Author Archives: Allan

How to set up a Business in Canada?

Chances are high that you plan to kick off a new business in Canada or why else would you be here? The idea of starting a business in Canada sounds interesting. To be able to give a tangible shape to your idea, it is important that you undergo a neat study of the Canadian market in general and Canadian mercantile law in particular. A budding entrepreneur must pick up an excellent grasp over Canadian business structure, Canadian taxation system and the Canadian custom and review agency (CCRA). This detailed research guarantees business success to a great extent.

There are two jurisdictions under which a business in Canada can be incorporated. First is under the Provincial law and second is under the Federal law. If you plan to limit your business operations to a particular Canadian province, you will have to adhere to the Canadian provincial law. Likewise if you plan to spread your business all across the country, you must hold on to the Canadian Federal law.

Once you are through with the initial stages of inception of a business idea, formulating a business plan and selecting a business name, you need to register the decided company name. It is mandatory to register the business name for almost all types of businesses in Canada. Following this, you will have to arrange for the finances. If you finance the business from your pocket altogether, what better? If however, you need some external source of financing, you may have to consult leading Canadian lending banks to obtain the same. Thereafter you will be required to obtain the necessary legal business license depending on the type of business that you plan to establish. Barring some exceptions, GST/HST registration is mandatory in Canada if sales exceed $30,000 within a calendar year. Last but not the least; you will have to arrange for business insurances in order to protect your business from risks and uncertainties.

The initial stages of setting up a business do seem overwhelming; however with the support of the cooperative Canadian Government, it soon becomes relatively easy.

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Tax Free Savings Accounts and Penalties

Recently we have had some clients approach us with letters received from the Canada Revenue Agency regarding their tax free savings accounts (TFSA) and a tax payable on over-contributions. The letter includes a Tax Free Savings Account Return and a transaction summary for 2009.

According to the CRA “If, at any time in a month, you have an excess TFSA amount, you are liable to a 1% tax on your highest excess TFSA amount in that month”. The 1% per-month tax will continue to apply for each month that the excess amount remains in the TFSA.

For example, if the limit is $5000 and you make the initial $5000 investment, plus an additional $600, then you will have to pay a 1% penalty on that $600 which in this case means $6/month.

You are allowed more than one TFSA account and are allowed to make withdrawals at anytime. However be aware that you will not be able to re-contribute any withdrawals until the new calendar year.

To find out about your maximum TFSA contribution limit for 2010, please refer to your latest notice of assessment received.

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Get a Head Start on Tax Planning for next year

Now that the April 30 Personal tax deadline has passed and your taxes are (hopefully) filed, make sure to plan properly for the 2010 tax year. In order to make next year’s taxes worthwhile, you need to make some changes right away.

Set up a monthly RRSP contribution from your bank account or payroll. Many individuals wait until the last minute to make an RRSP contribution or forget to do so. Why wait? By having your money deposited monthly, you’re paying yourself first and taking advantage of dollar cost averaging.

If you have taken advantage of the home buyer’s plan and/or lifelong learning plan, don’t forget to make that minimum RRSP contribution repayment during the year. Failure to do so will result in an increased taxable income based on your minimum repayment.

Keep all medical receipts, even those medical expenses partially reimbursed from your private insurance plan involves a tax deduction.

Keep all monthly/weekly public transit passes.

Keep all childcare expense receipts. Up to $5000 of childcare expenses can be claimed per child.

Keep all child fitness activities receipts. Up to $500 fitness activities may be claimed per child.

Position your investments tax efficiently. Capital gains and dividend income is taxed at lower rates than interest income. Keep all your low risk interest income earning investments inside an RRSP and/or TFSA.

If you are experiencing a life change, such as the birth of a baby or a marriage, make sure to take advantage of all tax benefits offered through the Government and start right away!

Don’t wait until next year to file your taxes and hope for a miracle! Proper tax planning does take a little bit of time and effort, but you will be rewarded financially if done correctly. Book an appointment with your Accountant today!

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On Your Side – Tips for filing taxes

The following newsclip was aired on CTV Montreal News at 6pm today Monday April 26, 2010.  Please take a couple minutes to view this clip on e-mail fraud and penalties if you do not file your income taxes on time.

CTV News

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What’s New for the 2009 Tax Filing Season?

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What is a Releve-4?

The Releve-4 is an official Revenu Quebec tax slip prepared by the landlord of a residential rental unit and issued to the tenant who was the occupant as of December 31 of the prior year. The value in the box A– “Impot fonciers relatifs au logements” represents the combination of property tax and school tax allocated to your dwelling which was included in your rent.

All tenants may be entitled to a Property Tax Refund if their family income does not exceed $50,411 for the tax year of 2009.

If you are a tenant and have not received your Releve-4, kindly ask your landlord for this document.

