You want to reward your employees for their hard work and loyalty during 2013. Here are ideas and tax issues you need to be aware of when giving gifts to employees and the CRA way of accounting for those gifts.
1) Gift – Award or Reward
A gift has to be for a special occasion such as a religious holiday, a birthday, a wedding, or the birth of a child.
An award has to be for an employment-related accomplishment such as outstanding service, employees’ suggestions, or meeting or exceeding safety standards. It is recognition of an employee’s overall contribution to the workplace, not recognition of job performance.
Last week I spent two intensive days learning about all the 2013 tax updates. As to be expected, a lot of the information dealt with the changes implemented by the Federal and Provincial governments for the 2013 tax season and proposed changes for 2014. But instead of dwelling on the tax dollars we all need to pay, I thought I would share 2 ways the CRA might be able to help you when something has gone off the correct path.
In 2013 the Canada Revenue Agency (CRA) recognized the need for additional support for charities by introducing the First-Time Donor’s Super Credit (FDSC) in the budget. This non-refundable FDSC will help supplement the Charitable Donation Tax Credit (CDTC) for individuals.
I am sure you have noticed the Grand Prize Lotteries advertised on TV, fundraisers seeking donations outside high traffic stores and the general mailing and social media requests – ‘Tis the season for giving. And while some of the giving is in hopes of winning a new home or a flashy car, others purchase and donate with the intention of the good cause they believe in or have been affected by. The general concept is giving to help support the community or international not-for-profit charitable organizations. With cut-backs on all fronts donations is helping keep some of the doors open for the smaller organizations. And it is in response to this that the CRA made this allotment.
I recently wrote and passed a two hour bookkeeping exam. It’s not that I felt the need to test my knowledge after all these years. The purpose was to get my CPB designation (Certified Professional Bookkeeper). The designation was one of many requirements I needed to meet in applying for a mentoring program being offered in partnership with IPBC and Ron Baker of Verasage, sponsored by Sage. And, while answering the exam questions, I started thinking about the clients we do QuickBooks training with. Whether the accounting software indicates it’s simple to learn or you’ll pick it up quickly, there’s a certain amount of bookkeeping knowledge required to be competent. If you’ve started working on an accounting software package and you’re struggling, you could have been tricked into thinking all you needed to know was how to operate a mouse! So, I thought it might be helpful to provide 9 bookkeeping questions to test your understanding of your bookkeeping software; to help you determine if it’s the software causing you the challenges or that you possibly need a little more guidance in the fine art of bookkeeping. (The answers are at the end of the last question).
I’ve just spent 5 days at the 2013 IPBC Conference in Mississauga, Ontario. IPBC stands for the Institute of Professional Bookkeepers of Canada. The first two days were an intense learning symposium with Ron Baker and Ed Kless, both with Verasage. Verasage is a think tank for professional-knowledge firms and our symposium was titled “Bookkeeper of the Future”. There were also more than 45 educational presentations to choose from, covering legal and government issues as well as software training and coaching. Needless to say after the 5 days, I came away exhausted and well informed. Now it’s just a matter of finding the time to implement and share everything I learned. So let’s start here with 5 interesting items I learned at the conference.
1. Non-Profit Organizations(NPOs) – NPOs do not have to register federally or provincially to acquire its tax-exempt status. But if it receives taxable dividends, interest, rentals or royalties totaling more than $10,000 in the fiscal year, it has to file a T1044. A T1044 is also required if the total assets of the organization were more than $200,000 at the end of the immediately preceding fiscal period. Once a T1044 is filed for the NPO, it must be filed for every subsequent year, even if the financial situation changes from the requirements above.
Near the end of February this year, I took on the responsibility of a co-op student from the York Region District School Board. As a co-op placement, their time was at no cost to me. I was very hesitant initially since there were as many bad experiences I’d heard from other employers as there we good experiences. I told the high school counselor that was looking for placements that the student would be treated the same as any adult looking for a full-time position. That meant a full interview after I reviewed the resume, and a police criminal check was required. This was not going to be a body that filled a chair 4 afternoons a week. I needed a fully committed worker with an aptitude for numbers and willingness to learn and work. The learning part included QuickBooks, an introduction to Personal Tax Returns and dealing with clients in person and on the phone. As we were going into tax season, there was no time available for someone who wasn’t committed to their success and that of the business. What I didn’t anticipate were all the things The Montana Group would learn from our co-op student, itemized below in 6 points.
I recently read an article by Carol Goar in the Toronto Star about the Wagemark label. This was introduced in Toronto July 17th of this year by founding director Peter McLeod. On July 24, 2013 it was mentioned on a New Zealand post.
The concept of it is “to create a common standard for wage-responsible businesses”. To display the Wagemark insignia a company must pay its chief executive no more than eight times the amount its lowest paid worker earns. The article also went on to say that currently the chief executives of Canada’s top 100 corporations, make 235 times the average worker’s pay. Wagemark certified organizations commit to capping top compensation at eight times the wage of their lowest paid decile (definition of decile – I had to look it up) of employees.
I know from the experiences of my nieces and nephews, and brothers, that it is a major event when the young adults move away for school. It’s not just the emotional and tuition costs but also the selection of the new home. In addition, the transporting of furniture and the associated costs can play havoc with a parent’s budget. I’ve mentioned the Moving Expenses Deduction available for personal tax returns to family, friends and clients but very few seem to want to take advantage of it when preparing personal tax returns for the students. Some of the reasons for ignoring this potentially valid tax savings are; I didn’t keep the receipts, it’s too complicated, it’s not going to help me, or I don’t know where to start. So as the exodus from family homes begins in a month or so, I thought I would share the simplified version of preparing for and the preparing of the Moving Expenses Deduction (CRA form T1-M).
If you move to study courses as a student in full-time attendance at a university, college or other educational institution that offers courses at a post secondary school level, you would qualify. The institution can be in Canada or not.
As a QuickBooksTM Pro Advisor here in Newmarket, Ontario, one of the key question clients ask me when looking for QuickBooksTM training is; “How long do you think it will take for me to learn what I need to know to do the bookkeeping for my company?” The answer is not straight forward if I don’t have all the facts i.e.; Have you done bookkeeping before? Have you used accounting software before? If yes to either of those questions then;
How long ago,
What type of software and
What type of business was it?
If you did bookkeeping on the old one-write system, I can’t assume you’ll grasp the concept of computerized bookkeeping. Once I have a better understanding of your experience I can suggest the amount of time I think it will take. The following is the guideline I use when doing QuickBooksTM training.
Well we’re coming up to the 6 month deadline for reporting payments made to subcontractors for construction services for 2012. Most of my clients report on an annual December 31st basis but those that are incorporated, report based on their year end. The reporting of T5018s is The Contract Payment Reporting System (CPRS) which must be filed with the Canada Revenue Agency (CRA) annually. This system became mandatory in February of 1998. Here is what you need to know.
A subcontractor, according to the CRA, is an individual, partnership, or corporation that provides constructions services. It doesn’t matter if the individual or company does not have a GST/HST number, or if their revenue is under $30,000. If the total amount of services supplied is $500 or more per year it must be reported. If an individual or business does not have a Business Number (BN), which is the same as the GST/HST registration number, then they must supply their Social Insurance Number (SIN).