Are you buying a business? What are the tax implications?

Business number (BN), Payroll and Goods, and Services Tax (GST)

You may need a new BN. To find out, go to Business number registration.

To find out about payroll accounts and other related topics, go to Payroll overview.

You will want to review the relevant information on GST for the type of business you are buying at Register for a GST account.

Change of ownership

When the owner of a sole proprietorship or one of the partners in a partnership or one of the members of a corporation’s board of directors changes, it is important that you contact your tax services office.

Depending on your business structure, a change of owner(s) will have a different impact on your business. Your partnership agreement and whether or not your business was registered using the legal names of each partner or the provincially registered partnership operating name could require a legal name change, or the registration of a new Business number (BN) and program accounts with the CRA. For corporations, it is important that we have the correct name and social insurance number (SIN) of each director.

Value of the inventory and other assets

When you buy a business, you generally pay a set amount for the entire business. In some cases, the sale agreement sets out a price for each asset, a value for the inventory of the business and, if applicable, an amount that you can attribute to goodwill.

If the individual asset prices are set out in the sale agreement, and the prices are reasonable, then you should use these prices for claiming capital cost allowance (CCA).

If the individual asset prices are not set out in the contract, you have to determine how much of the purchase price you should attribute to each asset, how much to inventory and how much, if any, to goodwill. These amounts should coincide with the amounts the seller determined when reporting the sale. The amount you allocate to each asset should be its fair market value (FMV). You should allocate to goodwill the balance of the purchase price that remains after you allocate the FMV to each asset and to inventory.

Once you have determined the values for the assets and the goodwill, add the fixed assets (such as buildings and equipment) into the appropriate CCA classes. The goodwill is considered to be an eligible capital expenditure and is treated like assets eligible for CCA.

Treat the value of the inventory as a purchase of goods for resale, and include it in the cost of goods sold in your income statement at the end of the year.

For GST/HST purposes, if you buy a business or part of a business and acquire at least 90% of all of the property that can reasonably be regarded as necessary to carry on the business, you and the vendor may be able to jointly elect to have no GST apply to the sale by completing form GST44, Election Concerning the Acquisition of a Business or Part of a Business. You cannot make this election if the seller is a registrant but the buyer is not a registrant. In addition, you must buy all or substantially all of the property, and not only individual assets.

For the election to apply to the sale, you have to be able to continue to operate the business with the property acquired under the sale agreement. You have to file Form GST44, on or before the day you have to file the GST return for the first reporting period in which you would have otherwise had to pay GST on the purchase.

Even if you file the election, GST will still apply to:

  • a taxable supply of a service made by the seller
  • a taxable supply of property made by way of lease, licence, or similar arrangement
  • where the buyer is not a registrant, a taxable sale of real property

Another way of buying a business is to buy the shares of an incorporated business. This does not affect the cost base of the assets of the business. Since a corporation is a separate legal entity and it can own property in its own name, a change in the ownership of the shares will not affect the tax values of the assets owned by the corporation.

Generally, the purchase of shares of a corporation is not subject to GST.

Please contact our office if you require any help with your purchase or have any questions.

GST – How to complete and file a GST return

You can file a GST/HST return electronically, by TELEFILE, or on paper. Before you choose a method, you must determine if you are required to file online and which online method you can use.

For instructions about how to complete each line of your return, see Instructions for completing a GST/HST return.

GST/HST NETFILE is an online filing service that allows registrants to file their GST/HST returns and eligible rebates directly to the Canada Revenue Agency (CRA) over the internet.

My Business Account

My Business Account is a secure online portal that allows you to interact electronically with the CRA on various business accounts. Business accounts include GST/HST (except for GST/HST accounts administered by Revenu Québec), payroll, corporation income taxes, excise taxes, excise duties, and more.

Represent a client

Represent a Client is a service that provides you with secure and controlled online access to tax information on behalf of individuals and businesses, including your employer.

Electronic Data Interchange (EDI)

EDI lets you pay the net tax you owe electronically through a participating Canadian financial institution.

GST/HST TELEFILE

GST/HST TELEFILE is a fast, free, and easy-to-use filing option that allows qualifying registrants to file their GST/HST returns in a matter of minutes, using their touch-tone telephone and a toll-free number.

