U.S. Supreme Court decision found that a business with no physical presence in a state may still be required to collect and remit state sales taxes.
A private corporation’s income from a specified investment business (SIB) is not eligible for the active business tax rates (varying from 10% to 31%, depending on a number of factors
Be cautious when acting as a director or taking responsibility for loans when not directly involved in a corporation’s activities. Failing to take certain actions may result in personal liability for certain corporate tax debts.
A person who earns income while receiving EI benefits can keep $0.50 of their EI benefits for every dollar earned, up to 90% of their previous weekly earnings.
The facts of each situation must be considered to determine whether an exception from TOSI is available, and whether remuneration in the form of dividend, salary or both is most appropriate.
Anticipating future demand is a tough job, wrought with ways you might go wrong. Proper demand forecasting and inventory control can save a company from buying too much or too little of something, which of course avoids expensive overstock scenarios or stockouts.
Offers for grants worth over $3.5 million will support 7 businesses to help launch their innovative products, processes and services into domestic and international markets.
The funding has been provided from the Accelerating Commercialisation element of the Entrepreneurs’ Programme.
We no longer need studies to tell us: Smartphones are almost everywhere. Most of the customers coming through your doors have a mobile device with them. And these devices aren’t always shoved in pockets or bags — shoppers are using them while they’re in store too.
There’s literally hundreds of blog posts giving you the 7-10 steps to reduce debtors and improve cashflow. Yet the debtors problem still exists to some extent in the majority of small and medium size enterprises (SMEs) globally.
Over 100 accounting/bookkeeping, marketplace and banking partners across Asia joined us in Brisbane this year to attend Xerocon, the most innovative conference for cloud leaders in Asia, Australia and New Zealand.
Too often businesses leave collecting debts at the bottom of the pile. Why? Often there is anxiety and worry around the process, or lack of trust in collection agencies. Sometimes lack of time and understanding of the process.
Clichés. Can’t live with them, can’t live without them. (See what just happened there—it’s that bad).
The most widespread, just-waiting-to-pop-out-at-you, cliché is a very short one, measuring just three words—time is money.
The homepage is the most important page of your business’s website. It is the virtual shop front to your business, providing your customers a first impression of what you have to offer. You only have seconds to grab your customer’s attention so it is key to make sure that they can find what they’re looking for quickly and easily.
During the Christmas holiday season, businesses of many types employ seasonal or casual workers to meet extra demands. Often these workers are hard-working young people who have travelled from overseas, bringing with them their own language and culture. This international melting-pot makes for a fun and productive work environment, although it can also present challenges.
Consider reviewing terms of worker engagement with a professional. Agreement on Contractor Status Is Not Enough.
Whenever a settlement is being negotiated, ensure there is mutual understanding on the tax treatment to prevent potential nullification.
There are special laws which hold a director personally liable for certain amounts that their corporation fails to deduct, withhold, remit, or pay. Most commonly, these amounts include federal sales tax (GST/HST) and payroll withholdings (income tax, EI and CPP). It does not generally include normal corporate income tax liabilities.
CRA noted that “if insurance agents, realtors, mutual fund salespersons, or other professionals are legally… precluded from assigning their commissions to a corporation, then the commission income must be reported by the individuals, and cannot be reported through a corporation, regardless of the documentation provided”.
Tax time is fast approaching—it’s important to do your homework and know exactly what tax deductions you can claim.
Individuals that receive certain types of income derived from a “related business” will be subject to Tax on Split Income (TOSI) unless an exclusion applies. TOSI is subject to the highest personal tax rate with no benefit of personal credits.
Do I have to check up on a supplier when paying them GST/HST? Yes.
Implement a system for checking GST/HST numbers, especially for major purchases, in CRA’s GST/HST registry...
If the loan was made to earn income and other conditions are met, you may be able to write-off half against your regular income as an allowable business investment loss (ABIL). A recent tax court case shed some light on defining whether the loan was made to earn income...
The legislation to legalize marijuana for non-medical purposes works its way through parliament (Bill C-45 entered the Senate phase on November 27, 2017). Producers, vendors, regulators, enforcement, and potential customers are seriously considering the implications.
