As we accountants gear up for tax season, we are fast approaching the yearly CRA annual website maintenance. What this means is that some of the services offered online will not be available from 11:00 pm on Friday, January 22, 2020 until 8:30 am on Monday, February 22, 2021 (Eastern Time). These services include:
-EFILE & ReFILE
-Express Notice of Assessment web services

If you are a little behind on filing, you may want to consider bringing us your tax information to file your 2019 (or earlier) tax information to get it all out of the way before we embark in the 2020 tax year.

This also means that if you have to get a head start on the tax year, you can drop off your tax documents starting February 22nd. Being an early bird can provide you with a few perks!

1.  You can receive your refund faster!

2.  If you owe money to CRA, you have a few months to come up with a payment plan. Filing close to the deadline can leave you scrambling to come up for the cash necessary to pay the balance owed. If you file early, you have a chance to reduce the interest and penalties on money owed. 

3.  You can get proactive with your 2021 financial planning.

4.  You will have more time to communicate with your tax advisor! If you are unsure about anything, there will not be a tight deadline looming. Give yourself time to really understand your tax situation. 

5.  Early filings help prevent identity theft since your return is marked as filed and no one can use your SIN to file a fraudulent return.

6.  Best of all – filing early gives you added peace of mind.  

As always, if you have any questions or concerns, contact us. We are always happy to hear from you!

In most cases, payroll is the biggest cost to a company’s overhead. Payroll processing can also be very time consuming and costly to administer. The good news is that there is always room for improvement and with a couple of revisions, you can streamline the process into a well-oiled machine.

1.  Keep It Simple: The challenge we encounter most dealing with small businesses is a complex payroll system. Employees are not on the same schedule; salaried employees are paid semi- monthly and hourly employees are paid monthly. Setting a set schedule for everyone takes much of the guess work out of your calculations. Having clear and simple payroll policies will help establish clarity in your organization. Overly complex rules surrounding vacation pay or commission pay can lead to overly complex calculations that also lead you to errors in payroll.

2.  Choosing the Right Software: How are you calculating payroll? An Excel spreadsheet? That is perhaps not the best way to keep track of the employee’s pay and the remittances due to the government. Talk to us about what types of technology might work best for your situation.

3.  Free the Paper: Have you considered to go paperless? Did you know the right software can enable you to email your employee’s paystubs automatically? Forgoing the printing of paystubs can save you time and money spent on ink, paper, envelopes, mailing supplies, and employee time spent on processing the paper paystubs.

​4.  Staying Current: Remitting your source deduction payments to the government on time is the biggest favour you can do to yourself. This not only avoids penalties and interest but also a snowballing effect of large unpaid balances.

Staying current also refers to staying up to date on new payroll legislation such as changes to holiday pay rules. Staying up to date on new legislation ensures that you remain compliant, avoiding audits and more penalties.

5.  Keep a Schedule: Are you surprised every time that payroll creeps up on you? Setting a payroll reminder and keeping your employees on a schedule will help reduce expectation gaps and give you more time to consider your task. Nothing spells disaster more than a rushed job.

6.  Seek Professional Assistance: Still have issues? Contact us. We would love to help.

We have been approached by some clients who ask if it is better for them to take advantage of the new 2020 working from home deduction or claim the deduction through the detailed method. This new deduction is calculated as a flat rate of $2 per day (at a maximum of $400). You cannot count days off, vacation days, sick leave days or any other day that you were absent from work. Also, if you use this flat rate, you cannot deduct any other employment expenses.

As the name suggests, the detailed method involves more details such as receipts for all expenses claimed. However, this method may be more beneficial to you if you incurred a higher amount of costs than $400 or had more than just working from home expenses (i.e. if you were required to purchase tools as a trades person).

List of Examples of Deductible Work-From-Home Expenses
 
Disclaimer: each situation is unique. Please speak with your accountant to verify if these examples of expenses are deductible for you. Any expense that your employer has already reimbursed cannot be used.
 
Use of home expenses: If you use your home office more than 50% of your work week, you may be able to deduct eligible expenses paid for the maintenance of your home office. Please measure the dimensions of your home office and have the total square footage of your home on hand. Example of such expenses are:

-Electricity, heating and water costs
-Maintenance done to the home office (minor repairs)
-Internet
-Telephone
-Portion of your rent

Other Deductible Expenses: Please retain all receipts for 7 years. All expenses must be paid out of pocket and not be reimbursed by the employer in order to be deductible.

-Supplies such as paper, ink, pens, etc. used to perform work duties
-Small tools to perform work duties such as a calculator (please keep all receipts speak with your accountant about including your various purchases)
-Software such as Zoom or other necessary to carry work responsibilities
-Cell phone charges (if not reimbursed or paid by employer)
-Accounting fees  

If you are a commission employee, you can also claim: a portion of your home insurance, property taxes and lease of a cell phone, computer, laptop, tablet, etc.

Do you have receipts scattered on your car floor? Are you like 99% of the population and hate filing? Do you struggle at tax time to gather up all your information because you had 99 other things to do that were more pressing than filing your gas receipt in your colour-coded accordion file? If yes, you are not alone.

In fact, we speak to many customers who love to talk about what they do, but cringe when they hand over their shoebox of receipts. Don’t worry! We love your shoebox. It’s ok. But maybe you want to reduce your bill or feel more on top of your record keeping. How much did I pay last year on supplies? Why do I feel like I made less money this year when I felt busier?

It goes without saying, great records not only brings what makes your finances better into focus, but can also save you some hard-earned cash at tax time. Don’t worry. There is new technology out there that can help you have the great records you dreamed of without paying for a regular bookkeeper.

