If I Ignore CRA’s Request to File Outstanding Returns – Tales of Two Taxpayers - submitted by Lilly Woo, CA, CFE, CFP It has been a strange summer for me. As the 2014 tax season came to an end on April 30, 2015, I was relieved as always and mentally plan for the lazy summer I wanted to enjoy. Then a strange thing happened. I received a phone call from a friend (“Paul”) whom I have lost touch with six years ago. He sounded stressed right away. As soon as we were through the initial ... Read More
Small business corporate tax rates in BC heading downwardsSeveral changes to tax legislation announced in the 2015 Canadian federal budget were recently granted Royal Assent. A measure that is highly relevant for small businesses in BC going forward is the gradual decrease in the combined federal and provincial corporate tax rates over the next 4 years, which are as follows: 13.5 % - present rate 13.0 % - effective January 1, 2016 12.5 % - effective January 1, 2017 12.0 % - ... Read More
BC Realtors are currently having a banner year. Record prices and record sales equate to record income for realtors. Prior to 2009, realtors were forbidden to earn their income in the form of a corporation, which means they were barred from any tax saving opportunities available to Canadian controlled private corporations (CCPCs).
PREC: The Personal Real Estate Corporation, Corporate Tax Structure for BC RealtorsSince 2009, the Real Estate Council of British Columbia (RECBC) has ... Read More
The average small business owner in Vancouver has a limited budget to deal with their marketing, accounting, IT and high location rental costs. Successful businesses tend to be surrounded by strong support networks, which include bookkeepers and tax advisors. As a result, their books and records are orderly, current, and their tax filings are consistent with their accounting records. For these businesses, a CRA audit is merely a small project to attend to with the help of a professional ... Read More
It’s been about a month since the filing deadline for your 2014 personal income tax returns. Since then, the CRA has been sending out notices of assessment or requests for more information. In some taxpayers’ cases, they have received a notice of assessment, which reflects different results from the tax return they have filed. In rare cases, the notice will state that the taxes owing are lower than the amount calculated by the accountant. However, in most cases where there is a difference, the ... Read More
Right now, Canadians are rushing to file their personal income tax returns on time. At Mew and Company, we are gearing up to process all of the documentation needed to file complete and accurate returns by April 30, 2015. Although we have been preparing personal tax returns for many years, it feels like every year, there are more documents to request and process than the previous year. A significant reason for this is perhaps that my clients’ lives have become more complicated from a tax ... Read More
Income Splitting Using a Family Trust As discussed and referenced in previous blog posts, a successful corporation with surplus retained earnings can reap large tax-saving benefits from income splitting when done with spouse and children. When the owner/shareholder of a business wishes to take advantage of income splitting opportunities as his children reach adult age, the easiest and most economical way to accomplish this is by restructuring the existing share classes and holdings. Ideally, ... Read More
The 13.5% Corporate Tax Rate I have discussed or referenced in many corporate tax planning blogs that the biggest benefit to being an incorporated Canadian business is that the first $500,000 in corporate profits is taxed at a low 13.5% corporate tax rate. Professionals and their net profits from an incorporate practice also benefit from this corporate tax rate.
Tax Planning Problem for Professional PartnershipsHowever, many professionals work in a partnership business structure where ... Read More
Income Splitting Pre Planning We are now firmly into the 2015 calendar year and with the New Year come new tax laws aimed at reducing your family’s tax burden (eg. recently announced family tax cuts) and changes to existing tax laws that reduce old benefits (eg. higher personal taxes on ineligible dividends).
Ineligible DividendsIneligible dividends are essentially the type of dividends that most profitable Canadian small business owners get from their corporations. They represent the ... Read More
Penalties and interest charges are the most common tools the CRA uses to enforce compliance with the Canadian Income Tax Act. ‘Compliance’ refers to filing the tax and information returns in their entirety and on time. When a taxpayer (a person or a corporation) files late, there are late filing penalties on unpaid balances. There is another serious penalty in the Income Tax Act that is catching some taxpayers by surprise. This penalty arises when a taxpayer fails to report an income amount ... Read More