Entrepreneurship & Small Business

Taxation - answering any questions here

  • Last Updated:
  • Mar 20th, 2024 10:57 am
Deal Addict
User avatar
May 22, 2005
3196 posts
735 upvotes
Not sure if this is the best thread to post in, but as "simple" as my tax scenario seems, this is the first time I'm submitting a return with self-employed income with a US-based employer (it gets more convoluted from there).

Any suggestions for a good accountant with US/Canadian tax knowledge that won't break the bank?
Newbie
Mar 5, 2020
30 posts
11 upvotes
I was tipped after answering an income tax question. Should I provide them with a receipt? Is this still part of being a deductible expense as per preparing/filing income taxes?
Member
User avatar
Oct 30, 2017
250 posts
71 upvotes
Ottawa, Ontario
Great to be back. if you have questions, please let me know
thank you very much
Philip Kwok, CPA, CGA
Member
User avatar
Oct 30, 2017
250 posts
71 upvotes
Ottawa, Ontario
Jyelong wrote: Hi there.
Quick question - my business end year is January 31. I had invoiced a client before end-year (and the work I did for them took place and was completed before the end of the last fiscal year). However, their payment was delayed because of a bank issue and I received in the current fiscal year.
For tax return purposes, should I report this income under last fiscal year or current fiscal year?
Thanks!
all revenue and expenses are in accural , not cash basis. so it is when you issue the invoice, or when you receive a bill. that's how CRA will look at revenue and expenses
thank you very much
Philip Kwok, CPA, CGA
Newbie
Oct 11, 2018
12 posts
hi, I am planning to do my small business tax filing this year as I do not have any employee only me the owner and no investment(not complicated small business). when I checked the balance sheet schedule 100 of last year I found 2 things I do not understand (2018 was field by 1 accountant different than the accountant who filled 2017 and 2016)
the first thing is - incorporation cost line 2018 in the balance sheet of the ( T2 Corporation Income Tax Return) document is 370 but when I checked 2017 and 2018 tax return I found it 420 (Can please explain what is incorporation cost and why my 2 previous accountants put a different amount. also when I checked the document called (Financial Statements), I found the 370 and 420 amount is recorded under different names which are (Goodwill and intangible assets ) also can you explain why. and when I file this year what amount should I put 370 or 420
the second question also in the balance sheet also under the liability part I see (Due to shareholder(s) / director(s) - current amounts) and the amount is 360 I checked everything and i do not see that the company owes me any money and I did not lend any money to the corporate and any expenses I did pay it from my personal bank account I took it already from the business. my question is there any explaining why is it there (did the accountant found the balance sheet is not balanced so he put this amount to fix it ) and what I should do this year do I need to put it again when I file taxes for 2019. sorry for the long post. and thank you for your help
Member
Dec 14, 2015
203 posts
85 upvotes
Toronto, ON
Hi, I was reading online on capital gains tax and have a question, hopefully someone can help me :)

I own a 4-storey property through an incorporated company and receive monthly rental income from a retail tenant on the first 2 floors (my family lives on the top 2 floors)
My question is if I am planning to sell this property in a few years, does it make a difference on capital gain tax whether I own the property directly or through an incorporated company?

thanks!
Member
User avatar
Oct 30, 2017
250 posts
71 upvotes
Ottawa, Ontario
EmadM11432 wrote: hi, I am planning to do my small business tax filing this year as I do not have any employee only me the owner and no investment(not complicated small business). when I checked the balance sheet schedule 100 of last year I found 2 things I do not understand (2018 was field by 1 accountant different than the accountant who filled 2017 and 2016)
the first thing is - incorporation cost line 2018 in the balance sheet of the ( T2 Corporation Income Tax Return) document is 370 but when I checked 2017 and 2018 tax return I found it 420 (Can please explain what is incorporation cost and why my 2 previous accountants put a different amount. also when I checked the document called (Financial Statements), I found the 370 and 420 amount is recorded under different names which are (Goodwill and intangible assets ) also can you explain why. and when I file this year what amount should I put 370 or 420
the second question also in the balance sheet also under the liability part I see (Due to shareholder(s) / director(s) - current amounts) and the amount is 360 I checked everything and i do not see that the company owes me any money and I did not lend any money to the corporate and any expenses I did pay it from my personal bank account I took it already from the business. my question is there any explaining why is it there (did the accountant found the balance sheet is not balanced so he put this amount to fix it ) and what I should do this year do I need to put it again when I file taxes for 2019. sorry for the long post. and thank you for your help
Hey there, incorporate cost, is the fees you need to incorporate your corporation. why there are different amount? may be because you paid additional amount in later year? this should add to schedule 8, i believe class 14.1, or may be they expense it for you in that year since it is a small amount.

