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Unique Accounting Services https://uniqueaccountingservices.ca Modern Accounting Solutions for Businesses and Individuals Fri, 21 Apr 2017 17:20:47 +0000 en-CA hourly 1 https://wordpress.org/?v=5.0.3 How to make your 2015 tax return your best one yet https://uniqueaccountingservices.ca/2016/01/13/how-to-make-your-2015-tax-return-your-best-one-yet/ https://uniqueaccountingservices.ca/2016/01/13/how-to-make-your-2015-tax-return-your-best-one-yet/#respond Wed, 13 Jan 2016 15:13:07 +0000 https://uniqueaccountingservices.ca/?p=293

HuffPost Business

Caroline Battista – Posted: 

As Benjamin Franklin once said: “If you fail to plan, you’re planning to fail.”

Working in the tax industry, I am always surprised by the number of people who think tax planning only happens when they file their return. Waiting until March or April to do your tax planning is not recommended if you want to pay the least amount of tax legally possible.

Every year, millions of Canadians wait until the last week to file tax their return, with one in five admitting that they file just in time. Ideally, tax planning should be a year round activity where you see the benefits when you file your return. Whether you get a refund or owe the government, your tax return should not be a surprise at filing time.

It does not have to be an onerous task. Collecting receipts and asking some simple questions can help make filing much easier next year.

Are you ready?

Did you have any major life changes in 2015? Medical expenses, the birth of a child or selling an asset can all have tax implications. Hopefully you have kept all potential tax paperwork in one place so you can easily find it. If you are missing a receipt, then you should get a duplicate so you don’t miss out on any tax savings.

Confused about what you should be keeping? Your T4s won’t arrive until after the New Year, but other documents such as tuition and education receipts, transit passes, medical receipts and stock transaction receipts may arrive in 2015. You may also have RRSP contribution slips, childcare expenses and charitable donations. For other income slips coming in 2016, set calendar reminders to remind you.

If you moved this year, then now is a good time to notify your bank and past employers so tax documents arrive at the right address. Remember, you are responsible for reporting your annual income so a missing T4 slip is your problem.

Got Kids?

Kids can be expensive, but parents can claim a number of credits and deductions to help lower their tax bill a little.

Watching your child’s holiday performance at daycare is always a fun and heartwarming experience. When it comes to daycare and other childcare expenses, for children under seven, parents can claim childcare expenses to a maximum of $8,000. For children seven to 16, the maximum is $5,000. Children with disabilities qualify for a larger deduction but you must have an approved Form T2201 – Disability Tax Credit Certificate.

If you signed your child up for fitness activities in 2015, then you might be eligible for the Children’s Fitness Tax Credit, a 15 per cent refundable credit based on registration costs of up to $1,000. Remember, your activity must meet the requirements and the organization must provide you with a receipt. Equipment cannot be claimed.

Many kids in university will be coming home after a semester of hard work and fun. It’s a good time to chat with them about managing their taxes and finances so they can think about planning for life after university. Most universities and colleges make the Form T2202A available online for download. This allows a student to claim tuition as well as the education amount and the Textbook Tax Credit. The student must claim all the credits that they need first before they can transfer up to $5,000 to a parent, grandparent or spouse.

Did you take care of yourself?

Medical expenses are often some of the most missed credits each year, so familiarize yourself with the eligible expenses list. While it’s quite lengthy, it is a good resource for knowing what can be claimed and deducted.

You can time your medical expenses to get the best refund. You are allowed to claim your best 12 months as long as one of the months ends in the tax year. It may sound a bit confusing, but it is easier than you think. For example, let’s say you have some major dental work completed at the end of 2014 and the beginning of 2015. You can claim medical expenses from September 2014 to August 2015 on your 2015 tax return. Your tax savings on medical expenses depend on the amount and your income, so the more receipts you have, the better chance you have of saving money.

Don’t wait until it is too late.

Waiting until April 2016 to try and reduce your 2015 tax bill is too late. By getting organized now, you will give yourself the best opportunity to learn about, and identify the credits and deductions you can claim. This will lead to the best chance of paying the least amount of tax.

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Year-end tax planning could save hundreds of dollars https://uniqueaccountingservices.ca/2016/01/13/year-end-tax-planning-could-save-hundreds-of-dollars/ https://uniqueaccountingservices.ca/2016/01/13/year-end-tax-planning-could-save-hundreds-of-dollars/#respond Wed, 13 Jan 2016 15:09:11 +0000 https://uniqueaccountingservices.ca/?p=290
 Year-end tax planning could save hundreds of dollars

Nobody likes to think about taxes in December. But this year take an hour or so to do some year-end tax planning.

But this year take an hour or so to do some year-end tax planning. You could save hundreds of dollars – money that could be used for more holiday gifts. That’s because the new Liberal government has promised some major tax changes that are expected to take effect in 2016. In taxes, as in life, timing is everything so if you have some discretion on when to take income you should consider how those changes will affect you.

