Get Unstressed – Organization tips to get you ready to file your taxes

I hear it all the time – people STRESS about their taxes and getting their taxes done.  Here are some tips to get you ready for your 2017 tax returns and reduce your tax preparer fees, as well as reduce your stress levels, knowing you’re prepared:

1 – Gather all your tax slips in one folder (T4’s, T5’s, T3’s, other T-slips, RRSP contributions, donation receipts, medical receipts.  Your T-slips should all be available to you by February 28th, except for T3’s and T5013’s which can take a few weeks longer (but by March 31st).

2 – Group like slips together

3 – If you have a lot of investments, keep a list of your accounts and account numbers, and check your T5 and T3 slips against your accounts to see what’s missing

4 – Group medical receipts by patient

5 – Group donations to the same organization together

6 – Gather details of any investment dispositions, including real estate, into a spreadsheet.  Include details of the historical cost and other transactions affecting your cost base.

7 – If you are a sole-proprietor or have rental income, use accounting software to capture income and expenses details for each of your business and rental properties (separate books and records for each business or property).  Hire a qualified bookkeeper to do your bookkeeping for you (freeing your time to spend on higher-level business matters). At the very least, use a spreadsheet to track your financial transactions.

8 – Don’t delay – start the process early.  The sooner you get your information to your tax preparer, the less stressful it will be for both of you.  Tax preparers would much rather get your returns done in March than scramble to meet the deadlines in the last final week.   If you’re getting a refund, wouldn’t you much rather receive that sooner than later?  And if you owe, wouldn’t you like to have peace of mind knowing how much you owe and that you still have time to make that tax payment (due April 30th), rather than waiting until the last minute.

9 – A caveat to #8 – it’s more efficient (and less costly) to get your complete tax information package to your tax preparer at the same time.  Sending bits and pieces in dribs and drabs will only add processing and review time to the process, which could result in additional billings by your tax preparer.  Having said that, don’t hold up if you’re just waiting for a couple of slips or receipts.  Just note what you are missing with as much detail as you can (for example, if you’re missing an RRSP contribution slip, note the amount you contributed and date of contribution).

You must have adequate and reliable records to support your tax filings.  Here are some helpful links on keeping records.

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/keeping-records.html

https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ic78-10r5/books-records-retention-destruction.html

Need help?  Send me an email (Linda@visionspire.ca), and I’d be happy to answer your questions.

 

[author] [author_image timthumb=’on’]http://54.82.103.175/wp-content/uploads/2017/12/IMG_0012-resize-square.jpg[/author_image] [author_info]Linda Spencer is a CPA, CA, Canadian Tax Specialist and Money Mindfulness Coach. With over 20years of assisting business owners with the business and tax strategies, her mission is to eliminate stress and anxiety people experience around money and taxes, by empowering them with the tools, knowledge, strategies and mindsets that will put them in the driver’s seat of their business success and financial wellness, so they can have more harmony, joy and abundance in their life. [/author_info] [/author]

What’s new in tax for your 2017 personal tax returns

It’s that time of year again – personal tax season!   Now, there are a few things you should be aware of that may affect your 2017 tax returns…here’s a quick summary (this update is for general information purposes.  Please speak to your tax advisors for specifics regarding your personal situation):

RRSP Contributions – The deadline to make RRSP contributions that can be deducted on your 2017 tax return is March 1 this year.  Many people ask whether they should contribute to their RRSP or Tax-Free Savings Account (TFSA), and I always respond by recommending they consult with their financial advisors.  Generally, however, it is advantageous to contribute to your RRSP if you are in a high income tax bracket and expect your retirement income (when you withdraw from your RRSP) to be in a lower tax bracket.  For 2017, you can contribute 18% of your 2016 earned income to your RRSP, up to a maximum of $26,010 for 2017 (plus any unused contribution room from previous years).  The TFSA contribution room is $5500 for 2017 (plus any unused contribution room you may have from previous years – up to a cumulative total of $52,000 at the end of 2017).  TFSA contributions are not deductible, and the income earned in the TFSA is not taxable.

Child Fitness and Arts Amounts – 2016 was the last year to claim the child fitness and arts credits.  No need to keep your children’s fitness and arts program receipts for income tax purposes.

Credit for Education and Books – 2016 was also the last year to claim the education amount tax credit.  If a student has unused education credits from 2016, they can still be used in 2017 and later years.  The tuition credit amount continues to exist, which has been enhanced for certain occupational and apprenticeship programs.  A proper T2202A will be required to claim the tuition credits (students should be able to get a copy through their student account).  Check the CRA website to see which programs qualify for the enhanced credit amount.

