Xero Certified Advisor

Allan | July 11, 2011 - 1:45 pm

Better Tax Services is delighted to be a certified advisor for Xero – a new web-based accounting system that enables small to medium sized businesses to work in partnership with their accountants and business advisors.

We will still continue to support our clients who use a wide range of both online and desktop based accounting software we see this partnership with Xero as a great opportunity to attract new clients but also a great way of getting more involved and more collaborative with our existing clients.

Have a look at the video below which is a great introduction to Xero.

If you do have any questions regarding Xero and are considering using it as your accounting system then please get in touch. We’re more than happy to offer any advice and support that get’s you up an running with Xero in no time.

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New Payroll Services

Allan | July 5, 2011 - 11:38 am

As an added value to our clients, Better Tax Services has decided to partner with NEBS PAYweb.ca for all your payroll needs.

Why Choose NEBS PAYweb.ca for your Payroll Services?

  • Established in 1967, NEBS PAYweb.ca is Canada’s longest serving and most trusted payroll specialist allowing us to excel in customer satisfaction and customer support. PAYweb has been trusted by Canadian companies from coast-to-coast for over 40 years. Their clients range in size from 1 employee to 1000 employees. They can accommodate businesses with employees across Canada.
  • View the NEBS PAYweb.ca flash presentation for an overview. 

NEBS PAYweb.ca is a perfect payroll solution to:

  • Reduce cost
  • Increase efficiency
  • Ensure compliance
  • Increase accuracy
  • Increase accessibility

NEBS PAYweb.ca Payroll Services offers:

  • Online inputs
  • Real time calculation
  • Remote printing – Reports & Stubs
  • e-Stubs
  • Unlimited Accruals
  • Customer Satisfaction

Find out how much money you can save a month! Get a free, no obligation quote and let NEBS PAYweb.ca become your payroll experts!

Patrice Edouard
Payroll Specialist
1-877-461-5006 Ext 2472
pedouard@nebs.com

*Ask Patrice about his special offers and don’t forget to mention that you’ve been referred by Better Tax Services!

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What are the Corporate Tax Rates in Canada?

Allan | January 6, 2011 - 10:04 am
Corporate taxes are based on the business net income and not the sales. The Federal small business corporate tax rate is 11% for up to $500,000 in net income. The General rate is 16.5% for net taxable income above $500,000.
In addition, each Province has its own tax rates which vary from Province to province as per the table below:

2011 Corporate Income Tax Rates
  General Small Business Business Limit
Federal 16.5% 11% $500,000
Alberta 10% 3% $500,000
BC 10% 2.5% $500,000
Manitoba 12% 0% $400,000
New Brunswick 11% / 10% 5% $500,000
Newfoundland & Labrador 14% 4% $500,000
Nova Scotia 16% 5% $400,000
Northwest Territories 11.5% 4% $500,000
Nunavut 12% 4% $500,000
Ontario 12%/11.5% 4.5% $500,000
Prince Edward Island 16% 1% $500,000
Québec 11.9% 8% $500,000
Saskatchewan 12% 4.5% $500,000
Yukon 15% 4% $400,000
Personal income tax needs to be paid on the money you withdraw from your corporation. You can withdraw money in the form of a salary or a dividend. Salary, an expense to your business, is tax deductible for your corporate tax. Dividends are paid out of your company’s after tax net earnings.

Both salaries and dividends are taxed at different rates on a personal level.

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Start Your Tax Planning Today

Allan | November 8, 2010 - 10:27 am

For most people, tax planning is at the bottom of their to-do list.  While we all complain about paying income taxes, we should also put in the effort to reduce our income taxes payable come tax filing next year.

Right now, things are quiet and you can go through things without a panic.  When we’re in tax season, we become stressed and tend to overlook things which can cost us money.

Here are some year-end tax planning tips:

  1. Add up your taxable income from all sources. Include employment income, investments, RRSPs, etc… There may be ways to reduce your income tax bill but you will be limited after December 31.
  2. Get organized. If you haven’t already, start an envelope or folder to hold all your tax slips and receipts.
  3. TFSA withdrawals. If you plan on making a withdrawal from your tax free savings account, you should do so prior to December 31. You will then have the opportunity to recontribute as of January 1.
  4. Pool medical expenses. Medical expenses can be claimed in any 12 month period and the family’s expenses should be pooled together on to one tax return.
  5. Review your stock portfolio. It can be a wise decision to sell some stocks to lock in a capital loss or gain. Capital losses can be carried back three years or carried forward indefinitely.
  6. Don’t forget your renovations. You may have some receipts from early 2010 that are eligible for the home renovation tax credit (HRTC). The HRTC was available to be claimed only in 2009, so if you have receipts, you need to file an adjustment to your 2009 income tax return.
  7. Plan your moving day. Check the provincial income tax rates before in the province before you move. You are subject to provincial tax based on where you reside on December 31. So if there is a substantial difference in tax rates, you may want to speed up your move or defer it until the next year. For example, if you plan on moving from Toronto to Montreal, you should wait until after January 1 to avoid an extra tax bill.
  8. Purchase new computer equipment. If you are in business, you have until February 2011 to take advantage of the 100% capital cost allowance on your income tax return.
  9. Make an RESP contribution. To take advantage of the government’s Canada Education Savings Grant for 2010, you must make a contribution to your child’s RESP before December 31.
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Salary or Dividends?

