Advice from Vancouver Accountants: Things you need to know about the Canadian Tax System

1. 1. The Canadian Government hosts the “Community Volunteer Income Tax Program.” This program was created as partnership between the Canadian Revenue Agency and various local community groups and is dedicated to helping those who are unable or prepare their own income tax and benefits returns themselves. This can be an invaluable resource for new Canadians as it helps them to get the help they need, regardless of their income level.
2. 2. Moving expenses can be written off in some cases. If you’re new to Canada and you’ve moved to take a job or for self-employment, some of your moving expenses may be written off, giving you a tax break. Speak to a Vancouver accountant to determine if you’re eligible.
3. 3. New Canadians can be eligible for GST credit, Canada Child Tax Benefit, Universal Child Care Benefits or credits for rent or property taxes. If you don’t file your tax return, you may not receive these benefits as the government won’t be able to determine your income and therefore your eligibility to receive them.
4. 4. If you’ve never owned a home in Canada before, you may be eligible for a first-time home-buyers tax credit. First time home-buyers in Canada can be eligible for up to $5000.00 in tax credits. Our Vancouver accounting and bookkeeping services firm can help you determine if you’re able to receive this tax break.
5. 5. If you can, set up an Immigrant Trust prior to arrival if you have major assets in your home country. Immigrant Trusts allow new Canadians to get a deferral of tax of five years on some of the income they’re generating outside of Canada, but they’re only a good option for immigrants with major assets in their home country as they can be quite costly to set up.

How can Vancouver Accountants Help New Canadians with their Income Taxes?

The tips above are just some of the tax benefits and credits available to new Canadians, and there are more that are unique to each and every individual situation. As a result, the best thing that an immigrant can do is to go to a Vancouver Accounting and Bookkeeping services firm, like Acton Accounting and Bookkeeping to ensure that they are taking advantage of all the benefits available to them. If you’re new to Canada and would like to hear more about how our Vancouver accountants and Vancouver bookkeepers can help you, give us a call today.

Tips to Avoid Negative Effects of Divorce or Separation on Your Taxes

1. Be conscious of the after-tax cost of assets that are being divided. When a divorce or separation occurs, often the most important thing to the couple is the division of their assets. It’s important to remember however, that some assets are taxable while others are tax-free. If this isn’t taken into consideration, one part of the couple could end up missing out on a significant portion of their divided assets. Think in terms of RRSPs and non-registered investments (subject to capital gains tax if sold) versus sale proceeds from homes and properties (subject to principal home exemption if sold). Remember, it is a good idea when facing a divorce to use the rule in the income tax act that allows for you to transfer your RRSPs to a spouse upon divorce (if you need to make an equalization payment) rather than cashing them in, which would make them part of your income and subject to taxes.
2. Update your relationship’s status with the Canadian Revenue Agency. If you’re single, in most cases you’re entitled to a larger Canada Child Tax Benefit, than if you’re in a relationship since the amount you receive is based on your combined income (family income).
3. Claim multiple principal residence exemptions. If you and your spouse happen to own multiple properties (a house and a vacation home for example) it can be a good idea to each take one property so that you can claim separate principal residence exemptions, one for each property which allows you to receive property sale’s proceeds tax-fre
4. Some of your divorce-related legal fees are tax-deductible. Unfortunately, lawyer fees associated with the preparation of your separation agreement are not tax-deductible. However, if you require a lawyer’s services to collect your support payments from your ex-spouse, these are tax-deductible on your personal income tax return.

Getting Divorced or Separated? Hire a Vancouver Accounting and Bookkeeping Services Firm

Getting divorced or separated is a hard enough time without worrying whether or not you’re doing the right thing in terms of your taxes. Dealing with the tax implications of your divorce doesn’t have to be painful.  If you’re facing a divorce or separation why not consider hiring a Vancouver accounting and bookkeeping services firm like Acton Accounting and Bookkeeping? Our experienced Vancouver  accountants can walk you through the tax implications of your divorce or separation and can help you make the right personal financial choices.

What to look for in a Vancouver Accounting and Bookkeeping Services Firm

Once you’ve decided that it’s time to hire a Vancouver accounting and bookkeeping services firm, it’s important to make sure that you hire the right one. To do this, it’s a good idea to evaluate the services offered as well as the experience and qualifications of the firm you’re planning on hiring.

Vancouver Accounting and Bookkeeping Services:

• Tax filing services for Vancouver Residents
• Canadian incorporation consulting and annual report filings
• Vancouver bookkeeping services
• Vancouver accounting services
• Filing services such as corporate tax, personal income tax, GST/PST Remittances, WCB, T4, T5, T5018, and NR4

Vancouver Accountant and Vancouver Bookkeeping Skills & Expertise to Look For:

• Industry Expertise – Some firms specialize in different areas or industries. It’s important to find Vancouver accountants and bookkeepers who are experience with a variety of industries and companies.
• Size – While some businesses may desire or require the skills of a large name-brand firm like one of the big four, for many smaller and local businesses, a medium or smaller sized firm is a better fit. We find that many smaller businesses prefer the face time they’re offered with our Vancouver accountants and Vancouver bookkeepers, rather than feeling overlooked by larger accounts when dealing with big firms.
• Years of Experience – It’s a good idea to look for a firm with  a good level of experience that you can rely on and may be able to offer you a wider-range of advice than newer firms.
• Cost and budget – One of the biggest downsides of choosing a large or big four accounting firm is the cost. When dealing with smaller, local firms like Acton Accounting and Bookkeeping, you’re much more likely to get good services at a reasonable price for your budget.