GST/HST Internet File Transfer

GST/HST Internet File Transfer is an internet-based filing service that allows eligible registrants to file their GST/HST returns directly to the CRA over the internet using their third-party accounting software.

Paper filing

If you are not required to file online, you may be eligible to file a paper return. To use this method, you can either mail your GST/HST return (GST34-2 or GST62) to the address on your return, or file in person at a participating financial institution.

You cannot file in person at a participating financial institution if:

  • you are claiming a refund
  • you are filing a nil return
  • you offset the amount owing on your return with a rebate or refund

Your personalized GST/HST return package

Each fiscal year, the CRA will mail you a personalized GST34-3 return package that includes:

  • an information sheet with your reporting periods and due dates
  • an access code for filing your returns electronically on GST/HST NETFILE or by phone using GST/HST TELEFILE
  • remittance vouchers to use if you make your payments at your financial institution

If you are filing electronically and make 2 consecutive electronic payments, the CRA will no longer send you an electronic filing package unless you request one.

If you file on paper, the CRA will send you the GST34-2 filing information package, which also includes personalized returns. You can use the access code provided in the package if you decided to start using GST/HST NETFILE or GST/HST TELEFILE.

If you need a new return package or access code, do one of the following:

  • to request a new GST34-2 or GST34-3, call the Business Enquiries phone line at 1-800-959-5525
  • to get a new access code for GST/HST NETFILE or GST/HST TELEFILE, go to GST/HST Access Code Online
  • to get a non-personalized version of the paper return (Form GST62), use the Order forms and publications

You can also register for My Business Account to view the due dates for your returns, make electronic payments or file your GST/HST returns without an access code.

View a previously filed GST/HST return

You may view the status and the details of a previously filed GST/HST return using My Business Account. You will also be able to view upcoming and overdue GST/HST returns by using the same online service.

GST/HST outreach seminars for non-profit organizations, charities, and similar organizations

GST/HST outreach seminars are informal presentations designed to help non-profit organizations, charities and similar organizations understand their GST/HST obligations and claim all eligible amounts to which they are entitled.

For more information and to register, see GST/HST Outreach Seminars for Non-Profit Organizations, Charities and Similar organizations.

Other GST/HST returns

Depending on your situation, you may have to file a different return. For more information, see:

Canada Revenue Agency (CRA) Options if you Can’t Pay Your Taxes in Full

If you cannot pay the full amount of taxes you or your company owes, you may qualify for a payment arrangement or ask for taxpayer relief. Contact the Canada Revenue Agency (CRA) as soon as possible to make arrangements. Ignoring your debt won’t make it go away.

What are your options?

The CRA can work with you to set up a payment arrangement in My Account, My Business Account, MyCRA, or CRA BizApp. The sooner you take action, the less interest you’ll have to pay. To make a payment arrangement for you or your business, go to Pay by pre-authorized debit or contact them directly.

What is a payment arrangement?

A payment arrangement with the CRA lets you make smaller payments over time, until you have paid your entire debt, including interest. The CRA has two new tools that can help you manage your tax debt. Try out our new Payment Arrangement Calculator, which you can use to estimate your payments and the time needed to reduce your debt to zero. The CRA has also introduced an Income and Expense Worksheet. This worksheet will help you calculate the part of your net income that is available to pay your tax debt. To help the CRA determine your ability to pay, you may have to give details of your financial situation and proof of your income, expenses, assets, and liabilities.

What is a Business Plan and How Do I Write One?

For small business owners, the concept of writing a business plan is new and they have no idea where to start. It can be a daunting experience, but when you do it right, the payoff can be enormous.

What is a business plan?

A business plan is the roadmap for your small business’ growth and development. It communicates who you are, what you plan to do, and how you plan to do it.

Why do I need one?

The first thing any investor or venture capitalist will ask for is a business plan. It doesn’t matter how great your pitch is—if your business plan doesn’t hold up to scrutiny, they’re not going to invest a dime. Good business plans give investors an idea of what to expect from your company, and tells them about you as an entrepreneur. It’s the handshake of the small biz sector.

