For most individuals, personal income tax returns must be filed by April 30th. However, if either you or your spouse (common-law partner) are self-employed, your personal tax return filing deadline is extended to June 15th. Regardless of the filing deadline, any tax balance owing must be paid by April 30th to avoid interest or penalties. If the due date falls on a public holiday or weekend, you have until the next business day to file your return.
For corporations, the income tax return must be filed no later than six months after the end of the fiscal year end. Depending on the type of corporation, any tax balance owing must be paid two months or three months after the fiscal year end.
Trusts must file their tax returns and pay their taxes no later than 90 days after the trust’s year-end. For most trusts, which have a December 31st year-end, the filing deadline is March 31st (or March 30th in a leap year).
Please feel free to contact us for assistance with your personal or corporate tax returns.
If you earn income that does not have tax withheld (or doesn’t have enough withheld), you may be required to pay your personal taxes in instalments throughout the calendar year rather than a lump-sum at April 30th of the following year. This usually happens if your income is from investments, rental properties or self-employment; however, it can also happen when you receive a pension.
If you feel the instalments requested by the Canada Revenue Agency (CRA) are too high, please contact us. We can determine a more appropriate amount to pay.
There are several methods to make a payment to CRA which includes, but is not limited to, the following:
To file your personal or corporate tax return, you can either mail your tax return to your tax centre or file it electronically (EFILE), which is the recommended and preferred method to file tax returns. It allows for quicker processing, increased accuracy, and it’s paperless.
Please contact us if you require assistance in filing your tax return.
The Income Tax Act (ITA) generally requires books, records and other supporting documents to be retained for a minimum of six years from the end of the year to which they relate. If you filed a tax return late, the six-year period begins the day you filed the tax return.
Various other documents such as share certificates, special contracts and agreements have a different retention requirement.
To discuss your specific situation, please contact us.
The Notice of Assessment (NOA) is a summary of how the CRA has assessed your personal income tax return for a given year. It is important to verify that the numbers agree to the return that was filed as the CRA may have made adjustments to the return that can be disputed. If you find that there is a discrepancy between your filed return and the NOA, or if you receive a Notice of Reassessment that changes the original NOA, we recommend that you contact CRA at 1-800-959-8281 to discuss the reasoning behind the adjustment.
If you disagree with the changes, please feel free to contact our office to discuss the next steps.
CRA sends out many types of letters, the most common of which are the following:
The educational letters do not require any action from you unless, as a result of receiving the letter, you have reviewed your return(s) and believe you have made an error in prior years that should be adjusted.
We can assist you with reviewing the possible error and filing the adjustment request.
If CRA has decided to review your tax return (which is not the same as an audit), this could be due to any one of the following:
If you receive one of these letters, you have 30 days to provide the requested information to CRA. If you fail to provide the information on time, the deduction or tax credit being reviewed will be denied.
If you receive any other type of letter, especially notification of an audit, please feel free to contact our office for assistance.
As dividends are distributions of after-tax income by a corporation, to avoid double taxation, Canada has come up with a complicated approach to taxing Canadian dividends received by an individual. The individual must “gross-up” the dividend by the appropriate percentage (depending on the type of dividend) and then claim a “dividend tax credit” to offset the taxes on the extra income. These amounts are reported on the T3 and T5 slip issued to you; therefore, you do not need to do the calculations.
A Canadian Controlled Private Corporation (CCPC) operating in BC will be subject to the following tax rates on its various income sources:
|Active Business Income up to $500,000||Active Business Income over $500,000||Investment Income|
The above rates are a general guide. There are a variety of other factors that may impact the tax rates, including the type of corporation and source of income.
To have your corporate tax situation reviewed by a tax professional, please feel free to contact us.
The personal tax rates in the province of British Columbia are as follows:
|2015 Taxable Income||Combined Federal and Provincial Tax Rate|
|The first $37,869||20.1%|
|Over $37,869 up to $44,701||22.7%|
|Over $44,701 up to $75,740||29.7%|
|Over $75,740 up to $86,958||32.5%|
|Over $86,958 up to $89,401||34.3%|
|Over $89,401 up to $105,592||38.3%|
|Over $105,592 up to $138,586||40.7%|
|Over $138,586 up to $151,050||43.7%|
The above rates do not apply to capital gains and Canadian dividend income as these types of income are taxed differently.
To have your personal tax situation reviewed by a tax professional, please feel free to contact us.
Canadian businesses that sell “taxable supplies” in excess of $30,000 worldwide are required to collect GST and remit it to CRA. The business must register for a GST account and file periodic returns with CRA.
Canadian businesses with taxable supplies below $30,000 are not required to collect GST or register for a GST account; however, they have the option of voluntarily registering. This can be beneficial in the start-up phase of a business when its expenses often exceed its revenues, resulting in a GST refund owing to the business.
Taxable supplies are goods and services supplied in the course of a commercial activity. It includes “zero-rated” supplies, but not “exempt” supplies.
A “zero-rated supply” means GST applies to the sale, but the rate is 0% (not the current 5% GST rate that applies to most goods and services in BC). Zero-rated supplies include basic groceries, prescription drugs, medical devices and some exports. A business can claim an input tax credit (ITC) for the GST paid on expenses related to providing zero-rated supplies.
An “exempt supply” means GST does not apply to the sale, therefore the business cannot claim an ITC for the expenses incurred in providing that good or service. Examples of exempt supplies include residential rents, most medical and dental services, most educational services and most services provided by financial institutions. If a business provides only exempt supplies it cannot register for GST.
