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Blog Archive The latest from the company blog. Click on the topic below to jump to a specific post.
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-------------------------------------------------------------------------------- Wednesday, January 4, 2012 The Honourable Jim Flaherty, Minister of Finance, today announced that the following automobile expense deduction limits and the prescribed rates for the automobile operating expense benefit will be the following for 2012. The Government reviews these rates and limits annually. Specifically: · The ceiling on the capital cost of passenger vehicles for capital cost allowance (CCA) purposes will remain at $30,000 (plus applicable federal and provincial sales taxes) for purchases after 2011. This ceiling restricts the cost of a vehicle on which CCA may be claimed for business purposes. · The maximum allowable interest deduction for amounts borrowed to purchase an automobile will remain at $300 per month for loans related to vehicles acquired after 2011. · The limit on deductible leasing costs will remain at $800 per month (plus applicable federal and provincial sales taxes) for leases entered into after 2011. This limit is one of two restrictions on the deduction of automobile lease payments. A separate restriction prorates deductible lease costs where the value of the vehicle exceeds the capital cost ceiling. · The limit on the deduction of tax-exempt allowances paid by employers to employees using their personal vehicle for business purposes for 2012 will increase to 53 cents per kilometre for the first 5,000 kilometres driven and 47 cents for each additional kilometre. For Yukon, the Northwest Territories and Nunavut, the tax-exempt allowance will remain at 57 cents for the first 5,000 kilometres driven and 51 cents for each additional kilometre. · The general prescribed rate used to determine the taxable benefit relating to the personal portion of automobile operating expenses paid by employers for 2012 will increase to 26 cents per kilometre. For taxpayers employed principally in selling or leasing automobiles, the prescribed rate will increase to 23 cents per kilometre. The additional benefit of having an employer-provided vehicle available for personal use (i.e., the automobile standby charge) is calculated separately and is also included in the employee’s income. -------------------------------------------------------------------------------- Wednesday, January 4, 2012 Child Care Expense CRA rules: The lower income spouse is the only one able to claim the child care expenses (with a few exceptions). These expenses are allowed to a maximum of 2/3rds of earned income (business, salary, bonuses). Dividends are not earned income so would not allow for the claiming of child care. The maximum claim per child is $7,000 for children 6 and under on the last day of the year and $4,000 for children 7 and older. Allowable child care expenses include care-givers proving child care services, day nursery schools and day care centres, school lunch program fees (child care portion), day camps and day sports schools and boarding schools, overnight sports schools, or camps where lodging is involved, or the like. Conceptually, if child care was necessary to allow the lower income spouse to be able to work (hence the earned income theory), it should be claimable, up to the maximums. Tax planning.In order to be able to claim child care personally, consider giving yourself a salary or bonus in the calendar year. Remember that there may be payroll withholding and remitting required, depending on the amount paid. That way, your company will be able to write off the expense (the salary) and you will pay tax on only 1/3 of that amount (assuming you have not paid yourself more than 150% of the child care eligible). -------------------------------------------------------------------------------- Wednesday, June 15, 2011 There are really two decisions. 1. Personal versus corporate: Base this decision on how much you will be driving the vehicle for personal use. If more than 10%, there will be a taxable benefit for the personal use. Alternatively, you can pay the company back by the 15th of February each year for that use. Either of these require a calculation of that taxable benefit. Usually, the best answer is to own it personally if you drive it more than 10% personally. 2. Lease versus Buy: Consider what the dealers are offering. For example, 0% financing might make you pick “Buy”. The taxes aren’t that different. Lease cost gets written off as they are spent, purchase cost gets written off over time (Capital asset). Either way, they both get written off. Consider the lease terms. For example, let’s say they allow 20,000kms per year and you know your driving will be 25,000. They charge quite punitively on the excess. This may drive you to purchasing. Finally, there are limits for either way: Lease cost limited to $800/month. Purchase cost limited to $30,000 (correspondingly the GST is limited to $1500). Interest on financing is limited to $300/month. If you go over either of these, the company still pays but it just gets disallowed on the corporate tax return. This is another reason to buy/lease personally in that you can charge the company for its use of your vehicle on the per kilometer basis.
