changes to cra tax rules 2017

3 Canada Revenue Agency (CRA) Initiatives That Could Affect YOU!

changes to cra tax rules 2017

Last month I was at a two-day intensive tax course.  While not considered exciting by most, I can say there was a lot of interesting information being shared by the presenters and the attendees. The CRA has been busy trying to collect the data and the tax dollars of those that are either trying to avoid the required reporting and remitting, or are ignorant of their responsibilities.

Here are 3 Initiatives, Results or Ongoing Actions:

1. Sale or Transfer of Real Estate

Between April 2015 and March 2017 the CRA reviewed 21,000 transactions (files) related to the sale or transfer of real estate.  As a result they assessed over $329 million in previously unreported income.  They also applied over $17 million in penalties.  They’re looking at rental properties being sold as principle residences, potential house flipping, properties being sold with revenue reported as capital gains when it should be reported as income, etc. As I discussed in a previous blog the reporting of the sale of your personal residence now must be included when filing your personal tax return.  The CRA has indicated that this will be an ongoing requirement, and they will continue to enhance their compliance procedures.  From the CRA Release dated June 16, 2017 “The CRA will continue to strengthen relationships with key partners such as provinces, territories, and municipalities to further expand, obtain, and exchange information on real estate transactions, thereby enhancing the CRA’s ability to combat tax evasion and avoidance.”

2. Sharing Economy

In a March 2017 Tax Tip the CRA gave us a heads-up that it is co-operating with the industries, the provinces, and the territories to identify and address areas where the tax system and compliance might be affected in the Sharing Economy. If you’re involved in the Sharing Economy you better know your tax obligations. The sharing economy includes;

  • Accommodation sharing – an example being Airbnb. Income earned by renting out your home through Airbnb must be declared on your income tax return. Depending on the services you provide it is either rental income or business income.  If you’re an Airbnb host you know the detailed documentation you and your guest receive.  The CRA also has access to that information.
  • Ride sharing – Uber and Lyft are examples of the major ride share resources. And if you ever hear about any of the companies being audited by the CRA, don’t worry about them. The CRA is actually looking for the individual higher revenue earners and the audit will have a trickle-down effect.
  • Music and video streaming
  • Online staffing
  • Peer/crowd funding

Besides reporting the income you also need to be aware of the GST/HST obligations on all of the above.  Generally, if you earn income from the above services or supplies of less than $30,000 in a 12 month period, you do not have to register for a GST/HST number. Be aware that this is based on revenue, not profit.

3. Cracking Down on Tax Cheats

The purpose of a CRA news release June 1, 2017 is to update Canadians on the government’s progress to crack down on tax cheats. Here are a few of their initiatives to capture more than $13 billion-worth of taxes owed in the past fiscal year;

  • Establishing specialized collection teams and adding technical and legal expertise to its audit and investigative teams
  • Improving processes to better use external data for the identification of high risk taxpayers
  • Increasing collaboration and information sharing with international partners

And as a positive;

  • Striving for early resolution of audit issues in a fair and consistent manner
  • Reviewing and modernizing existing programs, such as the Voluntary Disclosure Program, through consultation with experts and Canadians.

As you can see from the above it doesn’t matter whether you are; single, in a relationship, employed or self-employed, in a business partnership or major shareholder in a corporation you may receive a request for information from the CRA.  It can come in the form of “the brown envelope”, email or telephone call.

DO NOT IGNORE responding to the CRA.  If you’re not comfortable in communicating with them have a representative act on your behalf. If you’re unsure of your responsibilities speak with a tax professional. Death and taxes – CRA will not go away.

You can connect with me by clicking the contact tab at the bottom of the screen if you are reading this post on the website. Or you can leave your information in the form of a comment right here on the site.

Until next time,

Maureen

 

installment billing with quickbooks online qbo

QuickBooks Online (QBO) – Installment Billing

installment billing with quickbooks online qbo

I have a number of clients using QBO that have agreements or contracts where they offer their services over an extended period of time.  Even though the agreement might be for a year they don’t want to invoice and charge HST for the full year if they’re not being paid. This is where installment billing can be applied.

Who Benefits from Using Installment Billing?

Coaches, personal trainers and technical support services are an example of these types of businesses.  And one of their “selling features” is that they offer an affordable option to pay the total amount spread equally over a specified period of time. This is Installment billing and Installment payments, not to be confused with Progress billing.  Progress billing is generally associated with the construction industry with invoices generated for a percentage of work that is completed.  QBO does not currently offer the Progress invoicing feature.