due to shareholder, it is the amount of funds you paid to the company and you can withdraw from the company tax free. it is usually result in bank balance adjustment. for example, once you provided revenue/expenses to your accountants, they assume they are paid from corporate bank, and if the ending result is different to what is shown on the bank statement, they will adjust it to due to shareholder account because they think you might have paid/withdraw funds from the bank.

i won't be able to give you exact answer, you will need to ask them for detail, but since it is a small amount, I don't think you will have any issue. if you have more questions, let me know
thank you very much
Philip Kwok, CPA, CGA
Member
User avatar
Oct 30, 2017
250 posts
71 upvotes
Ottawa, Ontario
SojuSoldier89 wrote: Hi, I was reading online on capital gains tax and have a question, hopefully someone can help me :)

I own a 4-storey property through an incorporated company and receive monthly rental income from a retail tenant on the first 2 floors (my family lives on the top 2 floors)
My question is if I am planning to sell this property in a few years, does it make a difference on capital gain tax whether I own the property directly or through an incorporated company?

thanks!
if the corporation has ownership, then the corporation will report the capital gain, not you. the corporation will be tax on this.
thank you very much
Philip Kwok, CPA, CGA
Member
Oct 11, 2013
295 posts
161 upvotes
Almost American
How does buyouts of companies work? If I own a 100% of the shares of a Federally incorporated company that gets bought out for $1M for example, what happens? Am I taxed on the entire $1M at my marginal rate or is there some ability to shelter from insane amount of tax?
Newbie
Oct 11, 2018
12 posts
PhilipK796978 wrote: Hey there, incorporate cost, is the fees you need to incorporate your corporation. why there are different amount? may be because you paid additional amount in later year? this should add to schedule 8, i believe class 14.1, or may be they expense it for you in that year since it is a small amount.

due to shareholder, it is the amount of funds you paid to the company and you can withdraw from the company tax free. it is usually result in bank balance adjustment. for example, once you provided revenue/expenses to your accountants, they assume they are paid from corporate bank, and if the ending result is different to what is shown on the bank statement, they will adjust it to due to shareholder account because they think you might have paid/withdraw funds from the bank.

i won't be able to give you exact answer, you will need to ask them for detail, but since it is a small amount, I don't think you will have any issue. if you have more questions, let me know
thank you for your reply. I still have some questions (as I do not have any connection with my previous accountant) 1- why the amount of incorporation cost is recorded under the incorporation cost in the balance sheet of the ( T2 Corporation Income Tax Return) document and the same amount is recorded under (Goodwill and intangible assets ) in the (Financial Statements) document 2- for the amount of (due to shareholder ) do I need to put again in the balance sheet when I file tax this year 3- for all my earning I collect GST from my customer and pay it back to CRA what about if I got a gift from my customer how I record this amount when I file the tax this year and do I need to pay GST to CRA for this amount.
Member
Dec 14, 2015
203 posts
85 upvotes
Toronto, ON
PhilipK796978 wrote: if the corporation has ownership, then the corporation will report the capital gain, not you. the corporation will be tax on this.
thanks, that was my question, which way will I be taxed less?
As the owner of the corp which owns the property? or as the direct owner of the property?
Newbie
Jul 16, 2020
2 posts
I have an Ontario Corporation where I claim my business income. I want to add my wife into the corporation, but was wondering if there was a way I could amend the corporation or hold the shares in trust for her?

I'd like to avoid having to file a Form 1 (Notice of Change) or Form 3 (for amendments). I'd like to have it done on the back-end if possible. (Basically only myself, my wife, and the accountant/lawyer are privy to this change)
Member
User avatar
Oct 30, 2017
250 posts
71 upvotes
Ottawa, Ontario
EmadM11432 wrote: thank you for your reply. I still have some questions (as I do not have any connection with my previous accountant) 1- why the amount of incorporation cost is recorded under the incorporation cost in the balance sheet of the ( T2 Corporation Income Tax Return) document and the same amount is recorded under (Goodwill and intangible assets ) in the (Financial Statements) document 2- for the amount of (due to shareholder ) do I need to put again in the balance sheet when I file tax this year 3- for all my earning I collect GST from my customer and pay it back to CRA what about if I got a gift from my customer how I record this amount when I file the tax this year and do I need to pay GST to CRA for this amount.

