Canadian Bookkeeping Resources
Basic Tax Articles for Bookkeepers in Canada
Even if you don't do "tax", you need to understand the basics.
by L. Kenway BComm CPB Retired
YOU don't have time to spend looking for basic Canadian bookkeeping and tax information that may affect your business ...
... so I go hunting and find it for you to ensure you have it at your finger tips ... when you need it.
As a bookkeeper working from home and / or small business owner in Canada, YOU know tax planning doesn't happen when you file your tax return ...
YOU know tax planning happens every day throughout the year ...
By taking the time to learn and know the rules ...
So YOU can do all the little things needed to LEGALLY reduce your net taxable income.
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What You'll Find In This Chat ...
An index or table of contents ... for each series of basic Canadian bookkeeping articles focus on different aspects of tax compliance are outlined.
Click on any image below to go to the Executive Summaries for each series.
Series One
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Series Two
- Corporate Tax
- Issues for the owner managed business.
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Series Three
- Tax Audits
- Your options
- Improving your understanding
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Series Four
- Tax Compliance
- Basic Canadian bookkeeping information you really, really, really need to know
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Series Five
- Payroll Tax Notes
- Stuff small business owners need to know about
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Series Six
- Canadian Sales Taxes
- GST/HST in Canada
- BC PST Basics
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Claim tax credits in year paid
Claims for the Children’s Arts and Children’s Fitness tax credits are based on when the payment is made, NOT the year in which the activities are scheduled.*
The programs must be for 8 consecutive weeks or 5 days in a row. This means if you register your child for classes that run 4-6 weeks, they are not eligible for the credit. If your community center is running programs that do not meet CRA's requirements, speak to them about it.
*Source: The Knowledge Bureau, December 9, 2012 News
Let's make this clear for all my visitors before I get started ... I am not a tax expert like a tax accountant or lawyer but I do have some tax education classes under my belt.
While doing bookkeeping, I have learned a bit about small business taxes along the way. I do prepare tax returns for sole proprietors in Canada.
Welcome to Bookkeeping Essentials - The Tax Articles Index!
GOOD TO KNOW
Tax Filing Due Dates
Click here for due dates on:
- GST/HST
- Payroll
- Self-employed business taxes for T1-T2125
- Corporate taxes for T2
- Tax Slips
Looking for tax rates? Click here.
For your convenience ... and to help you deepen your tax knowledge,
this section is all about basic Canadian bookkeeping and tax information
relevant to doing your books.
That means you won’t find a lot about personal taxes here unless it relates to your business somehow. I will however provide a link to a highly reputable site where you will be able to find what you are looking for.
I provide some American (U.S.) small business tax information in The Tax - U.S section of this website.
I also try to provide references to U.S. tax pages near the top
of some pages. A site I like for personal U.S. tax rates information is US Tax Tips.
I'm going to start this chat out by talking about how governments raise tax revenues then move on to an executive summary index on all the articles ... so fill up the teapot and let's get begin.
Executive Summaries For Each Series ...
Basic Tax Knowledge For Small Business Recordkeeping
Tax filing deadlines and
due dates ... to Canadian sales taxes guide ... as well as tax planning
opportunities you work at 365 days a year.
Series 1 - Six Basic Canadian Bookkeeping Articles on ...
Tax Primer for Sole Proprietors
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Home Business Taxes Self Employment Tax Deductions
Canadian bookkeeping done properly assists in tax preparation. This article looks at basic tax savings and tax benefits for the self-employed work from home business owner.
Be ahead of the game this year, and find out what is legally deductible for income tax purposes. Then implement bookkeeping procedures so you capture what you need throughout the year.
Here are the basics discussed from a Canadian bookkeeping perspective:
- General rules of deductibility
- Reasonable expectation of profit
- Lines 8521 through 9270 on Form T2125
A question was asked in The Bookkeeping Forum on capital cost allowance. It is an optional tax deduction that you should be aware of if you are doing Canadian bookkeeping.
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Home Business Taxes Be Aware of What is Never Deductible & What has Limitations
A
tax planning opportunity for the self-employed home based business
owner so you are not caught with your pants down (so to speak) at tax
time. Be aware of what is NOT tax deductible on Form T2125.
Also learn about these basics discussed from a Canadian bookkeeping perspective:
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Home Business Taxes Watch Out For These Common Tax Mistakes
Another tax planning opportunity for the self-employed home based business owner so expenses are not disallowed during a tax audit. Read about 8 common tax mistakes self-employed workers make.
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Home Business Taxes Claiming Your Home Office Expense Tax Deductions
How sole proprietors claim home office expenses as a tax deduction when preparing their Canadian tax return. This is part of a series on Home Business Taxes - A Tax Planning Opportunity.
