Good Compliance Habits for Small Business
Getting all your ducks in a row doesn't have to be a chore. Done right, it's almost like breathing ... you aren't even aware you are doing it.
Check out the latest articles below.
Small Daily Habits Can Move Mountains
Do just one task today towards meeting your tax compliance obligations. Just one.
Make this the year you incorporate self-care into your daily routine so you are around for your family!
- Establish clear work boundaries and follow them by outlining your availability and response times to alleviate any confusion. You deserve one full day off a week to recharge your batteries, maybe even two days in a row.
- Remember every once in a while to stop, stretch, and JUST BREATHE!
- Think about reinstating recess this year if you work indoors. Get outside for 15 minutes to let natural light energize you.
- Eat breakfast. Don't have time? Try out Dr. Will's fast, easy, and healthy breakfast smoothie.
- Stay hydrated by drinking water to stave off fatigue and concentration issues.
- Schedule exercise time three times a week (maybe try a HIIT routine; they are quick and effective).
- Reach for progress not perfection with your business work habits as well as with your diet routine by making choices that are just a little bit better based on where you are now.
- Striving for thirty (30) plant points a week makes improving your diet easy. Incorporate a variety of plant based foods (nuts, seeds, oils, whole grains, legumes, beans, fruits, and vegetables) into your existing eating habits to have a healthier gut biome. You'll feel better which means you'll get more done with less effort.
Enjoy Your Visit! Laura
Dec 18, 2024
CRA SimpleFile Service
CRA SimpleFile service is a streamlined service introduced as a pilot project in 2023 to make the process of filing tax returns easier for Canadian taxpayers.
Dec 18, 2024
CRA Automatic Tax Filing
On Monday, the government released their fall economic statement. One of the items was going ahead with "making automatic tax filing a reality".
SimpleFile service was made available in February 2024. Those who met the qualifications for the service received an invitation to file by phone, by mail, or online.
For 2025, if legislation is passed, it is planned that some lower-income Canadians tax returns will be filed automatically on their behalf by CRA.
Automatically filing returns is also being considered for modest middle class Canadians that have "gaps" in their filing history or are non-filers ; as well as developing free tax software for simple returns
Dec 14, 2024
9 Most Popular Blogs Of 2024
9 Most Popular Blogs Of 2024. Tax Compliance for Small Business . CRA Subcontracting Reporting Requirements . Self Employed Tax Deductions . T4 & T4A Slips
Dec 11, 2024
Canadian Prescribed Interest Rates | Shareholder Loans
Quarterly prescribed interest rates issued by CRA for overdue & overpaid taxes and taxable benefits. Spousal interest payments are due annually by January 30th.
Continue reading "Canadian Prescribed Interest Rates | Shareholder Loans"
Nov 30, 2024
Are you ready for your CRA mail to go online?
On November 14, 2024, CRA announced it will be transitioning to online mail as the default method of delivering correspondence. This change applies to all:
- New business number and program account registrations
- Existing businesses registered for 'My Business Account'
- Businesses who have a representative that accesses the CRA’s services via 'Represent a Client'
What you need to do:
Sign into CRA's portal 'My Business Account' or 'Represent a Client' and make sure your email address is correct.
Exceptions:
Existing business, charities and non-resident businesses that are not registered for or do not have access to 'My Business Account' will continue to receive their mail by snail mail.
Requesting paper mail:
After April 2024, you will have to request paper mail by selecting paper mail as your delivery method for correspondence in 'My Business Account' or completing and mail form RC681 - Request to Active Paper Mail for Business.
Continue reading "Are you ready for your CRA mail to go online?"
Nov 27, 2024
CRA Updated Guidance - 2024 Capital Gains Relief
The legislation to enact the proposed 66.7% capital gains inclusion rate effective June 25, 2024 is held up in Parliament due to the filibuster launched by the Conservatives. It has not been introduced as a bill yet.
As a result, tax returns cannot be filed because the tax software isn't available yet. Tax software can only be released once CRA certifies their tax forms. CRA can't release updated tax forms until the legislation is passed. It's a mess.
The CRA has posted 2024 guidance on their webpage 'T4037 Capital Gains 2023' that they will be proceeding based on the Notice of Ways and Means Motion that has been filed.
"For all taxpayers, the new inclusion rate will apply to capital gains realized on or after June 25, 2024. Impacted forms for individuals, trusts and corporations are expected to be on Canada.ca as of January 31, 2025. Arrears interest and penalty relief, if applicable, will be provided for those corporations and trusts impacted by these changes that have a filing due date on or before March 3, 2025. The interest relief will expire on March 3rd. More information will be forthcoming in the coming weeks."