Of the approximately 28 million personal tax returns filed for the 2016 year, 58% got refunds. 68% received them by direct deposit. The average refund was $1,735.
On taxable benefits arising from employer-sponsored, if the cost exceeds $150/person, the entire amount, including the additional cost, is a taxable benefit to the employee.
CRA stated that they do not consider meals subsidized by the employer to be a taxable benefit provided the employee pays a reasonable charge.
If you are a director and legal representative of a corporation, ensure that you are properly protected if distributing assets.
If stating interest rates in legal contracts, ensure to also state them in per annum terms
If employees are using a business aircraft for personal use, attention should be paid to whether employment benefits are being properly calculated and reported.
CRA may request taxpayer information from third-parties...
Effective March 31, 2019, charities and qualified donees must include the new website address of CRA, www.canada.ca/charities-giving on all donation receipts.
One may need to track any return of capital which is not reinvested to determine interest deductibility.
Failure to make the claim on a return filed within four years of the end of the appropriate period is fatal to the claim.
CRA provides a number of mobile phone apps that taxpayers (individuals, corporations, etc.) can use to assist with their tax obligations...
T5018 should be filed for any subcontractor payment or credit made relating to goods or services received in the course of construction activities...
A travel allowance paid to an employee for the use of their personal vehicle for business purposes will be non-taxable if it is reasonable...
U.S. State Department was able to deny or revoke passports to U.S. citizens having a “seriously delinquent tax debt”...
Two significant changes are proposed. First, a limit to the small business deduction for CCPCs generating significant income from passive assets, and second, a new regime to stream the recovery of refundable tax to the payment of specific types of dividends
Gains or losses from selling or buying DCs must be reported on one’s tax return... DC received in exchange for goods or services must be included in the seller’s income for tax purposes. GST/HST would also apply on the fair market value (FMV) of goods or services
CRA states that T4s are required for all employees, including family members, and subject to payroll deductions, as appropriate.
CRA require PayPal to disclose sales records of Business Account Holders...
Determining the status of an appeal can be difficult.
A specialized indirect verification of income (IVI), a “yield analysis”, was completed to determine the unreported income. The primary variables included the number of plants in the crop, the expected yieldof dried marihuana from each plant, the frequency of harvest, and the price at which marihuana is sold. In this case, the taxpayer did not dispute the variables of the analysis, but rather argued that nothing was produced in the first few years, and that there was no profit in the third due to the seizure of crops and the claim that what was produced was for personal use.
A July 25, 2017 New York Times article (Canada Debates Whether Gift of Leibowitz Photos Is Also a Tax Dodge, by Sopan Deb and Colin Moynihan) discussed the acquisition of 2,070 photographs by American portrait photographer Annie Liebovitz and their donation to the Art Gallery of Nova Scotia.
One of the conditions required to claim an ABIL is that the loan was advanced to earn income(Subparagraph 40(2)(g)(i)). The loan agreement stipulated that interest at 6% was to be charged, but payments would not commence until 2009, which, as it would turn out, was after the business eventually ceased. The Minister argued that no interest was charged, and therefore, there was no intent to earn income. This was partially based on accounting records of the daughter’s company which were inconsistent in their reflection of accruing the interest.
In a May 18, 2017 Technical Interpretation (2017-0690311C6, Danis, Sylvie), CRA considered the addition to the capital dividend account(CDA) where two corporations were the beneficiaries of a corporately-owned life insurance policy.
2017 Advance Income Tax Ruling (2016-0675881R3), CRA ruled that the related party exemption (Paragraph 55(3)(a)) would apply to a proposed internal reorganization, such that Subsection 55(2) would not reclassify a deemed dividend into a capital gain.
In an August 22, 2017 Release (2017JTT0137-001468) it was noted that $1,500 grants were being offered to help resume operations for those affected by BC wildfires. Eligible organizations include small businesses, First Nations, and non-profits located in certain areas. For further details on qualification, or to apply for a grant, visit redcross.ca. Applicants have until October 31, 2017 to apply.