Vancouver Accounting and Bookkeeping Services from Acton Accounting & Bookkeeping

At Acton Accounting & Bookkeeping we have a dedicated team of Vancouver accounting and Vancouver bookkeeping professionals who are dedicated to taking the time to understand your business and to help you develop sound financial strategies for your business. Are you looking for a Vancouver Accounting and Bookkeeping Services Firm? Why not give us a call and find out how we can help you. 

The 2012 CPP changes will affect individuals between the ages of 60 and 70 who work while receiving CPP retirement pensions. The overall summary of the CPP changes for January 2012 is described by Service Canada as:

1. Your monthly CPP retirement pension amount will increase by a larger percentage if you take it after age 65.

2. Your monthly CPP retirement pension amount will decrease by a larger percentage if you take it before age 65.

3. Employees under 65 receiving CPP retirement pensions will now have to make CPP contributions. These contributions will increase CPP retirement benefits.

4. Employees age 65 to 70 receiving CPP retirement pensions can now choose to make CPP contributions. These contributions will increase their CPP retirement benefits.

5. The number of years of low or zero earnings that are automatically dropped from the calculation of your CPP pension will increase

6. You will be able to begin receiving your CPP retirement pension without any work interruption

How will the CPP Changes in 2012 directly affect you?

Individuals who are Employed and/or Self-Employed

Now that you know what CPP changes in 2012 are, it’s crucial that you understand exactly how they are going to affect your personal income taxes. The changes will affect individuals who are between the ages of 60 and 65 and are working and receiving the CPP retirement pension by requiring them to contribute to the CPP. If you are an employee or are self employed, Canada Pension Plan contributions are mandatory until the age of 65.

If you are an individual between the ages of 65 and 70, and are either employed or self-employed, CPP contributions will continue to be deducted from your pensionable earnings until or unless you choose to stop contributing.

Employers

Employers also need to be aware of the CPP changes in 2012 and how they will change their corporate accounting and bookkeeping.  Employers must withhold and remit CPP deductions on pensionable earnings for all employees aged 60 to 65 and they must also withhold CPP deductions on pensionable earnings for all employees aged over 65 to 70 unless they have elected to stop contributing to the CPP.

As an employer, it is your responsibility to know your employees’ ages and birthdays, as well as ensuring that you see proof that your employee is receiving a CPP retirement pension. Under the new regulations you must also check if the employee has previously filed to stop contributing to the CPP with a previous employer.  If your current employee has filed in the past to stop contributing, you must request a copy of the filing for your records.

At our Vancouver accounting and bookkeeping services firm we are constantly on top of new updates to tax requirements in Canada. If you’re not sure if things have changed or what the changes will mean to you, contact our accounting and bookkeeping services office today to ensure that you’re informed. We can help you with all of your personal income tax, corporate tax, as well as your Vancouver accounting and bookkeeping needs.

In Canada, filing requirements are based on residency rather than citizenship. That means that if you live in Canada, you pay taxes, but if you’re a Canadian citizen living abroad, you’re not required to.  This isn’t the case in the U.S and that has caused some confusion and difficulty for U.S. citizens who live in Canada. If you’re a U.S. citizen living in Canada then you are required to file two sets of tax returns each year: a Canadian return because you’re living in Canada and a U.S. return because you’re still a U.S. citizen. Fortunately, this doesn’t necessarily mean that you will have to pay U.S taxes in Canada as there are several mechanisms that you can use to make sure that you’re not doubly taxed. Making sure that you know what they are can help save you some money and difficulties.

Earned Income Exclusion

You may be able to exclude up to $85,700 from income for U.S. tax purposes by completing Form 2555 and attaching it to your return. Form 2555 is a special form excluding foreign earned income from taxation in the United States.

Treaty Benefits

If you receive Social Security benefits from the U.S., these benefits are not taxable in the U.S. They are taxable only in Canada. You may claim a 15% deduction on Line 256 of your Canadian tax return.

Foreign Tax Deduction or Credit

By claiming a foreign tax credit on your U.S. return for taxes you are required to pay to Canada, you can also help to avoid paying double taxes. To claim the credit, you must complete Form 1116 and attach it to your U.S. tax return. You’re also able to claim the Canadian taxes you paid as an itemized deduction.

As a Vancouver Accounting and Bookkeeping firm, we are experts on issues surrounding taxes for U.S. Citizens living in Canada. While this information will help to keep you informed about your own tax filing requirements, it doesn’t mean that we recommend filing yourself. If you’re a U.S. citizen living in Canada we find that filing two sets of returns can be a frustrating (and sometimes difficult) process. Why not contact us and learn how we can help you file your U.S taxes in Canada and save yourself a headache?