Even if you don’t plan on courting Venture Capitalists, there are other compelling reasons to develop a business plan. Writing out your goals and the action plan to achieve them allows you and your team to view your strategy objectively. It helps you see the holes and blind spots you may not have accounted for, or uncertainties that could cause trouble down the road. If you can discover these weaknesses yourself, you’ll be in a better position to fix them before you start pitching investors.

What makes a good business plan?

Business plans come in many different formats and styles, but the best ones cover the same critical topics:

Purpose. Explain why your small business exists and why it’s important. What problem or need is your business trying to solve? How does it solve your customer’s pain points?

Product/Service. Describe the product or service that you’re offering, and what makes it unique from its competitors.

Customer. Identify your company’s ideal customer. Get into their head, have a clear understanding of their challenges, and explain why your product is perfect for them.

Marketing. How do you plan to promote your brand? Show what you’ve already done, what you plan to do given your existing resources, and what results you expect from your efforts.

Monetization. The key to a sustainable company is a profitable business model. Explain how your business will make money and what kind of ROI (Return on Investment) investors can expect.

Team. A business idea is only as good as the team that executes it. Identify your team members and why they are the perfect team to bring this idea to life. Also look ahead and mention the people you still need to expand your company.

It’s not enough to just dump all this information into a single document and send it off. Venture capitalists read dozens of these documents a month, and have little patience for badly written or poorly created documents. You want your business plan to be as attractive and readable as possible.

Here are some tips to make your business plan more presentable:

  • Don’t write a novel. Make your business plan as short as possible while still communicating all the essentials. The fewer pages you use, the better.
  • Make it easy to read. Divide your document into distinct and logical sections, so that investors can quickly flip between key pieces of information.
  • Proofread. Double and triple check the writing for typos and grammatical mistakes. Awkwardly written documents are hard to read through and easy to dismiss as amateur.
  • Invest in design and printing. A proper layout and decent printing or bookbinding gives your business plan a professional feel.

Also remember that content is more important than design. Strategize and research your business plan thoroughly and know your numbers inside out—from costs to sales projections. Once you’re confident in your plan’s viability, then you can worry about formatting and layout. If you can show investors you can perform to a professional standard even during the pitch phase, they’ll be more willing to join you in building a thriving business!

Once your business is off the ground, you will need to start bookkeeping.  Please contact our firm to discuss the alternatives.

GST treatment of fuel charges

Generally, under the Excise Tax Act every recipient of a taxable supply (other than a zero-rated supply) made in Canada is required to pay GST on the value of the consideration for the supply. Consideration is defined in the Act to include any amount payable by operation of law. The Act also provides that all taxes, duties or fees (other than the GST) imposed under an Act of Parliament in respect of a supply of property or a service and payable by the recipient of the supply, or payable/collectible by the supplier in respect of the supply or in respect of the production, importation, consumption or use of the property or service, are included in the consideration for the supply, for GST purposes.

Given the preceding, supplies (for example, sales) made in Canada of fossil fuels would generally be subject to GST, which would be calculated on the price paid for the supply of the fuel. This would include any fuel charge paid or payable in respect of the supply as well as any fuel charge embedded in the price as a result of having been paid earlier on in the distribution chain.

GST registrants are generally entitled to claim an input tax credit to recover the GST paid or payable in respect of the supply of property or a service acquired for consumption, use or supply in the course of commercial activities.

What happens to CPP after the death of a spouse?

This is not as simple as it seems. In 2017 the life expectancy for the total Canadian population is projected to be 79 years for men and 83 years for women, so there may be many years you’re living alone on that income. Some of the situations are as follows:

  • Depending on the age of the surviving spouse:
Canada Pension Plan Survivor Benefits
If the survivor is: Then the survivor’s pension is:
age 65 or more 60% of the contributor’s retirement pension if the surviving spouse or common-law partner is not receiving other CPP benefits
under age 65 a flat rate portion – this year that rate is $193.66 a month.

