Entrepreneurship & Small Business

Taxation - answering any questions here

  • Last Updated:
  • Jan 11th, 2019 10:57 am
Newbie
Nov 2, 2018
2 posts
Hi. I have a question paying dividends during the first year of incorporation for my CCPC. I incorporated in Feb 2018 and would like to pay a dividend to recognize in my 2018 personal taxes. Do I have to wait for the end/after of the business fiscal year to declare the dividend, or can I declare and pay the dividend now (Nov 2018). I was planning on having a Jan 1 to Dec 31 fiscal year for the corporation as well.

Thanks very much.
[OP]
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Oct 30, 2017
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Ottawa, Ontario
AntLor wrote:
Nov 3rd, 2018 8:23 am
Hi. I have a question paying dividends during the first year of incorporation for my CCPC. I incorporated in Feb 2018 and would like to pay a dividend to recognize in my 2018 personal taxes. Do I have to wait for the end/after of the business fiscal year to declare the dividend, or can I declare and pay the dividend now (Nov 2018). I was planning on having a Jan 1 to Dec 31 fiscal year for the corporation as well.

Thanks very much.
Hi,
you can pay out dividends anytime you like.
for business rule, normally when a dividend paid, by a cheque to the shareholder , you should have a resolution signed by the directors. but since you are a small corp, it is ok.
then when it is the time for preparing T5s for 2018, you need to file them to CRA to show how much and to whom these dividends were paid in 2018. as well, when you prepare the corporate tax return, you need to have these information in schedule 3 of the T2. if you need help for preparing the T5 or schedule 3, you can message me and I can help.

so, you can pay yourself anytime you like, just keep track and report it properly when filing the T2 and have the T5 properly filed.

thank you
thank you very much
Philip Kwok, CPA, CGA
[OP]
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Oct 30, 2017
66 posts
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Ottawa, Ontario
Hi, when anyone has any questions, please let me know and I will try my best to help.
thank you very much
Philip Kwok, CPA, CGA
Member
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Mar 27, 2010
330 posts
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York Region
PhilipK796978 wrote:
Nov 7th, 2018 10:24 am
Hi, when anyone has any questions, please let me know and I will try my best to help.
How do you calculate what you have to pay for CCP when self-employed?
///
Sr. Member
Nov 12, 2014
532 posts
311 upvotes
Kingston, ON
Stn wrote:
Nov 7th, 2018 5:24 pm
How do you calculate what you have to pay for CCP when self-employed?
On your personal tax return.
[OP]
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Oct 30, 2017
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Ottawa, Ontario
Stn wrote:
Nov 7th, 2018 5:24 pm
How do you calculate what you have to pay for CCP when self-employed?
the equation is " (salary - $3500) x .0495 . this will give you the CPP contribution amount. if you are self employed, you need to multiple by 2, because you are paying both employer and employee contribution.

thank you
thank you very much
Philip Kwok, CPA, CGA
Sr. Member
Nov 12, 2014
532 posts
311 upvotes
Kingston, ON
PhilipK796978 wrote:
Nov 8th, 2018 8:45 am
the equation is " (salary - $3500) x .0495 . this will give you the CPP contribution amount. if you are self employed, you need to multiple by 2, because you are paying both employer and employee contribution.

thank you
There is also a maximum amount...
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May 12, 2004
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Philip,

I was recently made partner for the company I operate (Company A) and received 33% of the issued shares. Basically company was owned 50/50 by 2 seed investors and they are both giving me enough shares to make me 1/3 partner. Now I need to tell them what I want to do with these shares. What are the advantages of opening a personal holding corporation to register these shares versus just putting them in my own personal name?

Current situation;
- Wife is homemaker/housewife so I'm thinking she could pull a salary from the corporation? What are the ramifications if any of making her a shareholder in the holding company?
- I don't need the dividends to live on. Are there any tax benefits of the holding company owning US real estate?

Things get a little personal and convulated from there...so depending on your answers I might want to meet you in person.
Censorship is telling a man he can't have a steak just because a baby can't chew it.
- Mark Twain
[OP]
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Oct 30, 2017
66 posts
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Ottawa, Ontario
Cas77 wrote:
Nov 12th, 2018 10:33 am
Philip,

I was recently made partner for the company I operate (Company A) and received 33% of the issued shares. Basically company was owned 50/50 by 2 seed investors and they are both giving me enough shares to make me 1/3 partner. Now I need to tell them what I want to do with these shares. What are the advantages of opening a personal holding corporation to register these shares versus just putting them in my own personal name?

Current situation;
- Wife is homemaker/housewife so I'm thinking she could pull a salary from the corporation? What are the ramifications if any of making her a shareholder in the holding company?
- I don't need the dividends to live on. Are there any tax benefits of the holding company owning US real estate?

Things get a little personal and convulated from there...so depending on your answers I might want to meet you in person.
Hi Mark, in order to give you a detail answer, I will need some more personal detail, therefore you might need to private message me some additional detail.
but in general, rather to hold the operating company shares in personal or having a holding company depend on . 1. what kind of income will the operating corporation generates. 2. having a holding corporation is like building a shelter to your assets for legal proposes, will the business have any risk? do you have any assets that you like to protect? 3. your personal income level. how much funds you like to pay to yourself? can you keep the funds in the corporation?
Once I got more detail, I can explain to you in full detail of which one will be more benefit.