We can help you set it up and answer your questions if you ever run into trouble.

Got more questions about CEWS? Contact Us.
 

A trend we are seeing on the rise is self-employment as the gig economy takes off. But what does it mean to be a contractor versus an employee? It may seem attractive to hire a contractor over an employee because then you do not have to worry about remitting payroll deductions to CRA and you do not have the same commitment to an employee contract, which usually appeals to small businesses and startups.

Most people do not know the difference between an employee and a contractor, so if you don’t, you are in good company. The bad news is that if you do not withhold the necessary source deductions that you would if they were employees, it can result in a hefty fine and penalties on late payments.

It goes without saying that misclassification is risky business. It’s best to consult CRA’s RC4110 Guide to help you determine a worker’s status. Here are some helpful tips to help you figure it out:

Still not sure? You can ask CRA for a ruling via your CRA account or come talk to us. We would love to help!

Do you have receipts scattered on your car floor? Are you like 99% of the population and hate filing? Do you struggle at tax time to gather up all your information because you had 99 other things to do that were more pressing than filing your gas receipt in your colour-coded accordion file? If yes, you are not alone.

In fact, we speak to many customers who love to talk about what they do, but cringe when they hand over their shoebox of receipts. Don’t worry! We love your shoebox. It’s ok. But maybe you want to reduce your bill or feel more on top of your record keeping. How much did I pay last year on supplies? Why do I feel like I made less money this year when I felt busier?

It goes without saying, great records not only brings what makes your finances better into focus, but can also save you some hard-earned cash at tax time. Don’t worry. There is new technology out there that can help you have the great records you dreamed of without paying for a regular bookkeeper.

We can help you set it up and answer your questions if you ever run into trouble.
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Got more questions about CEWS? Contact Us.

As Canadian businesses struggle to overcome the financial impact of Covid-19, they may experience issues with keeping their employees employed and paid. The federal government launched the Canada Emergency Wage Subsidy (CEWS) to help cover the cost of employee wages, retroactive to March 15th. This subsidy enable businesses to re-hire your workers, prevent more job losses and help you ease back into your normal business activities.

Sounds great. But what else should you know? CEWS is a taxable income to businesses and should be included in your corporate tax return (if you applied as a sole proprietor, it should be included in your business income).

CRA does expect businesses to maintain adequate books and records to support the accuracy and completeness of your claim. Supporting paperwork such as showing the calculation of the wage subsidy claimed for each eligible employee is also required. Failure to provide adequate proof that your claim is legitimate may result in penalties.

You may be required to return part of all of the subsidy if you:
Cancel an application Amend a previous application Found calculation errors for a claim period Find out you do not qualify for the subsidy after a payment is received Received a notice from CRA stating that after a review, your claim has been denied or reduced The returned subsidy may be subject to interest.

Got more questions about CEWS? Contact Us.
 

This has been the year of adjustments. A huge number of businesses have had to reinvent how they handle their day-to-day business. It is no surprise that T4’s have not been spared.

For the 2020 tax year, employers will be expected to report pandemic-related benefits in the other information on T4 slips in an effort to track payments. This means that income earned from an employer between specific time frames must be reported under specific codes.

Another addition to T4’s this year is the amount of CEWS you used for each employee’s salaries by using special codes in the “other information” portion. CRA will release more information about the specific reporting requirements at the end of the year.

If you qualified for the 10% Temporary Wage Subsidy, you will first have to keep all payroll records including your calculations for eligible employees. You are also required to submit a form for each of your payroll accounts. CRA will use information submitted in you’re the form you submitted to reconcile each payroll account.
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Do you have more questions regarding T4s and T5s? Contact Us.

Are you the owner of an incorporated business? Did you know BMP loves corporate tax returns? Among our partners, we have a collective of 45 years of experience with corporate tax returns and one of our partners was tax auditor with CRA and the province. We are able to provide quality products for a reasonable price point (our corporate returns start at $500).

We can help you navigate CRA audits, tax objections, disclosures and appeals, corporate tax filing and planning and personal tax planning for owners, and filing corporate tax returns. We file returns electronically and we provide you with financial statements along with analysis on your financial position. We can help you understand how to be more profitable and how to pay yourself and other shareholders better.

As part of preparing your corporate return, we can file your WCB return, and file your T4s, T4As and T5s. If you have employed contractors during the year, we can issue them a T4A on your behalf. T5s are issued when the corporation issues dividends.

​Do you have more questions regarding tax implications of owning a corporation? Contact Us.

As many Canadian businesses were forced to close their doors and later modify how they do business in a World during a global pandemic, Canadians struggled to make ends meet. The Canada Emergency Response Benefit (CERB) and Canada Emergency Student Benefit (CESB) were launched in March and May respectively to relieve some of the pressure. Employers deduct taxes prior to depositing their employees’ pay into their account. However, this was not the case with CERB and CESB benefits.

What does this mean? CERB and CESB are taxable benefits and so you may owe CRA some taxes next tax season if you have earned other income for the year. If you have made less than $13,229 during 2020 you will not have to pay taxes on your income, including CERB and CESB installments.

There are many factors that will affect taxes owing for folks who made over $13,229 in 2020 such as a change in your tax bracket. However, if your income has decreased in 2020 you may be eligible for child credits or GST credits you would have not qualified for previously. 

If you have received CERB or CESB payments, chances are you may be experiencing financial hardship and may find it difficult to put money aside for taxes you may owe in April. Contact us to find out what we can do to help.
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Do you have more questions about CERB and CESB? Contact Us.