A Globe and Mail November 27, 2024 article by Rudy Mezzetta titled 'Despite interest and penalty relief, questions abound for corporations navigating capital gains changes' puts forth three filing options:
1. File and pay taxes based on the current 50% inclusion rate;
2. Manually adjust the existing forms and pay taxes using the 66.7% inclusion rate;
3. File using the current forms but calculate and pay taxes based on the higher rate.
The CRA will be administering the proposed capital gains inclusion rate while awaiting parliamentary approval. This is a standard practice.
Nov 21, 2024
GST Holiday Dec. 14 to Feb. 15
The government announced today that it will be introducing legislation in Parliament that would provide for a two-month Goods and Services Tax/Harmonized Sales Tax (GST/HST) break for groceries and holiday essentials.
It will be a hardship for small businesses with changing the sales tax rates twice in a short time frame. The administration for this 'holiday' will likely be very expensive for most small retailers.
(Update: It passed legislation on November 28th.)
This new temporary tax break will apply to:
- Prepared foods, including vegetable trays, pre-made meals and salads, and sandwiches.
- Restaurant meals, whether dine-in, takeout, or delivery.
- Snacks, including chips, candy, and granola bars.
- Beer, wine, cider, and pre-mixed alcoholic beverages below 7 per cent ABV.
- Children’s clothing and footwear, car seats, and diapers.
- Children’s toys, such as board games, dolls, and video game consoles.
- Books, print newspapers, and puzzles for all ages.
- Christmas trees.
Source: Prime Minister of Canada website, November 20, 2024 More money in your pocket: A tax break for all Canadians and the Working Canadians Rebate
Nov 21, 2024
The Working Canadians Rebate
The government announced today that it will be introducing legislation in Parliament that would provide for the delivery of a new $250 Working Canadians Rebate.
(Update: The Liberals did not get the support they needed as a minority government to move forward with this legislation.)
Canadians who worked in 2023 and earned up to $150,000 will see a $250 cheque in their bank account or mailbox, starting early spring 2025. To be eligible for the rebate, you must have filed a 2023 income tax return.
Source: Department of Finance Canada, November 20, 2024 More money in your pocket: The Working Canadians Rebate
Nov 21, 2024
First Quarter 2025 CRA Prescribed Interest Rates
Prescribed interest rates are released quarterly by the CRA. They are used to calculate the amount to charge on taxable benefits such as interest-free and low-interest rate loans for shareholders, spouses, and employees.
The rate in effect for the quarter commencing January 1, 2025 will be 4% based on the three month TBills sold at auction in October.
Did you know that the base rate is determined quarterly using the simple average of three-month Treasury bills for the first month of the preceding quarter rounded up to the next highest whole percentage point (if not already a whole number)?
Did you know that the overpaid taxes rate (amounts owing from the federal government) is always 2% points more than the taxable benefits rate?
Did you know that overdue taxes rate (basically the rate for all other purposes) is 4% points more than the taxable benefits rate?
Continue reading "First Quarter 2025 CRA Prescribed Interest Rates"
Nov 21, 2024
CRA and the Underground Economy | Cash Under The Table
Dealing in cash thrives in the underground economy. Here's what to do when your customer wants to do "cash under the table". Legal tax planning tools are dis...
Continue reading "CRA and the Underground Economy | Cash Under The Table"
Nov 21, 2024
2025 CRA Annual Indexation Adjustments Released
Last week, CRA released the indexation adjustment for personal income tax and benefit amounts. The 2025 indexation increase is 2.7% down from 4.7% in 2024.
The tax and non-refundable tax credits take effect on January 1 annually. Most benefits are effective July 1, 2025 as they are tied to the filing of your prior year return.
Continue reading "2025 CRA Annual Indexation Adjustments Released"
Nov 16, 2024
When Should You Incorporate As A CCPC In Canada?
You operate a business as a sole proprietor or a partnership. Is it the right time to incorporate your business as a CCPC?
Continue reading "When Should You Incorporate As A CCPC In Canada?"
Nov 16, 2024
What is the Lifetime Capital Gains Exemption (LCGE)?
The Lifetime Capital Gains Exemption (LCGE) is a provision in the Canadian tax system that allows individuals to realize tax-free capital gains up to a certain limit on the sale of qualifying properties. This exemption is designed to encourage investment in small businesses, farming, and fishing by offering tax relief on gains from these investments. I explore the key details of the LCGE.
Continue reading "What is the Lifetime Capital Gains Exemption (LCGE)?"
