Can’t find a Tax Slip?

… Read How to Find It and What Happens If You Don’t

By 30th April, you’ll likely find a home littered with receipts and other transaction documents.

Yet with all the receipts and tax slips you’re supposed to keep, it’s likely some are going to go missing. A missing slip may have a big impact on your tax bill. Here is a due diligence checklists to help you avoid any penalties on missing or inaccurate information.

Check your “My Account “account online

My Account for Individuals is a great place to start to check your information. By logging into your account, you should be able to find online versions of your T4 slips. You’ll also be able to check carry forward balances like tuition credits or capital losses, as well as your RRSP contribution limits.

How to Choose a Fiscal Year-End

It’s one of the first questions people ask themselves after incorporating:

Why choose a fiscal year-end?

A corporation’s fiscal year is an accounting cycle that serves as the basis for its income tax return. At the fiscal year-end, a corporation must prepare its financial statements then file its T2 corporate income tax return. The T2 tax return must be filed within 3 months after the fiscal year-end date to avoid interest and within 6 months to avoid late filing penalties.

So how do I choose a fiscal year ?

Just file your T2 return and your fiscal year will then be set. While the CRA may ask you to choose a fiscal year-end when you first incorporate, this generally relates to your GST/HST filings and can always be changed. Only by filing the first T2 tax return do you lock in your fiscal year.

Note that once you do lock in that fiscal year-end with CRA, it will be a bit of a process to change it. To avoid any hassle and additional professional fees, you want to make sure you choose your year-end carefully.

CRA Audits: Will I Be Selected?

I am often asked how the Canada Revenue Agency (“CRA”) selects its audit victims; oops, I meant to say taxpayers subject to audit. Basic instinct would suggest that certain taxpayers, certain claims and certain industries seem to trigger audits. With this in mind, I will list below how I believe the CRA may selects certain individuals and businesses for audit.

Reasons for Individuals and Corporations

I would suggest there is nothing worse than a scorned lover, a business partner you have had a falling out with or a dismissed employee to trigger a CRA audit. These individuals know your little secrets; a cash deal here, an offshore account there and a conference you expensed that was really a vacation. These people are also vindictive and in some cases, they make statements and claims that are not factual in nature; however, the claims are enough to bring the CRA to your door.

CRA also loves net worth audits. These are audits undertaken because you live in a 3,000 square foot home, have a Porsche and kids in private school, and yet show minimal income on your tax return.  Typically CRA either stumbles upon these situations, or information from one of the individuals noted in the preceding paragraph provides a lead.

Tax Deductions Tip: Charitable Donations

Did you know that the Canada Revenue Agency (CRA) allows a federal tax credit on charitable donations?

It’s true! You are allowed charitable donations of 15% for the first $200 and 29% on amounts over $200 up to a maximum of 75% of net income. The provincial tax credit for Ontario residents is 6.05 per cent of the first $200 and 11.16 per cent of any amount over $200.

Spouses can also combine their contributions to maximize this great feel-good tax break, which is a very important part of our Canadian giving culture anyway. Basically, charitable donations are a win-win for everyone!

Furthermore, and a very important thing to note, your contributions do not need to be claimed in the same tax year they were made, but can be carried forward for up to five years. FIVE YEARS!

Donations under the $200 limit can be accumulated and claimed in later years to qualify for the higher credit allowance.

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*p.s. Click here to contact me anytime for help with your Small Business Accounting, Bookkeeping, Taxes, and much more.