There is a section on "things to consider" when doing your Canadian bookkeeping so you can claim your home office expenses properly.
You will also find information on how HST affects you if your home office is in BC.
You can find more information on home office expense in The Bookkeeping Forum. - Will claiming this tax deduction create a capital gain when you sell your home? was discussed in Home Office Expense Deduction where change in use of principle residence was introduced.
- What portion of my utility and insurance bills can I deduct? is discussed in Home Office Deductions.
- Why won't the tax program let me claim home office expenses? was discussed in Home Office Expenses Cannot Create a Loss.
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Home Business Taxes Business Use of Your Personal Vehicle
Canadian bookkeeping and tax for business use of your personal vehicle is different than the U.S. ... so don't confuse U.S. rules with Canadian rules.
This article explains how to claim your business vehicle expenses on your personal income tax return using form T2125.
The rules are complicated and inflexible. Advance tax planning is necessary to take advantage of these potential tax benefits.
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Home Business Taxes Question and Answers Forum
Canadian bookkeeping basics is closely tied to home business taxes. Sometimes you need help ... I've put together some frequently asked questions and answers for the home based business owner who does their own bookkeeping in Canada ... Here's a sampling of the basic Canadian bookkeeping questions you'll find that relate to tax: Automobile Expense Related Questions - Does the $.52/km employee mileage allowance include GST? Can we claim GST tax credits on this expense when paid to us personally?
- Can I claim auto expenses if I do not have business coverage?
GST/HST Questions - Do you have to charge GST/HST on internet sales in Canada?
- Do you charge GST/HST on the sale of a business asset such as office equipment?
- Don't I pay more income tax if I voluntarily register for GST/HST?
Home Office Questions - What are the rules for business use of my home phone in Canada?
Sole Proprietor Questions - How do you input/report owner's draws on your personal tax return?
Business Tax Deduction Questions - Are bookkeeping service fees tax deductible in Canada?
- Are life insurance payments a tax deduction in Canada?
- Are tax penalties a deductible expense in Canada?
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Series 2 - A Basic Canadian Bookkeeping Article on ...
Owner Managed Corporations
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Use the information in The Bookkeeper's Notes on CCPC
as talking points with your accountant ... so you have a better feel for
what kind of information you are seeking. Some of the talking points
are:
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Loan To Shareholders CCPC Part 2
Beware of Conferred Shareholder Benefits
This chat reviews some of the very specific rules that apply when a corporation loans money to its shareholders and owner-manager remunerations.
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Corporate Minute Book CCPC Part 3
You will find information on maintaining your corporate minute book as well as your annual registration requirements. - What is it
- What Should It Contain
- Do You Need A Lawyer
- CCPC Annual Registration Requirements
- The Consequences of Not Maintaining Your Minute Book
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Series 3 - Four Basic Canadian Bookkeeping Articles on ...
Tax Compliance Audits
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Canadian Bookkeeper's Reference Page Understanding Tax Audits in Canada
Reduce your fear of tax audits by understanding the process.
It is your responsibility to have knowledge of and apply the tax
laws correctly, whether your return was prepared by a professional or
not.
In Canada, we have a self assessing tax system. If you are caught
evading tax, it is a criminal offense. Under tax law (unlike criminal
law), you are guilty until proven innocent.
Your best defense is due diligence through accurate record keeping.
Included in this article is a sidebar chat on Amending Your Tax Return to Avoid Penalties if you received some additional tax slips after you filed your return.
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More Tax Audit Articles
Three additional articles that may be of interest to are:
(1) What to do when you receive a notice saying you are going to be audited.
(2) Your rights as a taxpayer in Canada. Under taxpayer relief, you will find information on forms:
- RC4288 Request for Taxpayer Relief
- T1213 Request to Reduce Tax Deductions at Source
- ISP3520 Request for Income Tax Deductions.
(3) If you haven't filed past tax returns ... or you filed an inaccurate return, learn about CRA's Voluntary Disclosure Program which grants taxpayer relief to those who satisfy the conditions.
There is information for bookkeepers on how to protect themselves against third party civil penalties ... need to know when doing Canadian bookkeeping.
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I thought you might find this information interesting and informative. Check out these links!
- How to run into trouble with Revenue Canada?
- The five types of audit Revenue Canada performs each year.
- Watch out for those lifestyle audits! The cash myth and your lifestyle.
- There are only five ways to pay no tax.
- Get information on the CRA website by typing "what's new" in their search box.
See you on the next page ...
Your tutor Lake
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