Allan | October 27, 2010 - 1:17 pm

If you own a small corporation in Canada, you have the choice to pay yourself via salary or dividends. Recently, there was an interesting article published in the Globe and Mail discussing this very topic. In many cases, one would argue that dividends pose more tax advantages to business owners than salary.

Here is the link to the article: Skipping the RRSP, and paying yourself in dividends

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How Do I Report Foreign Business Income and Expenses on My Tax Return?

Allan | September 14, 2010 - 6:11 am

Ordinarily, Canadians can treat their foreign business income just as they would specify the income they have received within Canada on their Canadian tax return. For example, if you are part of a partnership or a sole proprietorship, you should report foreign income on Form T2125, the Statement of Business or Professional Activities on their Federal income tax return.

When the work is done in Canada:

Since this foreign income must be converted to Canadian dollars, the Canada Revenue Agency recommends using the exchange rate in effect at the Bank of Canada on the date the income was received. The average annual exchange rate is another alternative. For example, if an American client sends you a cheque, when you deposit it into your business account, it will be converted to Canadian dollars and noted in your business records. Then, when the time comes to fill out your Income Tax Return, that foreign income will be combined with all of your other business earnings.

When the work is done in a foreign country:

If the work is done outside of Canada, perhaps in the United States, you may also have to pay income tax there. Note that while Canada bases its income tax structure on residency, the American system focuses on citizenship and where the work is actually done. On top of that, certain states also have a state income tax system in place, and you may be required to file an income tax return with the Internal Revenue Service (IRS) and pay federal taxes.

When this is the case, you will also need to submit a Canadian Income Tax Return. However, since the United States and Canada have a tax treaty in place, you may not be required to pay any income tax in Canada. It may seem surprising that you will only pay taxes in one place but are required to file two tax returns, but this not a unique situation. In the United States, New Jersey residents who work in Manhattan have long been accustomed to doing the same thing.

If you are still unsure about exactly what should be done in your situation, get in touch with us and obtain the clarification you need.

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How is an Internet Business Taxed in Canada?

Allan | July 27, 2010 - 9:28 am

Essentially, Internet businesses are taxed in the same way that all businesses are taxed. The Canada Revenue Agency, or CRA, does not base its system of taxation on the way in which a business chooses to go about its operations, or the medium through which it does its business. Instead, it is based on the form of business that is being operated. This applies not just to income taxes, but to sales taxes. Even on the Internet, Canadian businesses must charge local Provincial Sales Taxes (PST) and the Federal Goods and Services Tax (GST). An Internet shop that is run out of Montreal pays the same taxes as a physical shop in Montreal.

If your business is a sole proprietorship, you are required to fill out a Statement of Business Activities (Form T2125). This form can be found in the T1 Income Tax Form. If, on the other hand, you own a business which is incorporated, you must report your income through a T2 Income Tax Return. You may want to hire an accountant to help you with this. An accountant can help to make your job a lot easier, saving you time and possibly money in the process.

As with any other business, you will be able to claim business expenses. Business expenses are costs that you have incurred in order to keep your business going. You will want to be careful with what you choose to claim. If you don’t claim enough, you are paying more taxes than you need to. But if you are claiming too much, the CRA may end up choosing to audit you, which can make your life difficult. This is another reason to consider having an accountant help you with the process.

As with any business, Internet businesses in Canada are required to keep records that can be made available to the CRA upon request. The required records are the same as for any other business, must go back six years, and they need to be maintained in Canada. In addition, Internet businesses are required to keep electronic records in addition to physical paperwork.

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My Business Is Incorporated; Do I Still Need To File A Personal Income Tax Return?

Allan | June 28, 2010 - 9:35 pm

Taxes can be confusing when it comes to separating your personal income from your business income. When your business is incorporated, it becomes an entity itself, capable of being taxed, sued, and all other things that can be done to an individual. Do you still have to file a personal return, even though your corporation’s income is already taxed?

The short answer is: yes. In Canada, filing a tax return on income from your corporation does not excuse you from filing a tax return on your personal income. Of course, there are many caveats to this simple rule.

First, the type of corporation you run determines the type of return you must file. If you are a non-profit corporation, organized for charitable purposes, your corporation is not subject to the same tax consequences as a for-profit business, although your personal tax liability may be the same. Further, your tax consequences will be different if you are organized as a private corporation or a public corporation. In Canada, a Canadian-controlled private corporation enjoys a significantly larger tax advantage than foreign-owned corporations. Be sure to talk to your accountant about possible tax advantages from types of incorporation when you file your corporate papers.

Further, the area in which you do business will affect your tax liability and initial start-up costs. If you are doing business only in Montreal as a sole proprietorship, it makes sense to incorporate provincially, which is less expensive. However, if you are doing business in other provinces and Montreal is only your home base, then you should consider federal incorporation.

Another consideration when filing your taxes is your corporate structure. Your corporation’s income may or may not be tied to your personal income, depending on how you pay yourself. If you are an employee of the company, your salary will be taxed under your personal income tax, and the corporation’s income will be taxed under the corporate return. It pays to discuss with an accountant the options you have for financial setup when you incorporate. You can save significant money by paying yourself in certain ways.

However your corporation is set up, you should always file your personal income on a T1 return and your corporate income on a T2 return.

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How to set up a Business in Canada?

Allan | June 21, 2010 - 6:50 pm

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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