In an April 28, 2017 Technical Interpretation (2017-0699741I7, Waugh, Phyllis), CRA was asked whether a reimbursement for tax advisory services obtained as a result of an employer payroll error would be a taxable benefit. The errors in question arose from the Phoenix pay system used for public service employees (see VTN 422(10)).
In a June 6, 2017 French Technical Interpretation (2015-0617331E5, Roy, Louise), CRA considered whether the transfer of a deceased’s TFSA to their spouse could constitute an exempt contribution. To the extent the payment is made in accordance to the will, CRA opined that the payment is made as a result of the individual’s death.
In a January 29, 2016 Tax Court of Canada case (SNF S.E.C. vs. H.M.Q., 2013-1207(GST)G), CRA had denied over $500,000 of ITCs, and assessed penalties and interest, in respect of GST and QST paid to welve suppliers. Unknown to the taxpayer, the suppliers did not remit the tax.
The taxpayer, a scrap metal dealer, obtained evidence of prospective suppliers’ GST and QST registration prior to accepting them as suppliers.
A variety of issues related to the T1135 form
In a June 22, 2017 Tax Court of Canada case(Grant vs H.M.Q., 2014-1399(IT)G), at issue was whether the director of a corporation could be held liable for $66,865 in unremitted source eductions, related penalties, and interest six years after the corporation went bankrupt. The taxpayer presented various defenses.
When a commercial obligation is settled or extinguished for an amount less than the principal amount of the debt, Section 80 applies the debt forgiveness rules. CRA notes that the forgiven amount is applied to reduce “tax balances” or is included in the debtor’s income under Subsection 80(2) or (13).
In a February 20, 2017 Tax Court of Canada case (Mullings vs. H.M.Q., 2016-2938(IT)I), at issue was whether preventative care associated with phenylketonuria (PKU) would be eligible for the DTC. Without the ongoing care and strict monitoring of the individual’s diet, permanent and severe rain damage would occur.
In a June 21, 2017 Tax Court of Canada case (Lawson vs. H.M.Q., 2015-3474(IT)I), at issue was whether the wholly dependent credit could be claimed where only one party was providing a cheque which represented the net of each party’s child support liability.Where both parties are required to pay, either may claim the credit (Subsection 118(5.1)). At issue was whether the agreement, in fact, created two obligations to pay or just one.
Since release of the Department of Finance’s Tax Consultation on Private Corporations on July 18, 2017, there has been much discussion and debate over the proposals. Below are a number of issues that have been raised, in addition to those noted in the basic discussion of the proposals (see VTN 433(5)).
In an August 16, 2017 Tax Court of Canada case (Radelet vs. H.M.Q., 2015-2089(IT)G), at issue was whether a waiver (Form T2029) signed by the taxpayer was enforceable such that CRA could assess the taxpayer beyond the normal reassessment period. The taxpayer asserted that the waiver was executed under duress and/or coercion and that the taxpayer failed to understand that the normal reassessment period was extended by the waiver.
Finance releases and CRA releases
The CRA Charity Directorate provides a number of fairly comprehensive and easy to read checklists relating to various responsibilities associated with operating a registered charity.
Where an individual is married or in a common-law relationship, GIS entitlements are based on the combined income of a couple.
In a recent release (Excise and GST/HST News No. 102), CRA reminded taxpayers that they may place a non-compliance hold on a taxpayer’s account if they are a non-compliant GST/HST registrant.
If operating as a mid-market business in the U.S., be prepared for the possibility of more scrutiny from the IRS.
Two Technical Interpretations (May 26 and March 3, 2017) considered whether support provided to a refugee would be required to be reported on a Form T5007, Statement of Benefits.
CRA assisted in collecting a six figure U.S. tax penalty for unfiled disclosures from a U.S. citizen resident in Canada.
An April 28, 2017 Tax Court of Canada case considered whether a practicing lawyer had a source of business income in respect of her law practice for the 2011-2014 years.
where a family member of a deceased individual would like to be recognized by CRA as the person or persons who will manage the tax affairs of the person who died without a last will and testament, they can now do so by completing a CRA Form (Affidavit for intestate situation, Forms RC549 to RC561, with no form for Quebec, and no RC554).
