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.

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!

Planning forces the entrepreneur to adopt the following things that are essential for success:

1. Setting Sales Goals and Benchmarks for the upcoming year.
2. Taking a realistic inventory on your company’s current resources.
3. Anticipating for future events.

In essence, you must budget for what is to come in the roads ahead. In the language of accounting, budgeting involves projecting what revenues and expense figures your business will face in the upcoming year.

Having the foresight to budget for future events will allow businesses to be flexible and will allow management to seize potential opportunities and tackle challenges. In today’s fast moving economy, the ability to be flexible and be adaptive is a must.

Download our Budget-Forecasting Form here.