Nov 13, 2024
2025 CPP Maximum Pensionable Earnings and Contributions Released
The 2025 maximum pensionable earnings and contributions were released by the Canada Revenue Agency on November 1, 2024.
The CRA news release stated, "In 2024, a second earnings ceiling was introduced, the Year’s Additional Maximum Pensionable Earnings (YAMPE). The YAMPE is used to determine second additional Canada Pension Plan contributions (CPP2). In 2024, the YAMPE is approximately 7% above the Year’s Maximum Pensionable Earnings (YMPE). In 2025 and every year after, the YAMPE will be approximately 14% above the YMPE."
Reference: News Release: November 1, 2024 Canada Revenue Agency announces maximum pensionable earnings and contributions for 2025
Continue reading "2025 CPP Maximum Pensionable Earnings and Contributions Released"
Nov 13, 2024
RRSP Tips and Traps | Small Business Owners
RRSPs can be a valuable tool for small business owners in Canada to save for retirement. Some RRSP tips and traps to keep in mind to maximize their benefits.
Continue reading "RRSP Tips and Traps | Small Business Owners"
Nov 07, 2024
Current Payroll Tax Rates | Canadian Bookkeeping
Meet your payroll compliance obligations. 2025 payroll tax rates - EI premium rates were released Sep 2024. CPP contribution rates were released Nov 2024.
Continue reading "Current Payroll Tax Rates | Canadian Bookkeeping"
Oct 27, 2024
Tax Compliance for Small Business | Canadian Filing Deadlines
Tax compliance filing deadlines for small business owners - GST HST returns, payroll remittances, income tax returns and instalment payments, subcontractors
Continue reading "Tax Compliance for Small Business | Canadian Filing Deadlines"
Oct 03, 2024
Provincial Sales Tax Rates in BC | BC PST Rates
Explore Provincial Sales Tax Rates in BC and more - current rates, exemptions, refunds, comparisons with other provinces, and its impact on goods, online sales.
Continue reading "Provincial Sales Tax Rates in BC | BC PST Rates"
Sep 23, 2024
Fourth Quarter CRA Prescribed Interest Rates
Prescribed interest rates are released quarterly by the CRA. They are used to calculate the amount to charge on taxable benefits such as interest-free and low-interest rate loans for shareholders, spouses, and employees.
The rate in effect for the quarter commencing October 1, 2024 is 5%.
Continue reading "Fourth Quarter CRA Prescribed Interest Rates"
Sep 19, 2024
How To Pay Employees With Cash | Casual Employment
Learn how to pay employees with cash properly to protect your business while accommodating the employee. CRA has a strict definition of casual employment.
Continue reading "How To Pay Employees With Cash | Casual Employment"
Sep 19, 2024
2025 EI Insurable Earnings Released
The 2025 EI rates including the maximum earnings that premiums can be deducted on were released by the Canada Employment Insurance Commission on September 13th.
"Each year, the Commission is responsible for setting the annual premium rate based on a seven-year break-even rate forecast by the EI Senior Actuary. The rate is set in order to generate just enough premium revenue to cover EI expenses over the next seven years and eliminate any cumulative surplus or deficit in the EI Operating Account. Annual changes to the premium rate are subject to a legislated limit of five cents."
The mandated 7 year break even objective has resulted in changes to 2025 rates. I've updated the Employment Insurance rates table.
Reference: News Release: Canada Employment Insurance Commission confirms 2025 Employment Insurance premium rate
Sep 17, 2024
Understanding Your Investment Tax Slips | T3 T5 T5008
A quick guide to understanding your investment tax slips. What's the difference between a T3 and T5 slip? A T5 and T5008? Who declares a dividend before payout?
Continue reading "Understanding Your Investment Tax Slips | T3 T5 T5008"
Jul 27, 2024
CRA Subcontracting Reporting Requirements | T5018 vs T4A
What are CRA subcontracting reporting requirements? Do you use slip T5018 or slip T4A? T1 line 10400 vs line 13500? Where do you code subcontractors expenses?
Continue reading "CRA Subcontracting Reporting Requirements | T5018 vs T4A"
Jul 24, 2024
Canadian Employment and Labour Standards | Minimum Wage Rates
The laws, exemptions to the wage and other labor law issues are provincially and territorially regulated by employment and labour standards. Here's a summary.
Continue reading "Canadian Employment and Labour Standards | Minimum Wage Rates"
Jul 22, 2024
POE For Remote Workers | Province of Employment Determination
How to determine the province of employment - POE for remote workers with examples. New guidelines are effective January 1, 2024.