For starters, there’s the much-hyped “middle class” tax cut. If the government acts immediately to fulfill that pledge, the 2016 federal tax rate for the $45,000 to $90,000 bracket (approximate numbers) will drop from 22 per cent to 20.5 per cent. That would produce a maximum saving of about $670, plus applicable provincial tax. Note that these figures are not exact because the precise tax brackets for 2016 had not been released at the time of writing.

This means that if your taxable income is between $45,000 and $90,000, you should try to defer any discretionary income until 2016 so as to benefit from the expected tax cut. Holiday bonuses are a classic example. If your income is over about $90,000 but under $200,000, it doesn’t matter when you take the money. No rate change is expected in the 26 per cent and 29 per cent brackets.

Top bracket taxpayers need to plan carefully. The Liberals have proposed to raise the federal tax rate on people earning over $200,000 by four percentage points, to 33 per cent. Add provincial tax on to that and the combined rate in many jurisdictions will be well in excess of 50 per cent. If you’re in the target range, do everything possible to take income before year-end. You’ll pay a lot more on each dollar in 2016.

The same advice applies to investment income from non-registered accounts. Half of any capital gains are taken into regular income so the tax changes will affect how much you actually keep. If your taxable income is below $90,000 and you’re planning to sell some profitable securities, wait until 2016. If it’s above $200,000, you should consider selling now.

Tax-free savings accounts are another area where acting now may save money later. The Liberals have said they will roll back the annual contribution limit to $5,500, from the current $10,000. We don’t know the exact details of how and when this will happen but it’s possible that 2015 will be the only year in which the $10,000 limit will apply. If you haven’t taken advantage of it and have the money available, it would be a good idea to put it in to your TFSA before Dec. 31.

Here are a few more year-end tax tips to consider:

Make charitable donations. Ottawa offers generous tax credits for donations to registered charities (29 per cent after the first $200, plus a special credit for first-time donors). It’s easy to make donations on line and you’ll receive a tax receipt almost instantly in most cases. One word of caution: donations to U.S. charities are not deductible unless you have some U.S. income to claim them against.

Contribute to an RESP. Dec. 31 is the cut-off date for 2015 contributions to a Registered Education Savings Plan to qualify for the Canada Education Savings Grant for this year.

Tax loss selling. If you have any taxable capital gains for this year, you might think about selling some losers to offset them. For Canadian securities, you need to put in the sell order by Dec. 24 to ensure the trade settles this year. Remember that you cannot buy back the same security within 30 days to avoid the Canada Revenue Agency’s superficial loss rule.

Installment payments. If you’re required to pay tax by installments, your final payment for 2015 is due by Dec. 15. If you’re late, the CRA may charge interest. Check to ensure you made all your earlier payments on time (March 15, June 15, and Sept. 15). If you missed any, pay them now to minimize penalty interest.

And now, back to shopping.

Gordon Pape is editor and publisher of the Internet Wealth Builder and Income Investor newsletters. His website is www.BuildingWealth.ca

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If you have kids, you’d better not miss these year-end tax tips https://uniqueaccountingservices.ca/2016/01/13/if-you-have-kids-youd-better-not-miss-these-year-end-tax-tips/ https://uniqueaccountingservices.ca/2016/01/13/if-you-have-kids-youd-better-not-miss-these-year-end-tax-tips/#respond Wed, 13 Jan 2016 15:02:36 +0000 https://uniqueaccountingservices.ca/?p=287

RESPs allow for tax-efficient savings for (grand)children’s post-secondary education. The federal government provides a Canada Education Savings Grant (CESG) equal to 20 per cent of the first $2,500 of annual RESP contributions per child, or $500 annually, up to a lifetime maximum of $7,200 (per child).

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High-income earners urged to make changes now to avoid income tax increase https://uniqueaccountingservices.ca/2016/01/13/high-income-earners-urged-to-make-changes-now-to-avoid-income-tax-increase/ https://uniqueaccountingservices.ca/2016/01/13/high-income-earners-urged-to-make-changes-now-to-avoid-income-tax-increase/#respond Wed, 13 Jan 2016 14:56:32 +0000 https://uniqueaccountingservices.ca/?p=284

OTTAWA — High-income Canadians looking to minimize their federal income tax should look at taking any bonuses they may be due or big capital gains this year to avoid paying more when Ottawa’s new top rate kicks in next year.

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Bill Morneau confirms tax cuts coming for ‘middle class’ https://uniqueaccountingservices.ca/2016/01/13/bill-morneau-confirms-tax-cuts-coming-for-middle-class/ https://uniqueaccountingservices.ca/2016/01/13/bill-morneau-confirms-tax-cuts-coming-for-middle-class/#respond Wed, 13 Jan 2016 14:09:28 +0000 https://uniqueaccountingservices.ca/?p=276

Finance Minister Bill Morneau is moving ahead with his government’s plans to cut taxes for what it calls “middle class” workers, while at the same time hiking taxes on the “top one per cent.”