Easily Setting Up Installment Billing in QuickBooks Online (QBO)

So how can you easily set-up Installment billings where you don’t have to remember to invoice your client monthly?  My suggestion is to do the following;

  1. Prepare your agreement or contract as an estimate. Estimates do not have an effect on your Sales or GST/HST accounts. Make sure to include the details of the equal monthly billings.  After you have the signed estimate in QBO, you can either leave it as is, or mark it rejected. Or you can prepare the proposal in your preferred software.  I personally like to keep everything in one place.
  2. Prepare the first equal billing invoice. At the bottom of the invoice, in the centre, is Make Recurring. This is a template and the default name will be your client’s name. Feel free to change the default name, which you would need to do if the same customer had additional recurring transactions.  Select “Scheduled along with Automatically Send Emails. Choose the other options that best suit your needs. i.e. start date of first invoice and last invoice date, or after so many occurrences. Then save the template.
  3. The invoices will now be automatically sent based on the invoice date you selected, or the number of days prior to the invoice date if chosen during the set-up.
  4. If you want QBO to automatically send you a copy of all sent invoices, go to Company Settings, Sales, Messages, then select Email Me a Copy
  5. Want to review your recurring transactions or make changes? Go to the Gear icon and under lists select Recurring Transactions. It is here that you can edit the body of the invoice, use, copy or delete.

Recurring transactions are only available in QuickBooks Essentials and QuickBooks Plus.

You have now established a process for ensuring your invoicing is sent on time, and no one is overlooked.  The amounts reported for GST/HST returns are based on actual and not future dollars.  Hopefully this will also help with your cash flow.

If you have another process you use with QBO and have questions about, I would like to hear from you, and possibly share with my readers.

You can connect with me by clicking the contact tab at the bottom of the screen if you are reading this post on the website. Or you can leave your information in the form of a comment right here on the site.

Until next time,

Maureen

Cash Flow – Do You Understand What It Is?

understanding cash flow

It’s Thursday evening and you have to meet the payroll deadline for tomorrow, but there isn’t enough cash (money in the bank) to pay your employees or sub-contractors.  Your sales are good, new customers are coming all the time and you keep an eye on your expenses.

So, Why Don’t You Have Any Cash?

You need to understand cash flow, the positive and negative of it. The bottom line on your Profit and Loss might show a great profit, but that doesn’t automatically mean there should be money in the bank. And poor cash flow is one of the biggest reasons that small businesses fail.

Here Are a Few of the Key Areas that Can Affect Your Cash Flow:

  • Accounts Receivable
  • Purchase of Assets
  • Inventory
  • Accounts Payable
  • Paying down debt

Where to Start the Analysis

If you’ve been in business for a while and your bookkeeping has been done accurately then your prior year’s Profit and Loss is a good place to start the analysis.  A newer business or a start-up should start with a cash flow budget.

Estimate Your Cash Flow Budget for the Year

Like all budgets a cash flow budget starts with estimating cash receipts and cash expenditures.  I suggest the numbers be estimated monthly for a 12 month period.  Good bookkeeping software allows you to enter your budget information and compare it your actual amounts, which should be reviewed frequently. Frequently means at least monthly, if not more often.

Perhaps there is money in the bank, but is it yours? A large percentage of it may be owed to the government for GST/HST, payroll liabilities or corporate taxes. Unless you started your business to be an accountant or bookkeeper, crunching numbers probably isn’t something you want to do or even like to do.  But your business success requires you to have a certain amount of financial literacy.

Need help with determining your cash flow, creating a budget or both?  Please contact me, I would be more than happy to work with you on these.  For cash flow you can chose one of 3 packages that I have available, with fixed prices. No surprises or unexpected hits on your cash flow.

If you’re running out of money, you may be running out of time. Every cash flow problem has a solution, if you see it coming.

You can connect with me by clicking the contact tab at the bottom of the screen if you are reading this post on the website. Or you can leave your information in the form of a comment right here on the site.

Until next time,

Maureen

QuickBooks Online (QBO) Shortcuts and Learning

QBO Learning BadgeQuickBooks Online (QBO) is accounting software accessible by being completely online!  It eliminates the need to have a centralized “accounting computer” and enables users to access it from anywhere they have internet access, at any time.

Shortcuts to Streamline QBO

Part of the enjoyment of learning QBO is also learning about the shortcuts to increase efficiency.  I’ve spoken to a number of QBO users and they weren’t aware there were these shortcuts.  So I thought it would be a great idea to share them with you.