Continue reading "POE For Remote Workers | Province of Employment Determination"
Jul 18, 2024
Year-End and Tax Preparation | Simple Tax Compliance Method
If you keep your books solely for year-end and tax preparation purposes, tax experts suggest you establish this simple method to meet this requirement.
Continue reading "Year-End and Tax Preparation | Simple Tax Compliance Method"
Jul 10, 2024
Canada Carbon Rebate for Small Businesses
This refundable tax credit was announced in the 2024 budget. It is a retroactive payment with respect to fuel charge years 2019 to 2024.
A fuel tax year runs April to March. You do not need to apply for the credit, it will be automatically calculated and issued.
To be eligible to receive the credit a CCPC must have (i) employed one or more persons in a designated province, (ii) have less than 500 employees throughout the calendar year, and (iii) file your T2 return for 2023 no later than July 15, 2024.
Jul 08, 2024
Information Returns Electronic Filing Thresholds
Here is a reminder of CRA's new policy on information returns.
"As of January 2024, businesses filing SIX or more information returns (slips and summaries) must file electronically to avoid penalties. Examples of information returns include the T4 (remuneration paid), T5 (investment income), T3 (trust income) and T4A (pension and other income)."
To file electronically:
- If you do not have a web access code, use My Business Account or Represent a Client .
- If you have a web access code, use Web Forms or XML.
Effective January 2025, CRA is making changes to the T619 electronic transmittal form. Part of this change will require submitting only one type of information return per file. For example, you will no longer be able to submit T4s and T4As in the same file. They must be sent in separate files.
Last week, CRA gave notice that they will be shutting down the system in December 2024 rather than the normal January shutdown. In 2024, CRA shut down the electronic submission services from January 20th to February 20th for annual maintenance required to get ready for the upcoming tax season. Now they are saying they will shutting down in December.
CRA is giving this notice now so that you can plan to have all your information returns filed before the December 2024 shutdown. I'm not sure how that will work. I hope it means they reopen in late January.
Source: CRA Newsroom June 28, 2024 Get ready: By January 2025 there will be changes to the electronic filing of information returns
Jul 04, 2024
Common T2 Schedules
I've compiled list of common T2 schedules that may be applicable to an average small business in Canada. We will look at schedules 1,2,3,4,6, 7, and 11.
Jun 17, 2024
New CRA GST/HST Electronic Filing Policy For 2024
On February 21, 2024 CRA announced new GST/HST electronic filing requirements.
"For GST/HST reporting periods that begin in 2024, all GST/HST registrants, except for charities and selected financial institutions, are required to file returns electronically.
The mandatory electronic filing threshold that was in place for GST/HST returns has been removed for reporting periods that begin on or after January 1, 2024, which means that electronic filing is now required for most businesses."
If you don't file electronically, the Canada Revenue Agency may charge you a penalty.
"The CRA will waive the penalty if you (1) file monthly or quarterly, and (2) were not previously required to file electronically, and (3) are filing a GST/HST return for a filing period beginning on or after January 1, 2024, and before April 1, 2024."
Source: CRA Website: Complete and file a GST/HST return
Jun 15, 2024
Canadian Small Business Tax Obligations | It's All About The Rules
Learn your small business tax obligations for audit ready books. Find out deadlines not normally on your radar; explore audit issues for the self-employed.
Continue reading "Canadian Small Business Tax Obligations | It's All About The Rules"
Jun 13, 2024
Capital Gains Inclusion Rates Upcoming Change
Effective June 25, 2024, the capital gains inclusion rate will increase from 50% to 66.67% for (1) capital gains over $250,000 per year for individual, and (2) all capital gains for corporations and most trusts. This change does not affect the principal residence exemption.
These are things you cannot do to lessen your capital gain tax burden:
- Current rules do not permit elections to realize a gain or loss on property without an actual transfer.
- Capital gains cannot be averaged over multiple years to stay under the threshold.
- Individuals cannot share their $250,000 annual threshold with corporations they own.
- The 66.67% exclusion rate applies across all sectors and all assets. There is no preferential treatment.
- There are no special rules based on how long an asset has been held.
Source: Department of Finance News - Fair and Predictable Capital Gains Taxation June 10, 2024
Jun 12, 2024
Canadian Controlled Private Corporations | The Bookkeeper's Notes
Miscellaneous notes about things I track about Canadian controlled private corporations (CCPCs) so I have easy reference to them when I need it.
Continue reading "Canadian Controlled Private Corporations | The Bookkeeper's Notes"
Jun 12, 2024
Canadian Sales Tax Rates | How To File A GST/HST Return
Overview and history of sales tax rates in Canadian provinces and territories includes GST HST PST QST. Explores 3 GST/HST reporting options.
