Planning Your Personal Taxes for 2017 – Federal Personal Tax Credits

The personal credits listed below apply for 2017:

                                                                                     Gross                              Credit (15%)

Basic personal                                                               $11,635                              $1,745

Spouse or eligible dependent(1), (2)                            $11,635                              $1,745

Canada Caregiver Credit

Infirm dependent under age 18 (3)                           $2,150                                 $322

Infirm dependent age 18+ (3)                                     $6,883                                 $1,032

Age(4)                                                                               $7,225                                $1,084

Disability                                                                        $8,113                                 $1,217

Additional disability for child under 18 (4)              $4,733                                 $710

Notes:

(1) Reduced by spouse’s net income.

(2) Enhanced by $2,150 ($322 credit) if dependent is infirm.

(3) Reduced by dependent’s net income in excess of $16,163;.

(4) The Age credit is reduced by an amount equal to 15% of an individual’s net income exceeding $36,430.

(4) Reduced if child care and attendant care expenses exceed $2,772.

Firm Seminar Recap!

Our firm had a great evening on September 21, 2017 hosting an informative seminar! Thank you to everyone who showed up! We covered tips to maximize your business and effective personal tax saving strategies.

A brief cap on the 3 fundamentals in effective personal tax saving strategies:
1) Reduce income subject to tax (Defer it!)
2) Maximize your tax deductions
3) Utilize all allowable tax credits

Remember to maximize your TFSA for absolute tax savings. Have children? Open a RESP and
start saving! Access the CPA provided Document Organizer worksheet to start your tax planning
today.

What to consider to maximize your business:
Do you have enough cash to pay expenses?
How should you time your bill payments?
What is the best way to monitor your inventory and revenue?
How much cash do you need for expansion?

For more resources please click the link here.

It was great to interact with participants and clients to discuss some of the key concepts of cash
management. There are also several accounting programs available on the market that allows you
to monitor these concepts with a variety of calculations, reports and ratios. We are certified
Quickbooks and Simply advisors. Ask any one of our professionals for more information.

Email clientportal@seniuk.com and let us know what topics you would like to learn at our next
seminar!

The CRA (Canada Revenue Agency) has an important new update affecting all Canadian Charities!

The Canada Revenue Agency’s (CRA) is instituting a new online service for all registered charities to:

  • file their information returns
  • update and manage account information
  • check file status
  • receive and manage correspondence online

Charities will be able to access these services through the CRA’s My Business Account portal. The My BA requires each charity to have their own unique Business Number (BN) to access these services. As a result, new BN‘s will be created and issued for all internal divisions that currently share a common BN with their head body. Letters will be automatically sent to each impacted charity, providing them with their new individual number and a Business Number Summary. This summary will show details about all CRA program accounts.

Questions and answers

When will my BN change?
All internal divisions will start to receive their new BN‘s by mail starting fall 2017 and continuing until October 2018.

Do I have to do anything to get my new number?
No. Impacted charities will automatically receive a letter listing the Business Summary of all their updated accounts, including the new number.

Will this affect my registration, registration requirements, or legal structure?
No, it should not have an impact on your registration or requirements. The steps and requirements for registration will remain the same. For further information about registration requirements see our new guidance CG-028, Head bodies and their internal divisions.

If the charity made changes to the way it was legally established, such as becoming incorporated, it must also provide the Charities Directorate with a copy of its new governing document. For more information go to Changing a charity’s legal status.

Will I need to make any changes to my governing documents?
No, you should not need to make any changes to your governing documents if you have not made any changes to the way the charity was legally established.

When do I start using my new number?
As soon as you receive notification from the CRA, you must start using your new BN.

What information do I need to change on my official donation tax receipts?
You will need to change the BN to the new one. However, if you have pre-printed receipts, you can cross out the old number and write in the new one. When you order new ones, make sure to update them with your new number.

What will happen to receipts that have already been issued with the old number?
The receipts that were issued up until the date of the new BN will be accepted. Be sure to use your new BN on all future receipts.

Will this change the way I file my T-3010?
Yes, but the only change will be that you will now be filing using your new BN.

Will I have to file my T-3010 with both BN‘s?
No. You will file a 12 month return and use only the new BN number.

Will I have to file two returns one for the start of my fiscal year up to the date of the new BN and the other from the date of the new BN to the end of my fiscal year?
No. You will not need to file a transitional or short return, you will continue to file a full 12 month return using the new BN provided.

What effects will this have on my other program accounts?
Your other program accounts should not be affected. With the letter notifying you of your new business number, you will find a Business Number Summary that will list all of your accounts. You can review it to confirm the status of your other accounts. If there are any errors you can make changes on the summary and return it to the CRA for action.