Professionals with unbilled Work-in-Progress (WIP) – Certain professionals, such as lawyers and accountants, generally carry WIP (income that has been earned for services provided, but not yet billed at year-end) on their balance sheet.  If you had WIP at the end of the year, you could generally take a reserve to defer the income inclusion to the following year when it is billed.  Effective March 22, 2017, such professionals will need to include their year-end WIP in income.  There are transition provisions available.  Please seek guidance from your tax professionals to ensure the transition year is being reported properly on your return.

Caregiver Tax Credit Amounts – As our population ages, more and more adults are caring for their elderly parents.  If this is you, you may be entitled to claim certain additional tax credit amounts on your tax return.   Effective for 2017, the caregiver tax credit, infirm dependent tax credit and family caregiver tax credit are being replaced by a NEW Canada caregiver tax credit.  This credit is equal to 15% (Federal) of caregiver expenses incurred, up to $6,883 of expenses, and up to $9,033 of caregiver expenses incurred for your dependent spouse or child who is infirm.   This credit is reduced dollar-for-dollar when the family member’s income exceeds $16,163.

Other noteworthy items:

For those who are self-employed – Remember that you pay double the CPP premiums – 9.9% of net business income, to a maximum of $5,128 for 2017.  You will also get a CPP credit amount for half of that (the employee portion).

The combined top marginal tax rate in Ontario is 53.53% (on income over $202,800).  The highest top marginal tax rate in Canada is in Nova Scotia at 54%, while residents of Alberta, BC and Saskatchewan see the lowest top marginal rates (47-48%).

Where are those high-income earners (over $200k)?  Here are some 2015 stats from Statistics Canada:

In 2015, there were 390,000 people in Canada who earned over $200k in income (or 1.45% of all income groups), over 100,000 more people than in 2011.  The median income for all of Canada was about $34k in 2015.

More than half of the over $200k income-earners can be found in Ontario (157,450 people or 1.55% of Ontario income-earners).

Interestingly, almost 900,000 people (8.7%) earned over $100k in Ontario in 2015 (2.2million or 8.27% across Canada).

 

[author] [author_image timthumb=’on’]http://54.82.103.175/wp-content/uploads/2017/12/IMG_0012-resize-square.jpg[/author_image] [author_info]Linda Spencer is a CPA, CA, Canadian Tax Specialist and Money Mindfulness Coach. With over 20years of assisting business owners with the business and tax strategies, her mission is to eliminate stress and anxiety people experience around money and taxes, by empowering them with the tools, knowledge, strategies and mindsets that will put them in the driver’s seat of their business success and financial wellness, so they can have more harmony, joy and abundance in their life. [/author_info] [/author]

Are You Ready For a Tax Audit?

Are you at risk? The Canada Revenue Agency (CRA) continues to audit the following key areas, as these areas seem to be the ones of greatest error or non-compliance by small and medium sized businesses:

Denied expenses – CRA denies unsupported and non-deductible expenses. It is important to have proper and adequate documentation to support the expenditures.
Taxable benefits – CRA scrutinizes automobile benefits and other expenses such as travel expenses and phone and internet usage to ensure taxable benefits are attributed properly to employees.
Shareholder benefits – CRA continues to seek out personal expenses paid for and deducted by the business that should be denied or taxed to the shareholder. Taxpayers should carefully document the business purpose of all expenses and have practices in place to closely monitor shareholder accounts and credit cards to avoid these reassessments.
International compliance / cross-border transactions – Many business are unaware of the tax and reporting implications of conducting business outside of their country and engaging in certain financing transactions outside of Canada, including sales taxes, payroll and employee withholdings, and corporate tax reporting implications. For Canada and the US, there is information sharing and new processes at boarder security to more closely scrutinize cross-border business travel.
Sales & commodity taxes (or Indirect taxes) – There have been a lot of changes in the sales tax rules in Canada over the last few years, with significant changes affecting large businesses, cross-border transactions, pensions, and financial institutions. Many businesses are unaware of how these changes affect them. The CRA also continues to find and disallow ITC claims for expenditures with inadequate or improper documentation.
Non-arm’s length transactions – Whether domestic or international, if there is insufficient proof/documentation for the validity of the transaction between non-arm’s length parties (such as management or administration fees), the expense can be denied (but yet, the income still taxed in to the other party – resulting in double taxation).
Aggressive tax planning/schemes – Aggressive tax planning and abusive tax avoidance schemes are a global concern. The CRA has invested millions in its program to reduce aggressive tax planning or abusive tax avoidance schemes that contravene specific anti-avoidance provisions of the law. The CRA now has the tools to detect, correct and deter the non-compliance of taxpayers using aggressive tax plans, and there will likely be more audit activity in this area.
As part of this scrutiny, the CRA has recently sent notice that it will be increasing its audits of individuals who have claimed business or property losses. If you do receive an audit request letter or request for information, don’t sit on it or stick it in a drawer somewhere hoping it will go away or take care of itself (yes, people do this). Take the letter immediately to your accountant or tax advisor to assist you in dealing with it.