-------------------------------------------------------------------------------- Monday, April 2, 2009 This election could benefit your company by you not having to remit all of the GST you collect. This works best if your GST paid on purchases (input tax credits) are low. The Quick Method of accounting is a simple way to calculate the GST/HST you have to remit. It is generally available for small businesses with annual worldwide taxable sales or supplies (including GST/HST, zero-rated supplies, and associated business supplies) of no more than $200,000 in any four consecutive fiscal quarters over the last five fiscal quarters. The $200,000 limit does not include the following: supplies of financial services; sales of real property; sales of capital assets; and goodwill. If you use this method, you have to continue using it for at least a year. New remittance rate for use by small businesses that provide services is 3.6% for eligible supplies made in a non-participating province through a permanent establishment of the business in a non-participating province. Credit of 1% on the first $30,000 of eligible supplies In calculating your net tax using the Quick Method, you are entitled to a 1% credit on the first $30,000 of your eligible supplies (including GST/HST) on which you must collect 5% GST or 13% HST in each fiscal year. For further details on the GST Quick method go to: http://www.cra-arc.gc.ca/E/pub/gp/rc4058/rc4058-e.html#P257_23031
-------------------------------------------------------------------------------- Monday, December 15, 2008 This fall, the federal government announced a nice little perk for Canadians with investment income. Starting January 1, 2009, everyone 18 and over, can contribute up to $5,000 to a Tax Free Savings Account (TFSA). Nearly every type of investment can be deposited there. The beauty of these is that they are not taxed when income is earned. For example, if you deposit $5,000 to a GIC, the interest is not taxed when you pull it out.
-------------------------------------------------------------------------------- Wednesday, June 6, 2007 There’s a new government incentive that your company might be able to take advantage of (started May 2, 2006). Timing: you have 1 year from your fiscal year end to file. The link is below for you to read through. In a nutshell, you get an ITC (Investment Tax Credit) on the corporate tax return for up to $2,000 per apprentice (for their first 2 years of apprenticeship) if they are in a qualifying trade.
-------------------------------------------------------------------------------- Sunday, April 15, 2007 1)Qualified Small Business Exemption: If the owner of this business ultimately sells the shares of the business, they may qualify for up to a $750,00 lifetime capital gains exemption. There are 4 criteria that need to be met to qualify for this tax-free capital gain. See February blog notes for these 4 rules.
-------------------------------------------------------------------------------- Tuesday, March 13, 2007 Individuals can still claim a $500,000 exemption against capital gains from qualifying shares of a small business corporation.
-------------------------------------------------------------------------------- Tuesday, March 13, 2007 Eligible dividends are taxed at a reduced federal rate, by way of an enhanced gross-up (45%) and tax credit(27.5%) for these dividends received by individuals and trusts. This helps to balance out the inequitable tax treatment between a non-CCPC and a CCPC.
-------------------------------------------------------------------------------- Tuesday, March 13, 2007 Alberta corporate tax – Alberta Finance ABCIT (use Alberta Access number 20...) Eligible banks for CRA on-line payments;Bank of Montreal Online Tax Filing Services National Bank of Canada Corporate Electronic Services Royal Bank of Canada Payment Filing Service, On-line Tax Filing HSBC Bank CanadaPayment Filing Service CIBC Government Payment & Filing Service TD Canada TrustTax Payment & Filing Service Scotiabank Government Tax Payment & Filing Service ATB FinancialPayment Filing Service, Online Tax Filing Laurentian Bank of Canada Commercial Banking Centre First Calgary- contact your local branch
-------------------------------------------------------------------------------- Tuesday, March 13, 2007 This plan recognized by CRA under bulletin IT-339R2 was introduced as a cost efficient and tax effective means of providing health and dental benefits for small and medium sized busineses. This plan is an inexpensive way for incorporated employers and sole proprietors to provide tax free health and dental services for themselves and their dependents, their employees and their dependents. These services are 100% tax deductible to the corporation or the sole proprietor, but not taxable as benefits to the individuals.
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