In recent years, CRA has particularly focused on tracking underground economy activities. One way they are doing this is by obtaining information from key 3rd parties.
A death benefit is a payment received subsequent to the death of an employee, in recognition of the deceased employees services.
CRA has provided commentary on its website to discuss recent changes to allow the electronic distribution of T4 slips. In the past, an employer could provide a T4 electronically only with the employees consent. For 2017 and subsequent tax years, employers may also satisfy their obligations by providing electronic versions without specific consent, provided other criteria are met.
Historically, CRA has stated that an employee enjoying a discount on the purchase of merchandise from their employer is only taxable if a limited number of specified situations exist, such as where the employer makes a special arrangement
In the past, taxpayers in certain designated professions (i.e., accountants, dentists, lawyers, medical doctors, veterinarians and chiropractors) may have elected to exclude the value of work in progress (WIP) in computing their income for tax purposes. This essentially enabled these professionals to defer tax by permitting the costs associated with WIP to be expensed without including the matching revenues.
When using this tool, individuals should have their CPP Statement of Contributions, financial information about their employers pension, most recent RRSP statement, and any other information related to savings that will provide for ongoing monthly retirement income.
In a March 31, 2017 Technical Interpretation, CRA commented on the tax consequences of a charity returning a donated property to the donor. This could occur, for example, when a donation was made specifically for a project that had been halted.
On July 18, 2017, Minister of Finance, Bill Morneau announced the release of a Consultation Paper which focused on three tax practices that the Government considers to provide an unfair tax advantage to private corporations and their owners. These include:
Some quick points to consider
The Voluntary Disclosure Program (VDP) provides taxpayers (individuals, corporations, partnerships, trusts, etc.) the opportunity to fix incorrect or incomplete previously filed tax returns (or returns that should have been filed) with a reduction to penalties and possibly interest. CRA recently released fairly substantial proposed changes to the current program, effective January 1, 2018. The proposals are expected to be finalized in the fall of 2017.
The proposals will create two tracks for income tax disclosures.
In a March 9, 2017 Technical Interpretation, CRA commented on the tax filing and withholding requirements related to a non-resident individual providing services to a Canadian company.
There are now over 500 time saving Xero apps that are designed to help your business work more efficiently. But which are the best Xero apps for your business?
From advanced reporting and time tracking tools, through to tools that make managing inventory and orders in real-time easy, there are a vast number to choose from.
Effective job scheduling is one of the most important but least understood disciplines of business management. Assigning the correct employee to the right job at the right time is crucial for business success, especially for companies with a mobile workforce. So why don’t some managers give it more of their attention?
Getting out of the cashflow trap for good: The first step is to admit your clients have a problem (with debtors)
This is the first article in a series of posts about Debtor Radar, a new debtor analysis and cash flow advisory tool for accountants from Debtor Daddy. If you’re an accountant you’ll be able to learn more here.
Our goal with Debtor Radar is simple: Help more small businesses solve the cash flow troubles caused by debtors.
For a number of years, advancements in technology have been the driving force behind most of the recent innovations in business and business management. Our systems are continually being optimized, our processes streamlined and our use of automation made more precise and more intuitive.
‘There are just not enough hours in the day!’ you cry with a desperation rivalling Tom Hanks’ Wilson-I’m-Sorry and fall to your knees in despair.
Okay, maybe that’s a little dramatic. But if you’re a business owner, I’m sure that sentiment or something like it has at least crossed your mind before. Maybe more than once.
And when you’re working crazy hours six or seven days a week just to get everything done, sometimes a deserted island with only a volleyball for company doesn’t actually sound so bad...
As an SMB, you’ll never have a shortage of sources for tips and insights. From retail websites (such as this one) to mentors and fellow retailers, there’s always somewhere to turn to for business advice and best practices.
Grow your business through marketing and advertising!