Not dealing with the CRA requests in timely manner can cost you hundreds or thousands or even more in additional taxes, interest and penalties, which can cripple a small business. But CRA auditors are people too – just doing their job, serving you, the taxpayer, as their client. You may have done everything correctly, or you may have made honest mistakes (CRA audits can be a great opportunity to learn and boost your tax management controls and practices). But be prepared. Talk to your accountant and ask them what your risks are and how you can reduce them.

[author] [author_image timthumb=’on’][/author_image] [author_info]Linda Spencer is a CPA, CA, Canadian Tax Specialist and Money, Marketing & Soul business coach. Her mission is to eliminate stress and anxiety around money and taxes, by empowering heart-centered small business owners with the tools, knowledge, strategies and mindsets to put them in the driver seat of their financial success and wellness.[/author_info] [/author]

Gearing up for Tax Season

It’s that time of year again – Tax Season, and while some people are eager to get their taxes done early, many stress and wait until the last minute (or later) to get their tax return filed. So, how can you better prepare yourself for this coming tax season?

  1. Be aware of the changes in tax law that may affect you. In Canada, the changes that were made in the last year relating to the 2016 personal tax year include:
  • Children’s arts credit – The maximum eligible fees per child (excluding the supplement for children with disabilities) has been reduced to $250 for 2016. This credit will be eliminated for 2017 and later years.
  • Children’s fitness tax credit – The maximum eligible fees per child (excluding the supplement for children with disabilities) has been reduced to $500 for 2016. This credit will be eliminated for 2017 and later tax years.
  • Home accessibility expenses – You can claim a maximum of $10,000 for eligible expenses you incurred for work done or goods acquired for an eligible dwelling.
  • Family tax cut – The family tax cut (allowing income split allocation of up to $50,000 for families with children) has been eliminated for 2016 and later years.
  • Eligible educator school supply tax credit – If you were an eligible educator, you can now claim up to $1,000 for eligible teaching supplies expenses.
  • Canada Child Benefits (CCB) – 2015 was the last year of the Universal Child Care Benefit (UCCB). As of July 2016, the non-taxable CCB has replaced the Canada child tax benefit (CCTB), the national child benefit supplement (NCBS), and the universal child care benefit (UCCB). You may have received taxable UCCB payments up to June 2016 that you would have to include in your 2016 income tax return.
  • Sale of principal residence – Starting in 2016, the sale of a principal residence must now be reported on your tax return in the year of sale, along with any principal residence designation. Under proposed changes, the CRA will be able to accept a late designation in certain circumstances, but a penalty may apply.
  • Reassessment period – Under proposed legislation, for tax years that end after October 2, 2016, the CRA may at any time reassess your income tax return if you fail to report a sale or other disposition of real estate. So make sure you report those real estate sales, including the sale of your own house.

 

  1. Open your mail as it comes in and keep separate file folders if you have a lot of different types of slips. Every year I get clients who bring in their tax slips in unopened envelopes.  First, I wonder why they wouldn’t open their mail (What if the information on the slip is incorrect, or if it’s the wrong slip altogether? Or what if it’s a request that needs a response by a certain date?)  Keep like slips together. I recommend keeping separate file folders for different types of slips/receipts (such as charitable donation receipts, T4 slips, T3 slips, T5 slips, RRSP slips, medical receipts).  Please note that most slips will have been sent out to you by February 28th, but some (like T3 slips for mutual fund and trust investments) are not due until the end of March.  You can always log in to your online account with CRA to check for missing T-slips.

 

  1. Have all your tax documents and support in order. If you are self-employed (i.e., you run your business as a sole proprietor), or have interest in a partnership or rental property, gather, organize and summarize all your transactions into categories and put them in a spreadsheet (or on a piece of paper, or in a bookkeeping program such as QuickBooks or Freshbooks).  Accountants and tax preparers really do not enjoy getting a shoe box or grocery bag full of disorganized slips…and it can add a significant amount to your accounting bill since it does take time to go through them and verify with you the business purpose and category of expenditure they relate to.  The same goes for your revenue invoices and receipts.  The more you can organize and summarize yourself, the more efficient (and less costly) the process of getting your tax return completed and filed.

 

  1. Keep your business transactions and documentations separate from your personal documents. Always keep a separate business bank account, and if you make business purchases by credit card, I recommend keeping a separate card just for business purchases and don’t use it for personal items. It’s easy to get things mixed up, but the mistake of claiming personal expenses as business expenses can be a costly one when faced with a tax adjustment or audit.

 

  1. If you use your vehicle for business or work, keep a log of your business and total km’s travelled. If you don’t already keep a log, you’ll need some way of documenting and supporting your business usage claimed in your tax return.