If you are a landlord and have not issued this document to your tenants, please do so immediately. The deadline to issue this document was February 28. Please remember that a copy of this Releve-4 and the RL-4 Summary must be mailed to Revenu Quebec. Failure to do so, may result in penalties of $25 per day up to a maximum of $2,500.

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What does the Quebec budget mean to you?

Overall, yesterday’s Quebec budget meant terrible news for all middle class citizens. Some of the new measures I do not agree with and others I feel as being long overdue. Highlights of the 2010 Quebec budget presented on March 30th, 2010:

We will see an increase of another percentage point in the provincial sales tax which will rise to 9.5% on Jan. 1, 2012.   An increase of a couple percentage points in the QST is going to hit the pocket books of wealthier citizens as they naturally have more disposable income.  A consumption tax is probably the best tax increase a government can make as it has no real impact on an individual’s motivation to work.

There is a $0.01 a liter fuel tax, with additional increases of $0.01 each year until 2013.  Why did they decide to add an extra gas tax which will inevitably penalize all drivers? Instead of this measure, they should have decided to bring back tolls on our highways and bridges. Toll fees would help to prevent urban sprawl which is taking a toll on our cities and on the environment. People, who have large houses in the suburbs and commute daily to downtown, should contribute financially for having such a privilege.

A two-year pay freeze for the politicians is long overdue!  I would have preferred to see pay cuts and job cuts.  Government is way too large and should be downsized just like most major corporations have done in recent years.  Also, how about cutting back on their overinflated expense accounts!

A hike in postsecondary tuition fees is Ok with me. Quebec currently has the lowest tuition rates in North America. Higher fees will encourage students to take their studies more seriously because they have more at stake. A problem arises when a student’s designer jeans cost more than their history or math class!

There will be an annual increase of 3.7% in the price of electricity for all Quebec consumers, beginning in 2014-15, with the exception of large industrial customers. The hikes are in addition to regular rate increases requested by Hydro-Quebec over the coming years. This of course is like an additional tax on all Quebecers.  But why let the industrial consumers off the hook?  This remains a mystery….

Brand new annual individual health care fees of $25 in 2010, $100 in 2011 and $200 in 2012 will be instituted.  New additional healthcare user fees were also mentioned, however no definitive details were announced.  How about providing a new tax credit for fitness activities instead?  Healthy citizens will inevitably lower our global healthcare costs.

This new budget full of tax hikes makes it even more important to hire a professional Accountant who will review your situation and look to minimize your overall tax burden. Contact us today for an appointment to evaluate your situation and help plan for the future.

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Smart Tax Tips for Students

If you are a student and you are interested in reaping the benefits of all that our Canadian tax system has to offer you should definitely read the following article published by our Accountant, Allan Fefergrad, CGA.   

 

Allan graduated with a Bachelor’s of Commerce degree from Concordia University and he prepares hundred of tax returns each year.  Contact us so that we can get started on your file immediately.

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How to save taxes if you are a tradesperson

The following artice was recently published by Revenue Canada which listed out the various tax deductions available to tradespeople.  The credits include Deduction for tools, Goods and services tax / harmonized sales tax (GST/HST) rebate and employment expenses.

tradesperson

Get in touch with us to learn how to claim you to claim your tax deductions!

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How to Maximize your Tax Refund?

Spring is a beautiful season. It’s a season where the temperature slowly rises, the snow begins to melt and flowers start to bloom.  Summer is fast approaching and for the majority of Canadians, we cannot wait! 

Spring also signifies that Tax Season is in full swing.  We hear the advertisements on the radio, television, read them in the newspapers and see them on our favourite websites.  The advertisements are generated by Accountants and companies producing tax software.  Most Canadians do not like paying taxes and hate filing their taxes annually.  They procrastinate and put off their tax filing until the very last minute on the annual deadline of April 30.

Most Canadians are employed in a full-time job and are limited to the amount of tax deductions they can take advantage of.  With proper planning and a bit of knowledge you will be able to Maximize your Tax Refund.

Here is a list of some tax tips:

  • Read and keep your notice of assessment. There may be some tax credits carried forward which are available to you such as tuition, capital losses, medical, etc…  The notice of assessment also tells you how much you may contribute to your RRSP.
  • Every year the Government of Canada spends millions of dollars in advertising the latest tax credits available to you.  Pay attention.  Were you aware of the 2009 Home Renovation Tax credit?
  • Hire a professional Accountant to prepare your taxes.  Accountants keep up to date with the latest tax changes from the current budget.  They will ask you about your family situation and financial situation.  They do charge fees for their work, but believe me, its money well spent. 

When was the last time a Government official called you at home to advise you that if you had contributed an extra $1000 to your RRSP, you could have saved $400 in taxes?  Your Accountant will.

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