To use any of the following shortcuts simply press CTRL + ALT +  “ “ the key below:

QBO Shortcuts

I seldom use the following shortcuts but they can be very handy for some users. These are date shortcuts that you can use by placing your cursor in a date field in QBO:

  • T – enters today’s date
  • W – enters the first day in the week
  • K – enters the last day in the week
  • Y – enters the first day in the year
  • R – enters the last day in the year
  • M – enters the first day in the month
  • H – enters the last day in the month

QBO Learning Options

You might be wondering what your QBO learning options are? QuickBooks offers some great videos that can help you at various stages. And of course there is YouTube, along with generic type classroom environments.

QBO One-on-One Learning

What we offer at The Montana Group is one-on- one personalized training.

Usually the customer comes in with their documentation, or access to documentation through such ports as Google Drive or DropBox.

Together we develop an agenda of what we want to accomplish in the two hour session, then get started.  This alone creates the benefits of learning, getting work done and having a reference of what was learned.

Here are a few aspects that make learning with The Montana Group unique:

1. We work together in a clean, comfortable and private boardroom, centrally located in Newmarket.

2. We use a large internet connected monitor so visuals are bright and clear. No leaning in to try and share a laptop monitor, or sitting side by side at a desk.

3. Everything we say and do is being recorded. The end result is a 2 hour video that will be emailed to you within 2 hours of the completed session.

No more writing numerous notes, while trying to learn! Then hoping you can read and understand those notes once you get back to work. And the video helps you share the experience with staff and partners, creating a greater learning reach.

4. If learning is required from a distance, or ongoing learning is required in shorter time frames, we can work together virtually. No need to leave the comfort of your office or home.  With a shared screen and everything being recorded you have the benefits of learning, accomplishing work and having a video reference of HOW TOs and WHYS.

Montana Group Boardroom QBO LearningEmbrace technology and the possibilities are endless!

So if you’re new to QBO and need to start from the beginning, or need help with what you’ve done or need to do – contact me.  I would be happy to meet with you in person or have a telephone call or virtual meeting to determine if we can help you with your needs and create your successes.

You can connect with me by clicking the contact tab at the bottom of the screen if you are reading this post on the website. Or you can leave your information in the form of a comment right here on the site.

Until next time,

Maureen

5 Tax Changes for 2016 That May Affect Your Tax Return

27504965 - tax word on money background

The Canada Revenue Agency (CRA) has many new services and changes in-store for us this coming tax season.

Here are 5 of the changes that might affect your 2016 personal tax return:

1. Income Splitting Tax Credit

In prior years the Family Tax Cut was a considerable benefit to spouses when one spouse had earned significantly more money than the other.  For 2016 and future years it has been eliminated.  Thankfully the ability to split pension income with your spouse or common-law partner is still available.

2. Children’s Fitness Tax Credit

The maximum amount of eligible fees in the year has been reduced from $1,000 per child to $500.  The amount for children eligible for the disability tax credit has not changed

3. Children’s Arts Tax Credit

This has also been reduced, this time from $500 to $250 per child.  The amount for children eligible for the disability tax credit has not changed

4. Home Accessibility Tax Credit (HATC)

Starting in 2016 you can claim a non-refundable tax credit for eligible expenses incurred for work performed or goods acquired for a qualifying renovation.  For an explanation and examples of what is eligible see CRA link here.

5. Principal Residence Rules

Effective January 1, 2016 you are required to report the basic information on your tax return when you sell your principal residence to claim the full principal residence exemption.  Basic information is; the date purchased, proceeds of the sale and the address. I wrote about this in a previous blog posted October 13th if you would like more details and the reasoning behind this new rule.

The CRA is also expanding its Community Volunteer Income Tax Program (CVITP).  This service helps Canadians with modest income and a simple tax situation complete their tax returns, while ensuring all eligible credits and benefits are received.  CRA is currently still recruiting more organizations and volunteers for participation.  Here is a link to determine if you might be eligible for this free service, and current locations near you.

And if your tax return is complicated, your circumstances have changed from prior years or you started a business, talk to a tax professional.  Contact us for a consultation to help determine eligible expenses to offset your income. You don’t want to give more money than necessary to the CRA!

You can connect with me on Facebook, or by clicking the contact tab at the bottom of the screen if you are reading this post on the website. Or you can leave your information in the form of a comment right here on the site.