Registered businesses must file GST returns with CRA on an annual, quarterly or monthly basis depending on their annual sales. The quarterly and monthly returns must be filed within one month of the reporting period. An annual return is due June 15th for an individual (note GST balance owing is due April 30th) or 3 months after the end of the business’ fiscal year.
In certain situations, it may be advantageous to file more frequently than CRA requires, particularly if the business usually receives a GST refund. This may happen if the business sells a large portion of ‘zero-rated supplies’, where GST is not collected but ITCs can still be claimed.
As with most types of tax, there are special rules and requirements that may apply to certain businesses.
Please contact us for a consultation if you require assistance regarding your business’ GST.
Generally, a business is required to register to collect and remit the BC provincial sales tax (PST) if it sells or leases taxable goods, sells software or provides taxable services in BC. If a business only sells non-taxable or exempt goods or services, or it is a wholesaler, it does not need to register.
Most services are exempt from PST, with the exception of legal and telecommunication services, some accommodation and services provided to taxable goods (i.e. automobile repairs). The list of non-taxable and exempt goods is lengthy as it can be due to the type of good, who is acquiring it or how the good will be used.
The PST rules can be confusing. Please contact us for a consultation if you require assistance regarding your business’ PST collection requirements.
We believe it is important to make sure we are a good fit. Therefore, we would be happy to meet with you without any charge the first time so that we can determine what your needs are and how we can help you.
We would be happy to look at your situation and help you with this important question.
The bank is requesting assurance that the financial statements are not misstated. When your accountant typically prepares your financial statements and corporate tax return, they are not required to go in to detail and verify the accuracy of the information provided. However, in a review engagement your accountant will inquire, analyze and discuss the financial statement information with you in order to determine whether it is plausible. The financial statements will then be accompanied with a review engagement report that will give the bank the added assurance they require.
We specialize in assurance engagements and would be more than happy to assist you in meeting this important banking requirement.
Incorporating your business offers the benefits of tax deferral and income splitting, as well as liability protection. Your current personal situation must be taken into consideration when deciding whether or not to incorporate.
Please contact us to discuss your business and personal situation.
The benefits of using a holding company in addition to your operating company can be substantial. You may be able to enjoy tax savings, wealth preservation and even make the business more saleable in the future. However, there will be legal and accounting costs associated with incorporating and maintaining a holding company. These costs must be compared with the benefits, which will be unique to your situation and personal preference. Effective use of a holding company requires careful planning as it is a potentially complicated area that offers significant advantages and possibly some disadvantages.
In order to assess your specific needs and circumstances, please feel free to contact us.
A family trust can be a great tool as part of an overall wealth creation plan. However, whether or not you need one will depend greatly on your financial circumstances, family situation and what is important to you. Some of the potential benefits of having a family trust are reducing income tax, protecting family wealth and effective transition of the family business to the next generation. A trust will also allow you to transfer shares of your corporation to other family members without losing control.
To determine whether or not a trust makes sense for your family, please do not hesitate to contact us.
There is no one-size fits all approach when it comes to owning real estate in a corporation.
If the corporation is an operating company, it may want to own the land and building that houses the corporate head office or warehouse. In some instances, the real estate may need to be held in a separate holding company.
With investment properties, it may make more sense to continue to own them personally instead of setting up a corporation. However, if you plan on buying multiple real estate investments over time, it would be beneficial to have the right corporate structure set up as early as possible.
To have your real estate ownership plans reviewed in detail, please do not hesitate to contact us.
Yes, you can pay your children a salary. However, the amount you pay them must be reasonable for the services that they provide to your business.
Are you ready to retire or explore new business options? Do you have an interested buyer? Is the market in your favour for selling? Is your business ready for sale? Do you have an exit plan in place? These are some of the questions that must be explored when considering whether or not it is the right time to sell your business.
To discuss your personal situation in greater detail, please do not hesitate to contact us.
When it comes time to sell your business you’ll need to consider various questions, some of which are:
You will also need to make sure you have the right team in place: accountant, lawyer, business broker and professional appraiser all provide a valuable service when selling a business.
Let us help you with building this team.
Generally life insurance premiums are not deductible for income tax purposes; however, there is an exception when the life insurance policy is assigned as collateral for a loan used to earn income. There are specific requirements in determining if the amount is deductible.
Please contact us for assistance with determining if your policy premiums qualify.
If the home qualifies as your “principal residence” for every year you owned it, you will not be taxed on any gain realized on the sale of the home.
How does your house qualify as your “principal residence”? You must have lived in it since you acquired the home and during this time you cannot have designated a second home (i.e. recreational property) as your principal residence. If you have used your home to earn income, you may only be able to claim the principal residence exemption for a portion of your home.
Please feel free to contact us to discuss your personal situation.
If you have the cash, you will come out ahead if you buy the car. However, if you will need to borrow the funds to purchase the car, there are various factors to consider when determining whether to buy or lease.
How large a payment can you afford? If you buy the car, you will likely have a larger monthly loan payment than if you lease the car; however, the loan payments will usually end after 5 years. With a lease, the payments are lower, but as you do not actually own the car, the payments will not end until you no longer want a car to drive, or buy out the lease.
From an income tax perspective, the amount that you can write off (depreciation, interest, lease payments) is restricted, with all amounts based on the vehicle’s cost not exceeding $30,000. For a purchased vehicle, you get a larger write off at the beginning of the ownership period (depreciation), which then decreases as each year passes. The interest on the loan is also deductible. With a lease, the annual deduction is the same each year.
With a lease, you pay GST and PST on the full lease payment, which essentially means you are paying these taxes on the interest portion of your payment. A business can recover the GST (with restrictions); however, the PST is not recoverable.
Lease vs buy? There is no one answer that suits everyone.