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When to Hire a Bookkeeper or Accountant https://uniqueaccountingservices.ca/2015/11/24/236/ https://uniqueaccountingservices.ca/2015/11/24/236/#respond Tue, 24 Nov 2015 17:17:17 +0000 https://uniqueaccountingservices.ca/?p=236

When to Hire a Bookkeeper or Accountant

When QuickBooks takes you only so far, it’s time to bring in a financial pro.

By Eileen P. Gunn

Entrepreneurs thrive on a DIY mentality: Do everything you can yourself and don’t pay for anything new until you have absolutely have to. It’s especially difficult to justify hiring financial help like a bookkeeper.

With user-friendly software such as QuickBooks available, many business owners feel they should be able to do keep their records on their own, even as they wrestle with finding the time and wonder if they’re doing things correctly.

Deciding about “hiring a bookkeeper is something I struggle with all the time,” says Randy Mitchelson, owner of National Web Leads, an Internet marketing company in Estero, Fla. While he finds basic accounting easy to do, it takes him away from working on his business. Meanwhile, his accounting and tax planning have become only more complicated in the six years since he founded his business.

Entrepreneurs who hire accounting help usually discover they weren’t doing nearly as well on their own as they thought they were.

Zalmi Duchman, chief executive of The Fresh Diet, a meal-delivery company based in Miami, lasted five years without a bookkeeper then hired one three months ago. The new employee cleaned up records that incorrectly mingled expenses and assets, reviewed employee purchases for duplications, and took over the mundane but critical task of paying bills. Duchman estimates his company is saving $500 to $1,000 in late fees every quarter. “I definitely have been able to make better and more educated decisions,” he says.

So what are a small-business owner’s options for professional help with financial tasks? Here is a primer:

Do I Need a Bookkeeper or an Accountant?
Actually it’s a trick question. You may need both.

Aaron Sylvan, a serial entrepreneur who lives in New York, compares the situation to needing to hire both a carpenter and an architect when building a house.

An accountant can analyze the big picture of your financial situation and offer strategic advice. He or she produces key financial documents, such as a profit-and-loss statement, if needed, and files a company’s taxes.

After tax season is over, an accountant can also act as an outsourced chief financial officer, advising an entrepreneur on financial strategies, such as whether to secure a line of credit against receivables when introducing new products.

In contrast, a bookkeeper does the day-to-day hands-on tasks: making sure new employees file all the right paperwork for the company’s payroll, submitting invoices (promptly) and following up on them, and paying the bills. The bookkeeper also tracks company expenses and can assure that every cost has been entered — and recorded correctly — into software like QuickBooks so that the business is ready for tax time along with filing any other reporting to, say, creditors or investors.

“I don’t keep receipts; they’re a pain,” says Sylvan, who runs Sylvan Social Technology, an ecommerce-services company. “Every month I get a bank statement with a gazillion transactions,” such as taxi rides, meals, conferences and other expenses he has placed on his company’s debit card.

His bookkeeper spends a few hours a week sorting it all out. As a result, Sylvan has a better idea about how his expenditures stack up against his budget. He knows he won’t bill clients incorrectly or miss important payments.

“Knowledge is power,” even when it comes to the small details, Sylvan says. “If you don’t have a bookkeeper, you’re probably not being as strategic as you could be in how you spend your money.”

When to Bring in a Bookkeeper
In his running a half-dozen businesses the past 15 years, Sylvan has typically hired a bookkeeper for a few hours a week within a few months after starting a new venture. For the first six to nine months, he’s usually too busy to focus much on recordkeeping, then “things begin to stabilize,” he says. “Then you can see trends and you can start to think strategically about where your money is going and where you can save.” And this is when a bookkeeper becomes valuable. Since Sylvan has fewer than a dozen employees at each new company, the bookkeeping takes about one day a month, he says.

The rates for hiring a bookkeeper on a part-time basis in the U.S. can range from $15 to $60 an hour, depending on location, the workload and whether work is done at the company’s office or from home.

Sylvan typically sees his accountant once a year, at tax time. But business owners requiring capital or frequently negotiating credit with a bank are likely to contact their accountants more often.

When to Hire a Staff Accountant or Bookkeeper
Many small entrepreneurs can probably stick to outsourcing accounting or bookkeeping services for quite some time. The typical service business can often outsource its chief financial officer tasks and bookkeeping until its revenues rises well above the $1 million mark — or until it has about 30 employees. Until then, most businesses usually don’t have enough work to keep a full-timer busy every day.

It’s time to hire full-time help, though, when you’re calling your accountant often enough that you wish he or she were in the office all the time. Bring in a full-time bookkeeper when your part-timer is spending two or three full days in the office and still falling behind.

Most new business owners find a staffing solution somewhere along the continuum that ranges from trying to go it alone and paying for full-time help.

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