plus

37.5% of the contributor’s retirement pension, if the surviving spouse or common-law partner is not receiving other CPP benefits
  • If the partner dies before applying for CPP, the CPP benefit is calculated based on what they have contributed so far in their working life, whether they’re 25 or 65. The survivor’s benefit is calculated based on that number — 60 percent if the survivor is 65 or over, 37.5 percent if they are under age 65.
  • If the family has children 18 or under, there is a monthly portion per child, currently $250.27 a month per child. Children aged 18 to 25 can also get this support if they are enrolled in post-secondary school, though they’ll have to prove their enrolment to the government each year.
  • if a couple is separated, it depends on whether the deceased spouse is living common-law with another person. If they are still legally married, the surviving spouse could get a share of the benefits, but if the deceased spouse was living with someone else, his or her common-law partner would get the benefits.

What ever your situation is, you will need to contact Service Canada to determine your survivor benefits.

The surviving spouse is responsible for applying for your monthly pension. If you are incapable of applying, you may have a representative (such as a trustee) apply for you.

You should apply as soon as possible after the contributor’s death. If you delay, you may lose benefits. The Canada Pension Plan can only make back payments for up to 12 months.

To apply, you must complete the Canada Pension Plan survivor’s pension and children’s benefits application form (ISP1300).

Work from anywhere with the Quickbooks Online Phone App to link to your Quickbooks Online Account

Run Your Business on the Go with QuickBooks Online.

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Invoice your customers and collect payments from wherever you do business.

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Frequently Asked Questions


What kinds of things can I do with QuickBooks mobile?

You can do some of your most important QuickBooks activities: create, view, and email estimates, invoices, and sales receipts; access customer information; convert estimates to invoices, receive payments, track expenses, download and reconcile bank transactions, and use your custom QuickBooks Online forms.

Which operating systems are supported?

QuickBooks mobile currently supports iOS 8.0 and later, and Android OS 4.0 and later.

How much does it cost?

It’s FREE with your QuickBooks Online subscription

Can I try it before I subscribe to QuickBooks Online?

Yes! Please contact our office to sign up for your subsciption. See how QuickBooks Online works and how easy it is to use – on the web and on the go.

How do QuickBooks web and mobile work together?

QuickBooks mobile is syncs with QuickBooks Online on the web. Any task you do or information you add in the app shows in both places at the same time. 

Can I do more in QuickBooks Online on the web than on mobile?

Yes, and we recommend that you do! It’s all part of your QuickBooks Online subscription, so please take advantage of all the features.

For instance, on the web you can customize your invoices and other forms, get access to over 20 reports, and give your accountant access so you’re ready for tax time.

Can I get insights about my business?

Yes, you can instantly see your:

·Profit & Loss report to see how your business is doing over time.

·Balance Sheet report for the list of your current asset, liability, and equity account balances.

How do I know my data is safe and my privacy is protected?

The same security that protects your QuickBooks Online data on the web applies when you use QuickBooks mobile. For more about how we protect your data, see our Online Security Center

The app uses TRUSTe certification program and keep your data and privacy safe.

GST Reporting Periods

GST registrants are required to calculate their net GST remittance or refund on a periodic basis – monthly, quarterly or annually, depending on sales volumes. Following each reporting period, a registrant must file a GST return and remit the net tax owing, orclaim a refund.

The reporting period is determined by the registrant’s “threshold amount” for a fiscal year or fiscal quarter. Detailed instructions on how to calculate these threshold amounts are included in paragraphs 35 through 40 of this memorandum.

  • Monthly – For registrants whose threshold amount for a fiscal year or fiscal quarter is greater than $6 million.
  • Quarterly – For registrants whose threshold amount for a fiscal year is $6 million or less.
  • Annually – Registrants whose threshold amount for a fiscal year does not exceed $500,000 may elect to file annually and pay quarterly installments.

At the time of registration, the Department will assign a reporting period based on the estimated annual taxable sales. The GST registrant can request an alternative reporting period by filing an election.

Tax information you need to know if you bought or sold a home

Principal residence exemption

When you sell your principal residence, did you know that any profit (capital gain) may be exempt from taxes? In fact, if your home was your primary residence for every year that you owned it, you do not have to pay tax on the capital gain.