Continue reading "Canadian Sales Tax Rates | How To File A GST/HST Return"
Jun 05, 2024
Why You Need An Employment Contract in Canada
Act carefully when dismissing an employee. Learn how a written employment contract for every employee hired reduces your liability for damages.
Continue reading "Why You Need An Employment Contract in Canada"
Jun 05, 2024
Employee Taxable Benefits | An Intro To Payroll Deductions in Canada
An introduction to employee taxable benefits in Canada. Information on cash and non-cash gifts and awards, vehicle benefit calculator, disability insurance ...
Continue reading "Employee Taxable Benefits | An Intro To Payroll Deductions in Canada"
May 26, 2024
Is Voluntary Disclosure the Right Move? | Unfiled Taxes in Canada
In dealing with the Canada Revenue Agency (CRA) over unfiled taxes, small business owners may wonder if voluntary disclosure is the right move.
Continue reading "Is Voluntary Disclosure the Right Move? | Unfiled Taxes in Canada"
Apr 27, 2024
Responding to a Tax Audit Notice | Steps to Follow
Practical steps to follow on responding to a tax audit notice. Discusses how to file a notice of objection, misconceptions, bookkeeping tips to ease the pain.
Continue reading "Responding to a Tax Audit Notice | Steps to Follow"
Apr 13, 2024
Business Record Retention in Canada | Data Storage Considerations
It's a balancing act. The CRA and PIPEDA both have guidelines for business record retention, but they serve different purposes. Data storage location is discussed.
Continue reading "Business Record Retention in Canada | Data Storage Considerations"
Apr 11, 2024
How to Register for PST in BC | A Guide for Small Business Owners
Learn how to register your small business for PST in BC, Canada, with my step-by-step instructions.
Continue reading "How to Register for PST in BC | A Guide for Small Business Owners"
Apr 06, 2024
How to Register for GST HST in Canada | Step-by-Step Instructions
Get ready to register for GST HST in Canada easily with step-by-step instructions to walk you through the process. Learn when voluntary registration might be...
Continue reading "How to Register for GST HST in Canada | Step-by-Step Instructions"
Apr 05, 2024
Basic Canadian Income Tax Compliance | Index
Basic small business tax primer focusing on three aspects of Canadian income tax compliance - (1) self-employed tax, (2) CCPC tax, (3) employee personal tax.
Continue reading "Basic Canadian Income Tax Compliance | Index"
Apr 04, 2024
How Are Sole Proprietors Taxed In Canada | Marginal Tax Rate Explained
Knowing how sole proprietors are taxed provides motivation to have audit ready books. You're in a high risk group for getting audited. Learn about your marginal tax rates as well.
Continue reading "How Are Sole Proprietors Taxed In Canada | Marginal Tax Rate Explained"
Mar 23, 2024
Small Business Bookkeeping | Basic Bookkeeping
Small business bookkeeping is an age old system designed to keep financial records in an organized way. Technology has made it easier than ever to learn.
Continue reading "Small Business Bookkeeping | Basic Bookkeeping"
Mar 22, 2024
Understanding Input Tax Credits | Canadian Sales Tax
What are input tax credits? How do you qualify to claim ITCs for your business? How do you claim your ITCs? Which calculation method should you use?
Continue reading "Understanding Input Tax Credits | Canadian Sales Tax"
Mar 22, 2024
What is Capital Cost Allowance (CCA)? | Common CCA Rates
Find out what is capital cost allowance and why you may not want to make a full CCA claim on your tax return every year. Learn more ...
Continue reading "What is Capital Cost Allowance (CCA)? | Common CCA Rates"
Mar 18, 2024
Taxpayer Bill of Rights | Insight into Small Business Rights
The impact of the Taxpayer Bill of Rights on small businesses levels the playing field; allows small business to understand their obligations, defend their ...
Continue reading "Taxpayer Bill of Rights | Insight into Small Business Rights"
Mar 07, 2024
How To Cancel Your GST HST Account | Financial Impact
Careful before you cancel your GST HST account as there will be a financial impact. Find out what that is before you close your GST/HST account.
Continue reading "How To Cancel Your GST HST Account | Financial Impact"
Mar 06, 2024
Maintaining the Corporate Minute Book | The Annual Filing
Basic information on maintaining the corporate minute book and your annual registration requirements ... also referred to as The Annual Report / Filing.
Continue reading "Maintaining the Corporate Minute Book | The Annual Filing"