Event Invitation: September 21, 2017 Evening Seminar

This will be a great learning opportunity as well as a chance to meet our Firm’s accountants and ask any questions you may have. The seminar will feature the following timely topics:

Maximize Your Business – Presented by Laura Marcato, CPA, CA

Some of the following questions will be answered:

  • Sales are great, why don’t we have any cash?
  • Do we have enough cash to pay expenses?
  • How much cash do we need for expansion?
  • Can I free up some cash from the business?
  • How can I get customers to pay sooner?
  • Are we managing cash efficiently?

Effective Personal Tax Strategies Presented by Carrie Tsui, CPA, CA

The following issues will be covered:

  • understand tax laws
  • tax planning
  • keep detailed records
  • how to achieve tax goals
  • reduce taxable income
  • tax deductions versus tax credits
  • increase deductions
  • use tax credits

Event date:         Thursday, September 21, 2017

Event starts:       7:00 pm

Event ends:        9:00 pm

Location:             Seniuk & Company Office

Price:          Free!

**As there is limited capacity, register as soon as possible to get your seat!

* Refreshments will be provided!

To RSVP, please send an email to clientportal@seniuk.com with your contact information (name, email address, and phone number).

How An Accounting Pro Can Help Your Small Business Succeed

One of the most positive qualities that many small business owners share is a burning desire – an insatiable willingness – to “do it all.” It’s what separates entrepreneurs from employees in the first place. An employee is more than willing to set out on the path that someone else has carved for them. An entrepreneur has a need to carve a path for themselves.

Unfortunately, this mentality can also get even the most passionate small business owners into a bit of trouble – particularly when it comes to their finances. Being able to balance your own cheque book and running the finances of a small business are NOT the same thing, nor should they ever be treated as such. To that end, the importance of finding the right accounting professional to help support your small business as it continues to grow and evolve cannot be overstated enough.

There are a number of essential ways, in particular, that an accounting expert can help your small business.

When You’re Just Starting Out

Perhaps the most important role that an accounting professional will play in terms of your small business takes place when you’re just starting out. One of the most common mistakes that many business owners make is not setting the business up properly.  This involves incorporating a business, understanding what expenses are tax deductible, obtaining GST and payroll numbers, and submitting the correct remittances in a timely manner.  These are small problems that can have major ramifications when tax season rolls around. A accounting pro who is intimately involved with the makeup of your business from a basic level can help minimize any potential problems.

Along the same lines, an accounting professional can also help make sure that your accounting system is properly set up in the first place. They can make sure that you’re picking the right accounting system that actually supports your long-term goals for your business and can create a chart of accounts to offer superior visibility into money coming into and out of your organization.

The Day-to-Day Grind

Another one of the hugely invaluable ways that an accounting expert can help your small business comes by the small, yet critical, decisions they make on a daily basis. A financial expert can help give you greater visibility into cash flow (including accounts payable and accounts receivable), for example. Cash flow and other instability issues are one of the major reasons why most small businesses fail in the first place, and having the right person at your side can help you avoid them altogether.

An accounting professional can also help make sure your security controls are properly set up and executed, particularly in terms of factors like compliance.  If the security aspect of your finances is not properly accounted for, it could be putting your entire business at risk. Even one small data breach could expose the personal records of multiple clients, something that opens the door to things like lawsuits, and that could eventually close the door on everything you’ve worked so hard to build.

Other Benefits

A financial professional will also play an important role when it comes to growing your small business. Remember that both an inability to scale up as fast as you need and growing your business faster than you can sustain are additional reasons why many small businesses fail. Because such a large part of your growth and expansion pace has to do with personal finances, it stands to reason that bringing someone into the fold who can leverage their years of experience to your advantage is a very good idea.

A financial expert can help you raise money – particularly helpful if you’re getting ready to bring a new product or service to market. If you ever decide that this chapter of your life is closed and that it’s time to look for new opportunities, these professionals can also help sell your small business as well. Selling a business is a process filled with potential mistakes just waiting to happen, and the expert hand of someone who has been in this position before is something that you literally cannot put a price on. It isn’t just an investment in your organizational ability – it’s an investment in the future of your business as a whole.

Conclusion

The fact of the matter is that there really is no “one size fits all” approach to small business accounting. Every business is a little bit different, which will require a certain level of care and finesse when it comes to finances in particular. Only by consulting the help of a professional as early on in the process as possible will you be able to avoid the normal pitfalls of running a small business and create a financially stable foundation from which to work.

Payroll – What are your obligations?

Who has to remit source deductions?

Payers, such as employers, administrators, trustees, and financial institutions must withhold and remit source deductions when applicable.