Whether you’re a personal trainer or a large computer repair shop, if you want to grow and build your business, you’ll need to attract new customers and keep them coming back for more.
Effectively marketing your business is one way to grow your brand and your business.
If you’ve just appointed your first fresh-faced Gen Zeds to your staff (anyone who’s just out of school and are aged 15-19), you could have up to five different generations to manage at work. In fact, these days, it’s not at all uncommon to have a wide range of generational diversity.
Don’t get stuck in your own Groundhog Day: 4 easy changes to re-energise your business
As a business owner, it’s important to learn how to protect yourself and your business from scams. Many scammers will imitate government departments to try and lure you into giving them valuable information and paying false payments.
With more than 350 million products on Amazon.com it becomes more and more difficult for sellers to get their products in front of the customer. Thus, Amazon’s “Sponsored Products” ads (“Amazon PPC”) are becoming extremely popular among sellers as they offer an (allegedly) easy way to bring their products on the first page. The following tips will help Amazon sellers avoid some common mistakes and get the most out of Amazon Sponsored Products.
It’s often how you say something that determines whether you get the result you want. This applies in financial services, marketing and even tax collecting.
In one experiment by the Nudge Unit they improved the payment of vehicle taxes by using simple plain language, “pay your tax or lose your car”. In fact HM Revenue & Customs attributes the recovery of an extra £210 million a year from taxpayers by using behavioural insights in its letters i.e. changing the words to influence behaviour.
Seven vehicles on the road. Ten electricians in the field. One business owner working overtime, all the time...
Such was the norm for L&L Electrical, a versatile electrical services company in Campbelltown, Victoria, and proud owner John Libroaperto.
Proud and successful owner he was, yes – but at a hefty cost in a most valuable currency: time.
Personalization is one of the most important aspects of retail and one of the biggest industry trends for 2017. The key to building lasting relationships with customers, personalized shopping experiences generate satisfaction and loyalty on the part of the consumer — and increased revenue for the retailer.
We’ve all been there before. You’ve called about those overdue invoices once, maybe twice, maybe three times, and payment still hasn’t been made.
What to do next? Throw up your hands in despair? Give up on it as a lost cause? No way, Jack. Not in this economy.
If you’re a fashion store owner looking to set your sales soaring in 2017, opening an online store might just be the best way to do it. Online sales of clothing, shoes and accessories are booming, with 43% of Australians aged sixteen and over now shopping online for these products, a 14% increase from the previous year.
Let’s face it, concepts like paperless office and cloud computing are not ‘new’ concepts anymore. It still surprises me when I encounter businesses that are not paperless and in the cloud. It just makes sense. I’ve been running businesses as ‘paperless offices’ since I co-founded Business Fitness back in 2001. My current business, PARADOX, has been ‘paperless’ and had 100% cloud-based IT and business systems from day one, almost 8 years ago now.
I was catching up with a friend over the holidays who was telling me about one of his friends getting made redundant from a small family business just before Christmas. The basic premise of the story was that the bank had told them they needed to make cutbacks, and as part of this they had to reduce staff numbers. They didn’t want to do this, but they had no choice…
There are several things that go into managing a business and optimizing its performance. These are often reflected in the balance sheet, customer satisfaction and low staff turnover amongst other factors. One component of managing the business effectively and which has a big impact is inventory control. To better achieve inventory control, there are specialized software packages such as Unleashed. However, before purchasing a package, you need to be sure of the benefits to your company’s performance.
Efficient omnichannel strategies used to be the ultimate goal for retailers — a milestone to work toward on a continuous basis. But times have changed, and both shoppers and retail itself have evolved. Omnichannel is now the standard.
We’ve worked with thousands of small businesses over the past few years and managed over $1B in receivables, so we’ve learned a few things when it comes to getting invoices paid earlier with less effort and stress.
“There’s more reasons for an invoice to be paid late than there are for it to be paid on time…” – Debtor Daddy Survey
The problem is that when it comes to getting paid on time there’s more reasons for an invoice to be paid late than there are for it to be paid on time. This means that you’re going to need great systems and great people to keep your receivables under control.