Helping you see the opportunities in your numbers. Jonathan Audette, CPA, CA Jonathan Audette Professional Corporation
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Changes to Voluntary Disclosures
If you are behind on your taxes you may want to pay attention! On June 9, 2017 the Canadian Revenue Agency (CRA) released proposed changes to the Voluntary Disclosures Program (VDP) effective January 1, 2018. The current program is quite lenient and the CRA has concerns that it may actually reward non-compliance. Under the current rules, if the CRA accepts the disclosure the taxpayer will NOT be charged penalties or prosecuted with respect to the disclosure. Additionally, the CRA may provide some interest relief. Under the proposed rules two tracks for non-disclosure will be created. The General Program will be very similar to the current program. However, under the Limited Program penalties will be assessed and no interest relief will be provided. This track will apply for disclosures which are considered to be major situations of non-compliance, such as active efforts to avoid detection, large amounts, multiple years of non-compliance and sophisticated taxpayers. Gross negligence penalties and criminal prosecution will still be waived under both streams. The most common use of this program in my practice, is for taxpayers with multiple years of non-compliance. If these proposed changes are finalized, which I expect they will be, starting January 1, 2018 the cost of making a disclosures will increase significantly. If you are behind on your taxes, or have a disclosure to make, I encourage you to contact your tax advisor ASAP to see if you may qualify for the program and if a disclosure can be made prior to January 1, 2018. Helping you see the opportunities in your numbers. Jonathan Audette, CPA, CA Jonathan Audette Professional Corporation Budget 2016 proposes a new Teacher and Early Childhood Educator School Supply Tax Credit.
This is a new 15% refundable tax credit on up to $1,000 in supplies that you purchased out of your own pocket. Essentially if you spend $1,000 you will get $150 back when you file your taxes. Qualifying expenses are supplies as such as paper, glue and paint for art projects, games and puzzles, and supplementary books. Any supplies purchased after January 1, 2016 are eligible. We will have to wait and see the actual mechanics of this tax credit. Your employer may have to certify that you paid for the supplies yourself. So for now keep those receipts! Helping you see the opportunities in your numbers. Jonathan Audette, CPA, CA Jonathan Audette Professional Corporation Christmas is a time for giving and even the Income Tax Act gives a little around the holidays. It is well known by business owners that they are only able to claim 50% of food, beverage and entertainment expenses. It is a lesser known fact that there is an exemption to this rule for certain employer-sponsored events available to all employees. If the following criteria are met you will generally qualify for the 100% deduction:
It is not necessary for the party or event to be held at your place of business; it may be held at a restaurant, rental hall or other location. The exemption also applies to the costs of food, beverages and entertainment for the employees' spouses and children, provided these are offered to spouses and children of all employees. Persons who work at the particular place of business, but not as employees, and who attend the same generally-available party or event, are also considered to be exempt. This could include owners, partners or shareholder-managers of the business. Jonathan Audette Professional Corporation offers a free, no obligation one hour meeting for potential clients to ask any accounting and tax related questions, including understanding more about the taxation of food, beverage and entertainment expense. Helping you see the opportunities in your numbers. Jonathan Audette, CPA, CA Jonathan Audette Professional Corporation Crowdfunding has certainly reached all aspects of our culture with the Simpsons airing season 27 episode 6 centering around Homer’s crowdfunding campaign. While the Simpsons may take this to an extreme, it has certainly become a successful way for some businesses and individuals to raise funding. A question I often get asked is are these funds taxable?
Like everything, it depends on specific facts and circumstances. Such funding likely falls into one or more of these categories:
Income from business When crowdfunding activity is undertaken for the purpose obtaining funding in a business context, for example to fund operations or a new product or service, the CRA takes the position that the funding is business income and is therefore taxable. Whenever an entity earns income, one must also consider the GST/HST implications. If the recipient is not a small supplier the CRA would consider GST/HST to have been collected on the proceeds and therefore must be reported and remitted. On the flip side, the entity would be able to claim expenses and Investment Tax Credits for expenses incurred in the course of carrying on such business. Donation – gift or windfall The terms ‘gift’ or ‘windfall’ are often used synonymously to describe a donation. They both typically involve a voluntary transfer of property from a free donor to a donee with no benefit or advantage conferred on the donor. A windfall is generally considered to be unsolicited, as such, a crowd funding donation would likely be considered to be more of a gift. Regardless gifts and windfalls received are not considered taxable. Is Homer Taxable? Homer’s crowdfunding campaign would be considered to be gifts and as such would be tax free. The reason is that he is merely soliciting gifts to purchase a product for himself. There is no benefit or advantage to the donor and he is not using the funds business operations or to develop a new product or service. Jonathan Audette Professional Corporation offers a free, no obligation one hour meeting for potential clients to ask any accounting related questions, including understanding more about the taxation of crowd funding. Helping you see the opportunities in your numbers. Jonathan Audette, CPA, CA Jonathan Audette Professional Corporation Decisions Matter
Hiring a CPA, CA can save you time and money. By turning to an expert you don't have to worry about wasting time understanding all of the complex accounting and taxation rules. A CPA, CA can quickly summarize and explain issues and opportunities and how they can affect your business and bottom line. Knowledge Matters CPA, CA’s are highly educated and have a wide depth and breadth of expertise. In order to attain their designations CPA, CA’s are required to complete rigorous coursework at an accredited university and also pass a series of exams. They are tested in areas of auditing, taxation, business and general accounting. After completing this course work, CPA, CA’s are required to complete a minimum of 30 months of work including 1250 assurance hours at a registered training office. CPA, CA’s are then required to maintain their knowledge by completing 120 hours of professional development every three years. Tax Matters Tax is often the largest single expense of any household. Tax legislation is constantly evolving and it directly impacts your business. A CPA, CA with this type of expertise is up-to-date on tax changes relevant to your specific needs. They can put together a tailored plan to minimize your tax liability and help you meet your financial goals. As your business grows your tax situation changes. Additionally, virtually every business transaction has HST implications. Early advice can prevent unexpected surprises by ensuring compliance, avoiding overpayments and minimizing your tax liability. If you are not working with an advisor, Jonathan Audette Professional Corporation offers a free, no obligation, one hour meeting for potential clients, where you can ask your accounting and tax related questions. Helping you see the opportunities in your numbers. Jonathan Audette, CPA, CA |
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January 2019
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