Your principal residence can be any of the following:

  • a house, cottage or condominium
  • an apartment in an apartment building or a duplex
  • a trailer, mobile home, or houseboat

In order for a property to qualify as your principal residence:

  • You must own, or jointly own the property.
  • You, your current or former spouse or common-law partner, or any of your children must have lived in the property at some time during the year.

To benefit from the principal residence exemption you must report the sale appropriately on your income tax and benefit return. How you do so can vary depending on whether the property you sold was your principal residence for the entire time you owned it. Only one property can be designated as a principal residence per tax year per family unit. A family unit includes you, your current or former spouse (or common-law partner) and any children under the age of 18.

Home buyers’ amount

You can claim the home buyers’ amount of up to $5,000 on your income tax and benefit return for a particular year if both of the following apply:

  • you or your spouse or common-law partner acquired a qualifying home; and
  • you did not live in another home owned by you or your spouse or common-law partner in the year of acquisition or in any of the four preceding years (first-time home buyer).

You do not have to be a first-time home buyer if you are eligible for the disability tax credit or you acquired the home for the benefit of a related person who is eligible for the disability tax credit.

Eligible home buyers can complete line 369 of Schedule 1 of their income tax and benefit return.

Home Buyers’ Plan

You may be eligible to participate in the Home Buyers’ Plan which allows you to withdraw funds from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself. Budget 2019 proposes to increase the Home Buyers’ Plan withdrawal limit to $35,000, to provide first-time home buyers with greater access to their RRSP savings when purchasing a home. This amount is available for withdrawls made after March 19, 2019. Buyers have up to 15 years to repay the amounts they withdraw.

To qualify for the Home Buyers’ Plan, you have to meet these two conditions:

  • you are a first-time home buyer
  • you have a written agreement to buy or build a qualifying home for yourself

You are considered a first-time home buyer if, in the preceding four-year period, you did not live in a home that you or your spouse or common-law partner owned. You must intend to live in the qualifying home as your principal residence within one year of buying or building it.

Home Buyers’ Plan for persons with disabilities

You do not have to be a first-time home buyer to participate in the Home Buyers’ Plan if you are eligible for disability tax credit or if you are helping a related person who is eligible for the credit buy or build a home. The purchase or construction must be done to allow a person with a disability to live in a home that is more accessible or better suited to their needs.

GST/HST rebate on new homes in Canada

If you bought a newly constructed home from a builder, you may be able to claim a new housing rebate for some of the goods and services tax/harmonized sales tax (GST/HST) you paid.

If you constructed or substantially renovated a house for use as your primary place of residence, you may also be eligible for this rebate.

For more information on the GST/HST new housing rebate, refer to guide RC4028, GST/HST New Housing Rebate.

Home accessibility expenses

If you are a qualifying individual (65 years of age or older at the end of 2017 or eligible for the disability tax credit) or an eligible individual claiming certain tax credits for a qualifying individual, you may be able to claim eligible expenses paid for renovations that make your dwelling more accessible.

Canadian non-resident tax obligations

Who is a non-resident?

A non-resident is someone who:

  • normally, customarily, or routinely lives in another country and is not considered a resident of Canada; or
  • does not have significant residential ties in Canada; and
    • lives outside of Canada throughout the tax year; or
    • stays in Canada for less than 183 days in the fiscal year.

The most common types of income subject to non-resident tax are:

  • Pension plan and Old Age Security (OAS) payments
  • Registered Retirement Savings Plan (RRSP) and Registered Retirement Income Fund (RRIF) payments
  • Rental and royalty payments
  • Annuity payments
  • Trust payments
  • Dividend payments

What are your obligations?

You are responsible for deducting and remitting non-resident tax if you are:

  • a Canadian resident who pays or credits certain types of income to a non-resident of Canada
  • an agent or someone who receives certain types of income on behalf of a non-resident of Canada, from which tax was not withheld
  • a non-resident of Canada who receives certain types of income from a Canadian source, from which tax was not withheld

 Failing to deduct and remit non-resident tax on these payments may result in penalties and interest.

Open a non-resident tax account to take care of your obligations

It’s now easy and convenient to open a non-resident tax account.

You can access the new registration tool and open a non-resident tax account through any of the Canada Revenue Agency (CRA) online portals, including: