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WHAT’S NEW FOR 2017 TAX YEAR:

Individuals and families

Express NOA delivers an instant message regarding a filing, and then, within 24 hours, delivers the notice of assessment directly into EFILE-certified tax preparation software. Ask us if you need this service with applicable fees.

Four child tax credits will no longer available this year: arts, fitness, education and textbooks in 2017. However, parents of children under the age of 16 can pre-pay 2017 arts and fitness programs to claim them on 2016 tax returns as long as total spending for 2016 does not exceed $250 and $500 limits, respectively.

Reporting the sale of your principal residence

On October 3, 2016, the Government announced an administrative change to Canada Revenue Agency’s reporting requirements for the sale of a principal residence.

Starting with the 2016 tax year, generally due by late April 2017, you will be required to report basic information (date of acquisition, proceeds of disposition and description of the property) on your income tax and benefit return when you sell your principal residence to claim the full principal residence exemption. A non-filing penalty may apply in case you fail to report the sale of your home. Ask your accountant the detail about how to report this.

Interest and investments

Business owners, large and small, will gain less from the sale of their operations as assets such as goodwill and trademarks will become fully taxable as investment income. Currently, half of the proceeds can be distributed tax-free as a dividend.

Investors will also no longer be able to rebalance their non-registered mutual fund investments in corporations structured as “switch funds” on a tax-deferred basis. As of the New Year, capital gains from such moves will be taxed in the same way as equities.

 

Capital gains deduction – The lifetime capital gains exemption limit has increased to $824,176 as a result of indexing in 2016.

Form T1135, Foreign Income Verification Statement – This form has changed to introduce a simplified reporting method for individuals who own specified foreign property with a total cost of less than $250,000 throughout the year.

Tax-free savings account (TFSA) – The TFSA annual contribution limit has decreased to $5,500.

Repeated failure to report income penalty – We may now charge you this penalty only if the amount of income you failed to report on your return was $500 or more. The calculation of the penalty has changed.

 

How should you prepare?

We have provided you a copy of document checklist. Please review and put together all the documents those are applicable to you. Drop off all necessary documents to our office to enable us prepare your tax return accurately and in timely manner.

You can now book your appointment over the phone at (416) 463-3330 or by emailing us at info@mmcpa.ca for your convenience.

We look forward to hearing from you early in the tax season!

Meals and Entertainment Expenses: Tips and Traps

Many of us already know that if we earn business or employment income, we may be eligible to get a deduction for meals and entertainment expenses as much as 50%. We wish this could be that simple the way it sounds. Even we have spoken with many seasonal tax preparers who also has fallacy about how it can be eligible or what actually need to be done if we want to claim this as an expense. What is the audit risk here?

Yes, there are some simple but mandatory things we can do to eliminate the risk of getting audited and disallowed by auditor. The expenses for food, beverages or entertainment, in order to qualify as a deductible expense, we (taxpayer) must be prepared to demonstrate that the amount was incurred for the purpose of earning income. Canada Revenue Agency insists that records be maintained of the names and business addresses of the customers or other persons being entertained, together with the relevant places, dates, times, business reasons and amounts supported by such vouchers as are reasonably obtainable.

In our experience we found that many taxpayers and their accountants do not give this matter of documentary evidence enough consideration because meals and entertainment expenses are only one half deductible and/or the company qualifies for the small business deduction. But there are greater audit risks exists than just getting a letter from CRA about the disallowed expenses. There is a possibility of double taxation. As an instance, if shareholders are involved, in addition to disallowing the amount as a business expense, an amount may also be added to the shareholders income under subsection 15(1) of the income tax act.

what is my 2014 tax brackets ?

We often get question from our clients: “what is my 2014 tax brackets?”

In Canada, we have marginal tax rate applicable to individual tax payers. This means the higher income you have you will have to pay more taxes. While filing your 2014 tax return, many of the low income earning families won’t pay any taxes up to an income of $26,786, versus a higher income family would pay 42.18% of taxes in Ontario. Therefore, medium to high income earning families such as dentists, doctors, professional engineers, IT consultants etc. in Canada especially in Ontario should take the opportunity of tax planning. Planning your taxes reminds me an old saying: “Prevention is better than cure”. If you wait till the last moment (at filing your tax returns), there are very few things you can do to minimize of defer your tax burden. Whereas taking the correct steps on time would give you the peace of mind of staying on top. To learn more about the tax planning in Canada, you may contact Mostafa Mohsin CPA, CGA | Chartered Professional Accountant expert in owner managed business and high income earners tax planning in Ontario and most of other provinces and territories in Canada.

Federal tax rates for 2014

  • 15% on the first $43,953 of taxable income, +
  • 22% on the next $43,954 of taxable income (on the portion of taxable income over $43,953 up to $87,907),+
  • 26% on the next $48,363 of taxable income (on the portion of taxable income over $87,907 up to $136,270), +
  • 29% of taxable income over $136,270.

 

Provincial/territorial tax rates for 2014

Tax for all provinces (except Quebec) and territories is calculated the same way as federal tax.

Form 428 is used to calculate this provincial or territorial tax. Provincial or territorial specific non-refundable tax credits are also calculated on Form 428.

Provincial/territorial tax rates (combined chart)
Provinces/territories Rate(s)
Newfoundland and Labrador 7.7% on the first $34,254 of taxable income, +
12.5% on the next $34,254, +
13.3% on the amount over $68,508
Prince Edward Island 9.8% on the first $31,984 of taxable income, +
13.8% on the next $31,985, +
16.7% on the amount over $63,969
Nova Scotia 8.79% on the first $29,590 of taxable income, +
14.95% on the next $29,590, +
16.67% on the next $33,820, +
17.5% on the next $57,000, +
21% on the amount over $150,000
New Brunswick 9.68% on the first $39,305 of taxable income, +
14.82% on the next $39,304, +
16.52% on the next $49,193, +
17.84% on the amount over $127,802
Quebec Go to Income tax rates (Revenu Québec Web site).
Ontario 5.05% on the first $40,120 of taxable income, +
9.15% on the next $40,122, +
11.16% on the next $69,758, +
12.16% on the next $70,000, +
13.16 % on the amount over $220,000
Manitoba 10.8% on the first $31,000 of taxable income, +
12.75% on the next $36,000, +
17.4% on the amount over $67,000
Saskatchewan 11% on the first $43,292 of taxable income, +
13% on the next $80,400, +
15% on the amount over $123,692
Alberta 10% of taxable income
British Columbia 5.06% on the first $37,606 of taxable income, +
7.7% on the next $37,607, +
10.5% on the next $11,141, +
12.29% on the next $18,504, +
14.7% on the next $45,142, +
16.8% on the amount over $150,000
Yukon 7.04% on the first $43,953 of taxable income, +
9.68% on the next $43,954, +
11.44% on the next $48,363, +
12.76% on the amount over $136,270
Northwest Territories 5.9% on the first $39,808 of taxable income, +
8.6% on the next $39,810, +
12.2% on the next $49,823, +
14.05% on the amount over $129,441
Nunavut 4% on the first $41,909 of taxable income, +
7% on the next $41,909, +
9% on the next $52,452, +
11.5% on the amount over $136,270

 

Source: http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html

Tax Planning Canada

The tax system in Canada provides for a two-level system for taxing corporate income: first in the corporation, and then in the hands of the shareholder when dividends are received from the corporation. Dividends received from a corporation resident in Canada by an individual are subject to a specific tax treatment based on the principle of integrating the income of the corporation and that of the shareholder.

A shareholder may also be an employee or executive of the corporation and, in this capacity, receive remuneration in the form of salary. A shareholder-manager of a private corporation may therefore remove funds from the corporation in the form of salary or dividends. The method of distribution chosen will generally be that which maximizes net after-tax cash in the hands of the shareholder, after taking into consideration the income tax payable by both the shareholder and the corporation. However, this does not mean that the shareholder may avoid personal income taxes on the income received from the corporation. This approach merely serves to minimize income taxes.

To prevent shareholders from withdrawing or benefiting from the corporation’s property or capital other than in the form of salary or dividends, thereby avoiding tax at the personal level, the Income Tax Act (ITA) contains a number of special rules. Therefore, it is very important to plan your taxes both at personal level as well as corporate or business level. M M CPA Professional Corporation has extensive experience in tax planning for owner managed business and high income families. You may wish to contact a Charted Professional accountant at (416) 463-3330 to learn more about it.

No More Torture: Make February A Time Of Singing

Every February, it happens again. Tax time rolls in. It’s as certain as the turning of the planets, the barking of a dog, the rising of tomorrow’s sun. Taxes.

 

Did you know that there are people who love working with figures and making sense of other people’s finances? Bringing those finances in line with the Canada Revenue Agency’s requirements, and helping individuals or businesses pay their taxes? No, really, there are. People who enjoy doing it enough that they’ll do it for their job, day in and day out. When they finish one man’s paperwork, they move on to the next. That mind boggling nest of figures you’d think no one unrelated would touch for love or money; they’ll take it, they’ll make sense of it, and they’ll spit it out, ready for the most severe auditor.

 

Utilizing a Toronto accountant may be the way out of your book-keeping nightmare. February doesn’t have to mean torture to you. Give your unruly financial secrets to someone who knows what to do with them, and watch your tax return Toronto take form effortlessly.

 

It means you can use that brain power for something else, something that you like doing. There’s a reason you didn’t go into accounting, after all. A reason you went into the field you chose. And there’s a reason that Toronto accountant became an accountant. Half of it is that he likes playing with financial figures, likes it enough to do it day in and day out. Half of it is that he’s uncannily good at it.

 

A tax return in Toronto is not the simplest of documents. Navigating its slots and boxes and clauses may be almost enough to turn a normal mortal mad. But a Toronto accountant is in a class apart, and to him, that tax return Toronto makes entirely as much sense as your street address makes to you. He could probably even recite it backwards, forwards, or sideways if it was necessary to his work.

 

If you’re not the one entirely responsible for generating that Toronto tax return, February may begin to mean other things to you. Fun things. It’s a pretty nice month, and it comes at a pretty nice time of year; when spring is just beginning to peak around the corner, still to shy to show herself properly, but excited about all that is in store. It’s a month far too good to be marred by tax worries.

 

Putting yourself through un-necessary self-torture isn’t fun for anyone. It isn’t fun for you; it makes you feel the dunce. It isn’t fun for your family, when you spend all the mental energy you could be spending on them on the confusing legal sheets, they are the ones that are suffering. All that for a bit of paper and a subtraction on your bank account. Think about skipping the torture one year—this year—and getting a Toronto accountant to help you make sense of the madness, and you may never go back to your old stumbling-blindfolded-in-the-dark way again.

You, An Accountant, And Your Toronto Tax Return

If Canada’s tax code was straightforward and simple, you might not need help from a Toronto accountant. You would be able to turn in the very minimalistic paperwork yourself, make any required payments, and that would be that. You wouldn’t stay awake, ever, worrying about taxes, wondering how to file them correctly, wondering how to stay on top of the paperwork, wondering how to find the money you need to pay the CRA.

Well, that’s another world. In this world, the tax code is not straightforward or simple. It takes hours and hours of concentrated time to make sense of it, and you might very well be working yourself into a headache without making any real progress. Facts and figures are jiggling around in your head, and it’s hard to see quite which number goes in which box. How do you know for certain that that number that comes out of the end is right, after all you’ve gone through to come up with it?

You don’t, ofcourse, unless you go through and check it again, giving yourself, on average, three more headaches. That is the story of the tax return Toronto for most Canadians who try to do it themselves.

And that’s why you may want the help of a Toronto accountant. Someone who knows those circuitous tax laws like the back of their hand. Someone with a magic, order-inducing touch, who can make sense of your complicated finances. Someone who can look at your mess of paperwork and go – pouf!- and convert it all to order and neatness.

Well, maybe you won’t find a Toronto accountant who can do quite that. Making order of chaos is never entirely automatic. But someone who knows those laws like anything, who knows finances like anything, and who has experience putting personal finance in line with the tax code and helping to prepare tax returns in Toronto will certainly be able to work a kind of magic over your book-keeping that will have you thanking yourself, over and over again, that you thought to call the accountant. You’ll wonder why you didn’t think of it earlier. You may curse yourself for the years you sweated it out on your own. Because, to be honest, preparing tax returns in Toronto is really not your element—most likely.

You probably have lots of things that you are very good at. Some of them have only entertainment value. With others, you make a living from your family. But—unless you missed the boat on career choice and ought to be a Toronto accountant yourself—preparing tax returns for the Canada Revenue Agency is probably not in your uber-talented division of practiced skills. It’s probably not even in the moderately-talented. If you’re like the majority of people in this country, it’s probably way down at the bottom of a list of things you really do poorly.

So… spend your time on the things you do well, and find a Toronto accountant to do the things you do poorly. Think about all the other ways you can use that time you won’t have to spend on your taxes. Then go do them.

HST New Home Rebate

An HST rebate is available under the GST/HST system to recover amounts paid in error or where the rebate is intended to provide specific relief to the taxpayer, such as the HST New Home Rebate.

What is New Home HST Rebate?

The HST New Housing Rebate (or HST new home rebate) is available to an individual who buys a new home (or a substantially renovated house) from a builder or hires a builder to build a home for them on their existing property.  For such purchasers, there are two components to the HST New Home Rebate: the federal and provincial portions of the rebate.   For the 5% federal portion of the HST, the HST new home rebate is clawed-back for homes with a purchase price above $450,000.

Ontario, on the other hand, has its own HST new home rebate, called the HST New Housing Rebate that applies to the provincial portion of the HST (8% part) on new or substantially renovated homes used by the purchaser, or their relatives, as a primary place of residence.  The HST new home rebate for homes purchased in Ontario is currently available up to $24,000 with no claw-back.

Am I eligible for New Home Rebate for Rental Property?

Similar to the HST New Home Rebate described above, there is also an HST rebate in Ontario for real property that is purchased for use as an investment property (i.e., rental property).  In Ontario, the HST New Home Rebate for a rental property can be as much as $24,000.

What is the Deadline to apply?

There are strict deadlines to apply for the HST New Home Rebate.  The general rule is that the purchaser must apply for the rebate within 2 years of their purchase or date of occupancy.  What constitutes the occupancy date can be tricky and purchasers should be weary.

Can CRA Deny HST New Home Rebate?

The CRA has been actively challenging HST new home rebate claims and disallowing the $24,000 rebate.  Many individuals will have received a Notice of (Re) assessment that states their HST rebate claim has been denied and that they owe money to the CRA on account of not qualifying for the HST rebate.  The CRA also charges interest on the outstanding amounts.

To discuss this matter with one of our tax experts, we would encourage you to contact us at (416)463-3330 or by email at info@perfectaccounting.ca

Can Small Business Owners Prevent CRA Audit

If you are operating a small business you already know that it is usually a lot of work for you to do everything from sales to services and everything in between. A tax audit is the last thing that an owner needs. There are many fine ways to avoid any problems with the Canada Revenue Agency if you are cautious and keep good records. Doing this, along with some other tips can help small business owners to be sure that when it is time to deal with taxes they have everything in order so that the CRA is reassured that a business is in compliance with tax laws.

There are some simple steps a business can take to be certain they are in agreement and can prove this where the CRA and taxes are concerned. Record everything; file the right forms, keep contractors straight and a few more important details can keep a small business from being put through a CRA audit. The following steps should be a few steps for small business owners to follow in order to be sure that when it is time to deal with the CRA they have all their documents lined up and forms filed so that they will not add the pressure of an audit to the regular stresses of hold and run a small business.

Record Keeping

While running a small business it is vital to keep track of all records of everything that goes on with the business. The records should be detailed with all income and every expense recorded. Less than 5% of sole proprietors are actually audited by the CRA. Even with this being the case, it is important to keep very clean records of everything that goes on in your business. The recommended time for a business to file and keep records is seven years in the event your business should be audited. One can buy commercial software or use something like MS Excel spreadsheets to keep track of records for a business.

Any income and outgoing debt should be recorded at least weekly by the business owner. This can be done in Excel and there should be a column for any expenditure for supplies or debts owed, including fixed debts such as rent for the building or property taxes as well as electricity and other utilities. These should be broken down into weekly increments and recorded. Travel and business trip expenses should also be recorded as they are deductible, in addition to, any business cash transactions.

File CRA Forms

The CRA will want to look at all the forms you need to fill out that are obtainable through them. Be certain to fill the entire form out as directed. If something is left blank the CRA will note this and want to audit it. Once you are certain that the forms are filled out properly make sure they are signed.

According to the CRA a calendar tax year is 12 consecutive months beginning January 1 and ending December 31. A fiscal tax year is 12 consecutive months ending on the last day of any month except December. A 52-53-week tax year is a fiscal tax year that varies from 52 to 53 weeks; but, does not have to end on the last day of a month. This does not mean you keep your records yearly. Keep weekly records and file the quarterly or yearly tax reports.

Business Income

Since the CRA is particularly interested in whether those who are self-employed are reporting their full income all that you earn must be listed. Use the exact figures that appear on your tax forms. The CRA has also been on the alert for errors in T2125, the form used to report incomes from Sole Proprietorship or partnerships.

If the government notices that a business owner is taking a lot of vacations or owns a house or car that is more expensive than what that owner is reporting it will throw up a red flag that will almost surely result in an audit. So be certain all cash is accounted for on your filings.

Be Accurate

It is important these workers are distinguished when a small business files so that it does not draw the attention of an auditor. A freelancer must report taxes if they make over $500 in a year.

Never Mix

Tax write-offs must never mix personal and business deductions. It is suggested that anything that will be used as a deduction, such as computers and office equipment be photographed. If a vehicle is used for business then the mileage used for business must be recorded. If a business trip is taken, it is acceptable to take family and make it a vacation; however, only money spent for the use of the business associated costs may be deducted. If there is cross-over in this area, it could cost a small business owner an audit and penalties.

Ratio Analysis

Another way to avoid having a small business audited is to align it with other businesses to show that the income models are steady with ratio analysis. This is particularly important if the business is cash heavy. A “vertical analysis compares expenses relative to gross receipts in a given year. An industry analysis shows how a small business compares to others within the industry as a whole and there are sites for
these kinds of comparison.

Final Opinion

Small business owners should be consistent with record keeping and filing forms. A small business that is cash intensive needs to record all cash transactions. The right forms need to be filed for various parts of the business including freelance contractors. Deductible expenses must be kept to only those that are relevant to the business. Using contrast ratios will help an owner make sure that they are on track with other similar businesses and they will be able to prove that they are not hiding money by not reporting cash. Snap of office equipment or other debatable deductibles can be useful as well. If a small business owner follows all these rules they should not attract a CRA audit and if they do, they will be sheltered from fines and fees.

Perfect Accounting and Tax Services – Registered Professional Accountants for all your Tax and Accounting needs.

Bookkeeping Service Toronto

Bookkeeping Service is fairly important for small enterprise in Toronto. For most modest organization taxes are the largest value. But numerous little organizations have no strategies to lessen the volume of taxes payable. It is crucial that tiny companies can decrease their tax charges so that you can aggressive and worthwhile.

Under are ten tips Tax that your tiny business need to employ:

1. Expenses for House

As a small business proprietor, you can compose off expenditures linked to office of your property, if you operate from residence. These expenses contain:

O lease

o House loan curiosity

o Utilities

o Charge Condominium

o Residence taxes

O Upkeep and repair

The following formula is utilized to create the charges of a home workplace deducted for tax cost:

Costs connected with the original listing more than x (Area Complete Residence / Room Residence Workplace very first)

You should seek advice from your account in Toronto before deducting charges for your residence office is limited some other folks apply.

two. Sprinkling dividend – accounts in Toronto and Scarborough

Bookkeeping Support and Accountant in Toronto and Scarborough, we advocate you invest a dividend to members of your family who are far more than age 18. First $ 38,000 (roughly) of dividends acquired by individuals that are entirely tax completely cost-free.

Kiddie tax of 46% is utilized to pay out out dividends from personal organizations to kids under 18 many years, properly defeating the purpose of splitting income with the minorities.

three. Cash flow sharing with your husband or wife

Take into account obtaining to pay out your spouse’s salary that the function he / she performs in Organization. The sum of payment shall be sensible in relation to the hours and type of perform task. For example, it is sensible to pay out your spouse $ one hundred per hour for eight hrs a day, when your husband or wife only work three hrs per day capacity Administration is.

By splitting cash flow with your spouse, the complete tax payments will be diminished down.

4. Permit car Tax Entirely free

If you very own a car you use for organization purposes, you ought to have Companies Verify your shell out by your self to allow duty price-free vehicles. The Revenue Canada (CRA) will permit the company to spend out an allowance deduction for taxes of 53 cents per kilometer for the 1st 5,000 kilometers and 47 cents per kilogram Then meters for kilometers driven for business functions with employees organization to compensate him / her for employing their autos.

Automobile allowance obtained by the employee tax is entirely cost-cost-free.

5. Meals and enjoyment – accounts in Toronto and Scarborough

Fees arising for entertaining your customers are your buyers consume out for lunch / C the minimal is 50% tax deductions. Make certain you inform your account in Toronto and Scarborough to monitor meals and enjoyment for individuals !

6. Costs of marketing business

Expenditures in advertising firm as gifts to consumers, parts, advertising and Promotional products (eg organization pens, calendars, and so on.) is a hundred% by tax deductions Your Small Organization.

7. Depreciation Tax

Tax depreciation (Allowance worth of capital) can be deducted in respect of capital assets of Organization by your little organization. Tax depreciation allowed for tax deduction is calculated as% of the cost of property The charge set by the CRA:

O Furnishings and Fixtures – twenty%

Establishing o – six%

o private pc – one hundred%

o Application – 1 hundred%

o Common workplace gear – twenty%

o Manufacturing tools – 25% in the 1st yr, 2nd twelve months 50%, third yr 25%

 

You ought to talk to your Bookkeeping Firms Toronto and tax planning Danforth Avenue on maximizing the tax depreciation Business your modest company.

 

eight. Deduction for tiny organizations

 

Companies and small firms in Canada have specific taxes on the 1st $ 500,000 revenue organization, which appropriately diminished income movement tax fee of government Central to only eleven%. deduction in Canada are little organizations.

 

9. Any bills incurred for business purposes

 

There are some exceptions, even so, this sort of as meals and entertainment are talked about in over. Income Tax Act of Canada stipulates that payments are acceptable for The aim of the revenue from the firm tax deductions.

 

As a end result, the sum of this sort of costs is affordable and perform of incurring costs Worth is connected to your enterprise, fees need to be tax deductions.

 

10. Retain the solutions of accounting?

 

Final, but not least, you should retain the companies of an accountant to deal with the books of company Tiny your tips and worthwhile tax. Charges you pay out your account Toronto (or other accounts) will be much more than offset by the Tax monetary savings recognized by your Accountant.

 

Bookkeeping Solutions & Accounting and Tax excellent help is the service account register the Toronto and Scarborough.

 

An Accountant in Toronto and Scarborough, www.perfectaccounting.ca gives a listing of outstanding tips to employees, organizations, investors, and their function.