Until next time,

Maureen

Principle Residence Exemption – Reporting of Sale to CRA

Sold Home For Sale Sign in Front of New House

Last week Finance Minister Bill Morneau announced a number of changes in an effort to limit foreign money into Canadian real estate and ensure borrowers can afford the mortgages they want to take on.  One of these includes reporting the sale of residences to the CRA and including any capital gains.

The 3 most discussed changes are:

  • Effective October 17, 2016 there is a stress test used for approving high-ratio mortgages, that will be applied to all new insured mortgages
  • Effective November 30, 2016 new restrictions will be imposed in providing insurance for low-ratio mortgages
  • The launch of consultations regarding lender risk sharing

But I think the 4th item, also effective in 2016, is what everyone selling a home in Canada should be aware of:

  • Previously when selling your principal residence any financial gain was tax-free and it was not necessary to report the income on the sale. Now, the capital gains tax is still waived, but the sale of the primary residence must be reported to the CRA when filing your personal tax return.

You will need to supply to CRA:

  • Date of purchase
  • Proceeds of disposition
  • Description of the property

Why the changes?

  • Ottawa is responding to extensive media reports indicating foreign investors are flipping homes in Canada and falsely claiming the primary residence exemption
  • Ensures families only claim an exemption on one home a year, and the home owners must live in the property
  • Certifies that if an individual was not a resident of Canada in the year they purchased the residence, and they disposed of that property after October 2, 2016, they are not eligible to claim the exemption for that year

This is also a fact and history-gathering move for Ottawa.  Did you sell a cottage during one of the years, and not pay tax on the capital gains, while you were claiming another address as your principle residence? It could be also be a way flagging a possible “lifestyle audit”.

Do you think this change will curtail foreign investment, or homeowners trying to claim more than one property as a personal residence? Or do you have other concerns regarding this change? I’m interested in hearing your thoughts.

You can  connect with me by clicking the contact tab at the bottom of the screen if you are reading this post on the website or you can leave your information in the form of a comment right here on the site.

Until next time,

Maureen

Goal Setting – 3 Intention Words for 2016

Maureen Burleson

I was recently consulting with an associate and asked her if she made New Year’s resolutions. Her response was no that she didn’t actually make resolutions but usually came up with 2 or 3 keys words that spoke to her about how she wanted the next year to unfold. During that conversation I thought about my own challenges of keeping New Year’s resolutions and wondered if it was time for a different approach. Once I let go of my pre-conceived thoughts on “resolutions” I easily came up with 3 key intention words which I hope will guide me towards achieving my goals in 2016. Here they are: Read more

QuickBooks® – Education not Training

QuickBooks education York region

I receive numerous calls monthly from prospective customers that want QuickBooks® training. They want to know how to “do a set of books” so they can put it on their resume, or they’ve just started a new job and need to know how to use QuickBooks® , FAST. I don’t do QuickBooks® training, I do QuickBooks® education, for both QuickBooks® Desktop and QuickBooks® Online.

You can train a puppy, muscles in your body and sometimes a spouse but I look at learning and teaching QuickBooks® as educating. That is why I only work with customers that have their own businesses, or their representatives responsible for the bookkeeping. By working with the actual documentation that is managed on a day to day basis, the customer is getting work completed, and leaves knowing they have a reference they can look back on if the process comes up again. I don’t believe in working with sample companies; it’s not the customer’s real world. Read more

3 Bookkeeping Apps to Make Life Easier

bookkeeping services Newmarket

Last week I attended the 4th Annual IPBC conference. IPBC is the acronym for the Institute of Professional Bookkeepers of Canada. As a Certified Professional Bookkeeper (CPB) it’s imperative that I stay up to date on the ever changing information, rules and guidelines as they impact accounting, software and the law. From this conference there are 3 bookkeeping apps to make life easier that I want to share with you. Read more

Buying a Franchise? – 4 Key Financial Considerations

bookkeeper newmarket

I currently have two customers that are at different stages in buying a Franchise. They have asked me for my opinion on the purchasing and financing of the businesses. One customer is buying a Franchise that has been in operation for almost two years, so they’re purchasing from the Franchisee. The second customer is buying the Franchise from the Franchisor. This involves determining the location, rental agreement, leasehold improvements, purchasing equipment, computers, software, hiring etc., before the doors are even opened. Despite the differences there are numerous issues in common that they need to consider. Buying a Franchise? Then read on to see these 4 key financial considerations. Read more