 

  1. 6. Get your taxes done early. The deadline to file and pay your Canadian personal tax return is April 30th, without incurring penalties and interest on any amounts due.  If you are self-employed, June 15th is the filing deadline (but the tax payment due date remains April 30th).

 

The information reported in your tax return is ultimately your responsibility, not your accountant’s.  Therefore you should at least be aware of the rules that apply to you, so that you are comfortable signing off on your return before it’s filed.

 

Here are some helpful links to find further information:

For individuals – http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/menu-eng.html

For small business owners and self-employed individuals – http://www.cra-arc.gc.ca/tx/bsnss/sm/menu-eng.html

I also love taxtips.ca for their tools and calculators.

If you have a specific tax or business question you want answered, or would like assistance with your income tax return, feel free to send me a direct email at Linda@visionspire.ca.

You may also want to attend my upcoming workshop in Georgetown, ON on March 22, 2017 – Tax Essentials for Small Business, where I will be showing you essential tips and best practices regarding income tax and GST/HST compliance for small business in Canada.

 

[author] [author_image timthumb=’on’]ca/wp-content/uploads/2017/03/Visionspire-Linda-Spencer-Ontario-quote.jpg[/author_image] [author_info]Linda Spencer is a CPA, CA, Canadian Tax Specialist and Money, Marketing & Soul business coach. Her mission is to eliminate stress and anxiety around money and taxes, by empowering heart-centered small business owners with the tools, knowledge, strategies and mindsets to put them in the driver seat of their financial success and wellness.[/author_info] [/author]

workshop group photo

What Happens at a Money Story WorkShop with Linda Spencer?

You might be thinking, a money workshop with a tax accountant?  Really?  Accountants are boring!

Well, if you do think so, you’ve never been to one of MY workshops.  I’ve been presenting workshops and training sessions for years, and I’ve never been called boring.  What you will experience is this:

  • A warm welcome on arrival (and a hug if you’re clearly open to receiving one :))
  • A lot of light energy in the room and from me
  • Connection, lots of smiling and laughs
  • Insight – I WILL change how you think about money (and tax accountants)
  • New knowledge and tools – The best way I can help people end their struggle and stress with money is to pass on the tried and true tools that I’ve learned and have used

I’m not your typical tax accountant…I don’t talk like one, and certainly don’t dress like one….One of my former accounting partners said to me a while back at an alumni event, “You were never one to be kept in the box, were you”.  No, I wasn’t…who wants to be put in a box!

You’ll see that I smile a lot and laugh often. I take a very light approach to life and living (I wasn’t always this way – it took some major cosmic events to get me here).  You’ll see that I love art – I wear my art and the amazing wearable art pieces of my favorite local designers (I may even wear one of those pieces at the workshop).  I have 9 tattoos (and no, I don’t ride a motorcycle), mostly designed by me.  I make jewelry, am a published author and write inspirational poetry.   Every article I write, workshop or program I create, social media post, etc. IS art.  So, no, I’m definitely NOT your typical tax accountant.

I DO believe that we are all connected and that we’ve been given some pretty amazing abilities to use in this lifetime to create the experience of Heaven on Earth – I use (and further awaken) my intuitive gifts daily, and you’ll see this in my workshops.

So specifically, here’s how the day will flow  on September 21 at the Re-Set Your Money Story Workshop at Rattlesnake Point Golf Club (Milton, ON):

9:30-10:00am    Welcome; Participant check-in (with coffee & muffins)

10:00-10:15      Introduction & Workshop Ice-Breaker (with LeeLee Fowler of Rise Media & Design – personal friend & marketing coach, and online community engagement strategist)

10:15-11:15      Crack Your Money code with Your Personal Money Archetypes (What are money archetypes, What are YOUR money archetypes (assessment), why are they important) – there’s a little bio break in here.

11:15-12:15     Being Money Visualization & Exercise (I will walk you a visualization where you will BECOME money – this will give you a TON of insight on how you do money and your money values!)

12:15 – 12:45    Light lunch provided

12:45-1:45       Money Boundary Breakthroughs (we’ll work on one or two specific money block areas that YOU would like to break through, and you leave the workshop with committed action steps to move you forward in your life/business)

1:45:2:00       Wrap-up, Thank You’s, Questions, end the workshop.

 

Sounds fun and light to me (and who doesn’t want more fun and lightness with money instead of stress and anxiety)….how ’bout you?

COME JOIN ME on September 21, have some fun with MONEY and FINANCE, and press re-set on some of those money stories that are holding you back from being at ease with money.

[button link=”http://54.82.103.175/moneystoryworkshop” type=”big” newwindow=”yes”] CLICK HERE to REGISTER[/button]