What source deductions do you have to withhold and remit?

The source deductions you have to withhold and remit to the CRA may be any combination of:

  • Canada Pension Plan (CPP) contributions;
  • employment insurance (EI) premiums; and
  • federal, provincial, or territorial income tax.

For example, if you are an employer and you pay a salary to an employee, you will generally have to deduct CPP, EI and income tax. If you are a pension plan administrator, you will have to deduct income tax but not CPP or EI.

What happens if you do not remit your source deductions?

If you do not remit your source deductions and employer shares of CPP and EI as and when required, the CRA can take actions against you. For more information, go to Failure to pay amounts deemed to be held in trust.

Forms and publications

Best way to Structure Your Real Estate Investments in Alberta

Real Estate investments can be held two ways:

Personally – The properties are held in your name personally.

Within a Corporation – The properties can be held in either an existing operating company, a holding company or a property company.

Depending your type of situation in the investments, then I would recommend the following:

  • You are going to dabble in real estate with very few properties. In this situation, the simplest method would be to hold the property personally.  In this situation, you would:
  • Purchase the property in your name and the obtain financing personally.
  • You would report the net income on property annually in your personal tax return.
  • In the year the property is sold, you recognized a capital gain or loss on your personal return and pay the associated taxes at your personal tax rate.
  • You plan to be in the business of real estate investing by purchasing multiple properties. In this situation, you’ll want to consider holding the properties within a corporation. The advantages of this type of structure are:
  • there is much less liability risk in the holding company because it holds shares of companies with no direct assets. The “property” company and the operating company are the risk companies, meaning if something goes legally wrong, you cannot be held personally legally liable.
  • you have the ability to defer some of the taxes owing by paying wage bonuses and/or dividends at later dates, not automatically in the year the sales transaction occurs.

The types of corporations are as follows:

  1. Operating Company – Setup to control the business operation and your day-to-day project management. All your active business components are within this company and also your risk.
  2. Holding Company – This is for building your family wealth. The holding company owns the operating company so we can strip residual income up into the holding company on a tax-deferred basis via dividends and then allow the holding company to acquire assets.
  3. Property Company – The use of this is for acquiring real estate on behalf of the holding company. Each property with a significant amount of risk may need its own company so that it does not put the others at risk.

How can this be set up?

This can be done in steps and it doesn’t have to happen all at once. The starting point depends on the size of the building you’re buying and the type of property management you’re doing.

Make sure you take records properly and that you’re reporting to your bank, mortgage holders and Revenue Canada appropriately.  If you’re committed to being in the business of real estate investing and you’re in it for the long haul, work with your advisors to setup the proper structure the first time. Although this isn’t a system for someone that’s dabbling, it can be a serious benefit to real estate investors that want to grow their portfolio over time.

Self-employed – What are your tax obligations

·       As a self-employed person, you and your spouse or common-law partner have until, June 15th annually to file your personal income tax returns or the tax department may charge you a late-filing penalty.

·       You have to report your income from any business you run yourself or with a partner. For more information, go to cra.gc.ca/selfemployed.

 ·       If you own a business or are engaged in a commercial activity, keep complete and detailed records. Your records should be detailed enough to calculate the tax you owe and to support any deduction or credit you are claiming. They also must be supported by original documents.

·       Keep your supporting documents for six years after the end of the tax year to which they relate. The tax department may ask you to prove your claims for deductions or credits with documents other than official receipts, like cancelled cheques or bank statements.

·       If you get income that has not enough or no income tax withheld during the year and you owe more than $2,000 in taxes, you may have to pay tax by instalments in future years. For more information, go to cra.gc.ca/instalments.

Taxes and the Tax Department – What to do when someone who has died

We understand that dealing with the death of a loved one is difficult time.  It does involve dealing with their tax situation after they have passed away.  Some of the tasks that need to be done include:

  • Contacting the tax department and let them know the deceased’s date of death as soon as possible at 1-800-959-8281.
  • If the deceased was receiving any benefit or credit payments such as the Goods and Services tax (GST) credit, the working income tax benefit advance payments, and/or the Canada child benefit, please also let the tax department know to stop the payments and, if applicable, transfer them to a survivor.
  • A final personal tax return must also be filed for the deceased. On the final return, all of the deceased’s income, credits, and deductions   are included from January 1st of the year of death up to and including the date of death.
  • Income earned after the date of death may have to be reported on a T3 Trust Income Tax and Information Return.
  • The legal representative or executor is required to file any tax returns for the years that the person did not file before he or she died.
  • The due date for the final return depends on the deceased’s date of death. Please contact our office for help in determining due dates and timing for all tax filings due.