This comprehensive spreadsheet has worksheets for all of your tracking needs including:

Cash Disbursements
Cash disbursements paid from your company’s bank account and credit card are easy to track with the Chequing-Cash Purchases worksheet and the Credit Card Purchases Worksheet.

Sales Tracking
Monitoring and measure company sales information is simplified with the Sales Tracking Worksheet included in the Generic Business Tracking Spreadsheet.

Payroll
Most companies need to keep track of their company’s employee pay expenses. By downloading our Payroll worksheet this becomes a much easier task for bookkeepers, HR administrators and your accounting department.

Income Summary
Want to take a quick look at your business income statement? Check out the Income Summary Worksheet included in the Generic Business Tracking Spreadsheet for a snapshot of how your business is doing in terms of income.

We’re always looking for ways to help you improve your accounting and bookkeeping processes. These worksheets are just one of the many ways that we can help you improve your financial monitoring and tracking. If you’d like to hear more about our Vancouver accounting services and how we can help you, please contact our accounting services office today.

Operating as a sole proprietorship or partnership has many advantages compared to a corporation. They’re simple and much cheaper to set up, require less paperwork, and have fewer regulations.

However, if you chose to incorporate, investors are generally more comfortable working with corporations since sole proprietors are subject to unlimited liability. This means that if the business is sued, all the business and personal assets of the owner are at risk.

The tax implications are a crucial factor when deciding whether to incorporate. Here are 5 important tax issues to consider:

1. Business losses can be written off against other income of the sole proprietors and partners.
2. A small profitable corporation pays a lower tax rate than an unincorporated business and the owners only pay taxes for income they received.
3. Owners of a corporation receive a capital gains exemption on the sale of the business.
4. Corporations can write off private health service plans that they provide for employees.
5. More paperwork. Corporate tax returns are filed separately from the owners’ personal tax returns.

Before making your decision, be sure to seek professional advice and contact our team at Acton Accounting & Bookkeeping.

The provincial government has created an action plan to reinstate the old tax system of 7% PST and 5% GST. The plan intends to make the change back a smooth and effective process for everyone. It’s expected to take at least 18 months to switch back, with progress updates provided quarterly by the Province.

Those who are eligible for the BC HST credit will continue to receive it until the provincial governments action plan has been completed. If you operate in the film industry, unfortunately the savings brought by HST are now gone.

Businesses will be required to assess, collect, report and remit PST and other related taxes to the provincial government. They are also responsible for changing over their electronic and manual systems and processes. In order to help smoothen the change, the provincial government will be providing information and training on the tax application, collection, compliance and reporting rules related to the PST.

Many believe that it was not the HST itself that caused such an uproar, but the way it was introduced. So keep a close eye on this issue; it’s possible that a new hybrid version of the HST will be developed to provide the best sales tax solution for BC.

To find out more about how this change will affect you and your business, contact our team at Acton Accounting & Bookkeeping

And what about the rich here in Canada? Currently our highest tax bracket is at an income of $128,800 and over. Here are our Federal tax rates for 2011:

• 15% on the first $41,544 of taxable income;
• 22% on the next $41,544 of taxable income (on the portion of taxable income between $41,544 and $83,088);
• 26% on the next $45,712 of taxable income (on the portion of taxable income between $83,088 and $128,800);
• 29% of taxable income over $128,800.

Do you think our current tax brackets are fair? Would you argue that the rich should pay more taxes? A poll by CBC News currently shows that 91% of Canadians believe they should. We welcome you to contact us and pick our brains!

Also, make sure to take the time to learn about tax credits you may be eligible to claim in your personal tax return. These include charitable donations, payments made to union or professions boards, and payments made towards transit or tuition. See our complete list or contact our professional accountants and bookkeepers to learn more.

With summer a mix of more rain than shine here in Vancouver, BC, there are no doubt many business owners looking to get out of the city for awhile. It’s common knowledge that travel expenses incurred while on a business trip can be expensed back to your company, but what about when your on vacation with your spouse or family?

A travel expense is what you incur to earn business or professional income while you are away. Now this doesn’t mean that you necessarily have to make your entire trip about business. It simply means that if you dedicate an hour or two each day of your vacation to business related activities, then you are essentially on a business trip.

This can be as simple as setting up a meeting each morning with a vendor or contact in the area that you may potentially work with in the future. After this one meeting, you are then free the rest of the day to enjoy true vacation activities like relaxing at the beach or sightseeing.

So, what does the CRA consider deductible travel expenses?

• public transportation fares;
• hotel accommodations; and
• meals

In most cases, meals and beverages can be claimed for up to 50% of the expense cost.

It’s very important that if you plan to claim your travel expenses that you keep every single receipt from your trip. We recommend bringing a small accordion file or even just a resealable bag to store your receipts in. Be sure to also keep a detailed account of who you met with each day and what your meeting was about.

If you have any questions about claiming travel expenses, we invite you to give us a call!

Acton Accounting and Bookkeeping’s tax accountants are highly experienced at helping small businesses save more while accurately filling out their corporate taxes. We can give you the information you need to make your next vacation even more affordable!