands of dollars in business tax deductions and the opportunity to increase that pile of cash. 

Revenue Canada states that you can attend 2 conventions a year.  What if I don’t have the opportunity to attend an organized convention?  Now you can.   Your intent must be business and you need to create an itinerary based on the needs of your business. Follow your itinerary; use pre-designed convention agendas for the different departments and needs of your business.  Analyze, strategize and problem solve those areas of your business and you will ensure that you are not missing out on thousands of dollars in business tax deductions while you create a new perspective and strategy for your business.

Bookkeeping is often overlooked as an opportunity to maximize on business tax deductions. Why? Bookkeeping management of finances is more than merely harmonizing the bank accounting.  The objective of any small business owner is to achieve success in both the marketplace as well at a financial level. However as easy as it may sound, it isn’t a task each one of you may be competent to accomplish.  Your bookkeeper must ask the right questions from you, be able to communicate to you and your tax accountant, and understand their job description to ensure they are providing tax compliant bookkeeping.

For more information and tools to analyze your business, ensure proper bookkeeping and maximize on your business deductions to ensure your pile of cash keeps growing and you are the King, contact us today.

Biz Begins with Books Lisa Patrick

Record Keeping & Fraud Lisa Patrick

Why proper record keeping is so valuable to your business!

Record keeping is considered by many entrepreneurs as one of the "least important" part of operating a business (unless you are an accountant). However, good record keeping is essential to your financial survival.  It also provides you the information paper trail tool to navigate through your records to uncover where the possibility of fraud is occurring or has occurred.

Reason #1:

If you have a business in Canada, The Income Tax Act requires you to keep records so that you can prepare complete and accurate tax returns.  Keeping careful records of all your financial transactions is also in your own best interest for the following reasons:

·      Good records help you to identify from whom you received your income.  You may receive cash or property from many different places.  Unless you have records showing sources of your income, you may be UNABLE to prove that some are non-business or non-taxable.

·      Well kept records can mean tax savings since they serve as a reminder of deductible expenses.  You may forget some of your expenses when you prepare your tax return unless you record them when you incur or pay them.

·      Well kept records can prevent most of the problems you might encounter when your tax returns are audited.  If you records are so incomplete that your taxable income cannot be determined for them, taxation auditors will have to use other methods to establish income.  This could be very time consuming and inconvenient for you; it could also be your disadvantage if your records do not support your claims.

·      Your records will keep you better informed about the financial position of your business.  Statistics derived from proper records can tell you what is happening with the business.  An analysis of these statistics can help lead you to the reason why. 

      Successful use of records can show you:
          trends on what is occurring in your business
          allow you to compare performance on past budgets
          assist you to prepare future budgets

·      Proper books and records may help you to obtain assistance from banks and other creditors.  Not only will your books and records give accurate information about your current financial position, but they will also show that you are constantly aware of what is happening within your business.

Therefore, keeping good records requires more than just knowing which records to keep and for how long. It also includes setting up systems and maintaining records in a way that makes it easier for you to monitor the progress of your business to track business is improvement, which items are selling and changes that are required – knowing how best to keep records can be the difference between the failure and success of your business.


Businesses are now finding it vital to their continued success to implement measures of protecting themselves against corporate fraud.  Preparation is the key to making sure that businesses are ready to handle a situation of corporate fraud. Businesses need to recognize that taking due diligent measures to ensure that those who handle your records and provide record keeping services have established credibility through third party verification of an absence criminal record and verification of professional memberships and designations. Utilizing companies like IHonest who specialize with third party verification are vital.

If businesses are recognizing that corporate fraud is prevalent within their own companies and they are taking measures within like: finding out as much as they can about the business they are dealing with, and then applying the right amount of common sense, they prepare their business for protection against fraud.

But, what about ensuring that the professionals they deal with have proven that they are qualified and skilled but what about their credibility and background.  Does a former employee or professional who providing a testimonial/reference make them instantly credible?  No, what that testimonial/reference says is that professional provided a quality service.

The Ottawa police department sates that their investigators not only investigate corporate fraud that are financial institutions but also commercial businesses and professionals.

These are the questions that the Ottawa Police Department ask:

“What should I do if I uncover a fraud situation in my company?
What should I do if a company that I have dealt with has defrauded me?

The answer to the above questions is the same - document, document, document!

Corporate fraud investigations are quite extensive and often very complex. It is important that you gather as much documentation as possible to be included in your police report. It is important to know where your documentation came from and what value it has for investigative purposes.

A statement or summary must accompany your documentation to explain what has happened and why you believe a fraud has occurred. Your documentation must be in some form of order and not simply gathered together in a random fashion.

 You MAY be required to provide a forensic audit at your own cost. The Ottawa Police Service does not provide this service. Your file will be reviewed and discussed with you first before any such request for an audit is requested.” Ottawa Police Service

Now we have a police department telling us; document! Therefore, proper record keeping is vital.

What does the Ottawa Police Department say about prevention of fraud.  Well they tell us to “do your homework!”

 Imagine you own a business and the professional you hired to handle your record keeping has misappropriate of cash or inventory, or conducted fraudulent financial reporting?  You find out in the investigation that this professional was charged Under the Criminal Code of Canada,  Section cc. 380.(1) and you did not complete due diligence …

All I ask is -  How would you feel?  What would you change?

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