LET ME TRY AGAIN,
1. these pretty much means the same thing, they are all itangible, why? I don't know, but it does have the same meanings pretty much.
2. yes, it must be in T2 also, otherwise, the balance sheet won't balance
3. if you get a gift, like wine? i think you don't need to

I really think you should get help from accountant to file the T2 because base on what you said here, you don't have a full understanding of it and it is an issue if you filed it wrong
thank you very much
Philip Kwok, CPA, CGA
Member
User avatar
Oct 30, 2017
250 posts
71 upvotes
Ottawa, Ontario
TaxationNoob wrote: I have an Ontario Corporation where I claim my business income. I want to add my wife into the corporation, but was wondering if there was a way I could amend the corporation or hold the shares in trust for her?

I'd like to avoid having to file a Form 1 (Notice of Change) or Form 3 (for amendments). I'd like to have it done on the back-end if possible. (Basically only myself, my wife, and the accountant/lawyer are privy to this change)
to add shareholder, you don't need to give any forms to Ontario Ministry , only a change of director
but be careful of any benefit issue here because if there is any value in the company now, but simiply give her share can trigger a gift and then taxable
thank you very much
Philip Kwok, CPA, CGA
Newbie
Oct 11, 2018
12 posts
PhilipK796978 wrote: LET ME TRY AGAIN,
1. these pretty much means the same thing, they are all itangible, why? I don't know, but it does have the same meanings pretty much.
2. yes, it must be in T2 also, otherwise, the balance sheet won't balance
3. if you get a gift, like wine? i think you don't need to

I really think you should get help from accountant to file the T2 because base on what you said here, you don't have a full understanding of it and it is an issue if you filed it wrong
thank you for your advice but the previous accountant made a lot of mistakes in 2018 personal tax and this year i made a change of 2018 TAX return and i filed 2019 personal myself and it went very well. regarding my business tax last year he did mistakes also but I discovered and I made him correct it . as I said i did my personal tax and I do payroll deduction and t4 by myself I know business tax is not easy as personal tax but I try to understand it . because my small business only has around 40 000 earning and I am only the employer and employee in the same time that is why I feel it is ok to file it I did income statement very well .i only has difficulty with the balance sheet and my previous accountant did it wrong last year and he changed it many times. regarding the gift, it is a 500 dollar cheque written to my business account my customer gave it me at Christmas so I asked where can I put it in my T2 business tax, and if I include it as an income do I need to pay GST to CRA . thank you again for your sincere advice and because you are giving good advice I like to get your opinion even I have an accountant still I like to ask you
Newbie
Dec 6, 2018
7 posts
4 upvotes
Hello. I have hired a Nanny to care for our two children 6 and 2. Part time. I have registered for a business number and considering her as an employee. Being that she will be working in my house, will there be any available tax credits I can claim in relation to business expenses. I am aware of child care expenses claims. I inquiring about household expenses: Heat, hydro, mortgage, property taxes; if so , any other, and how?
Thank you. Ontario
Member
User avatar
Oct 30, 2017
250 posts
71 upvotes
Ottawa, Ontario
MrMclovin wrote: Hello. I have hired a Nanny to care for our two children 6 and 2. Part time. I have registered for a business number and considering her as an employee. Being that she will be working in my house, will there be any available tax credits I can claim in relation to business expenses. I am aware of child care expenses claims. I inquiring about household expenses: Heat, hydro, mortgage, property taxes; if so , any other, and how?
Thank you. Ontario
if you are paying her by your corporation, then it is a salary expenses for the company. however, since her work has nothing to do with your business, CRA might not accept that if they saw it.
normally people pay the nanny by personal funds, then report this as child care expenses in personal tax
thank you very much
Philip Kwok, CPA, CGA
Member
Dec 14, 2015
203 posts
85 upvotes
Toronto, ON
SojuSoldier89 wrote: thanks, that was my question, which way will I be taxed less?
As the owner of the corp which owns the property? or as the direct owner of the property?
@PhilipK796978 can you please help? thanks!
Member
User avatar
Oct 30, 2017
250 posts
71 upvotes
Ottawa, Ontario
SojuSoldier89 wrote: @PhilipK796978 can you please help? thanks!
DEPENDS ON YOUR PERSONAL INCOME OF THE YEAR.
FOR CORPORATION, CAPITAL GAIN WILL BE TAX AT ABOUT 25% WITH A PORTION BEING REFUNDABLE
thank you very much
Philip Kwok, CPA, CGA
Jr. Member
Oct 23, 2006
151 posts
49 upvotes
Thx Philip for all your help.

Some GST questions.

Corp has been filing GST annually (3 or 4 months after fiscal year end) since net GST/QST payable was under 3k.

Since this yr we are headed towards 30k net GST/QST payable I was wondering if

corp will have to file earlier than the 3-4 months after year end or make installment payments since payable is above 3k.

and what are implications for future year filings as we expect next year GST/QST payable to be under 3k

Top

Thread Information

There is currently 1 user viewing this thread. (0 members and 1 guest)