If you want your wife to earn income from the business, you will need to assign her some duties to justify this income. if she will be a shareholder of the holding corporation, she will still need to get involved in the business. when we discuss, I can give you some advise of what kind of duties you can assigned her to justify these income

if the corporation owns foreign property, US real estate, if only earning rental income, it is tax at high rate, close to 50%, but some portion is refundable, net will be about 28%, depending on your personal tax level, it might or might not be a benefit. But if you are operating a business and having an office there, that will be different. I need more detail.

Thank you very much. you can PM me and we can discuss more in private.
thank you very much
Philip Kwok, CPA, CGA
[OP]
Newbie
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Oct 30, 2017
66 posts
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Ottawa, Ontario
QN5252 wrote:
Nov 8th, 2018 9:57 am
There is also a maximum amount...
thanks for helping
thank you very much
Philip Kwok, CPA, CGA
Newbie
Sep 15, 2018
9 posts
Hello, in 2015 I purchased a company car and paid the full amount of it in cash. So I followed CRA rules for CCA. So I claimed the 1/2 rule for 2015. And the cca amount for 2016 and 2017.

In 2018, I purchased set of tires and claimed it as business car expense in Quick books in full.

Just a week ago, the car was involved in accident and the insurance company advised me that they will apprise the car value based on the market value and also include the tires cost as it was installed 10 days ago.

Please help me with the following:

1- I not sure how to record that in Quick Books?

2- what I should do for the taxation for the year end especially for the cca.? And how much I can include this year in the cca?

Moving forward:

A. if I decided to purchase new car to replace this one? What I should do?

B. If I decided to lease instead of buying, what I should do in this case?

Thank you again for the great help.
[OP]
Newbie
User avatar
Oct 30, 2017
66 posts
17 upvotes
Ottawa, Ontario
loudyca wrote:
Nov 18th, 2018 5:45 pm
Hello, in 2015 I purchased a company car and paid the full amount of it in cash. So I followed CRA rules for CCA. So I claimed the 1/2 rule for 2015. And the cca amount for 2016 and 2017.

In 2018, I purchased set of tires and claimed it as business car expense in Quick books in full.

Just a week ago, the car was involved in accident and the insurance company advised me that they will apprise the car value based on the market value and also include the tires cost as it was installed 10 days ago.

Please help me with the following:

1- I not sure how to record that in Quick Books?

2- what I should do for the taxation for the year end especially for the cca.? And how much I can include this year in the cca?

Moving forward:

A. if I decided to purchase new car to replace this one? What I should do?

B. If I decided to lease instead of buying, what I should do in this case?

Thank you again for the great help.
Hey Loudyca,
1. first record the repair cost, debit repair, credit bank. when insurance paid you, you credit repair and debit the bank
2. CCA will be the same, see 1. not touching the capital asset account. unless the automobile is a total loss, is it? give me detail here.

A. when you sold your car, you record the sale amount in disposal of capital, in the tax return, same thing. if the sale is more than the CCA balance, the amount will add to your income, if less, than you can claim that as an expense.
B. if you lease, it will consider as rent payment for tax purpose. while in accounting, it usually will record as a capital lease asset.

if you need more help, contact me.
thank you very much
Philip Kwok, CPA, CGA
Jr. Member
Mar 6, 2010
141 posts
31 upvotes
Brampton
OP
1. if I am an incorporated contractor, incorporated simply for the purpose of having a job, do I need to contribute to any EI, CPP or any other Govt mandated fund?
2.Since I am just starting to work from home and need to setup home office, can I claim cost of buying computer table, computer, chair, staionary, phone etc. as start up cost (lets say $1000)?
Thanks for the excellent selfless work done by you in this thread.
[OP]
Newbie
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Oct 30, 2017
66 posts
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Ottawa, Ontario
luking wrote:
Nov 19th, 2018 9:47 pm
OP
1. if I am an incorporated contractor, incorporated simply for the purpose of having a job, do I need to contribute to any EI, CPP or any other Govt mandated fund?
2.Since I am just starting to work from home and need to setup home office, can I claim cost of buying computer table, computer, chair, staionary, phone etc. as start up cost (lets say $1000)?
Thanks for the excellent selfless work done by you in this thread.
1. when you incorporate, the revenue goes to the corporation, therefore, corporation report revenue and file tax return. nothing to do with your personal side. you only pay payroll remittance when your corporation pay yourself a salary, since you are a 1 man corporation, you choose to pay yourself a bonus only once a year, and therefore, remit only 1 time. if you need more detail or help prepare the corporate return or T4s, contact me privately.

2. when you work from home, you can claim home office, based on home area, related to the work area you use at home. yes, you can claim furniture you purchase and all other stuffs as long as you purchase it for work.

if you need more help, let me know.
thank you very much
Philip Kwok, CPA, CGA
Deal Addict
Dec 12, 2009
2798 posts
928 upvotes
Toronto
I'm trying to understand how to handle meal expenses with respect to a government contract that pays a per diem meal allowance according to the national joint council schedule http://www.njc-cnm.gc.ca/directive/d10/ ... 2s98-tc-tm

To keep it simple, I want to look at a single meal. For example breakfast, I buy a coffee and bagel for $6.00 + $0.78 HST = $6.78
On my invoice I would include a breakfast meal allowance of $17.15 = $15.18 + $1.97 HST
In essence the difference between the 2 is profit.

Am I correct in thinking that when it comes time to file an HST return, the $0.78 is an ITC with the net HST payable as $(1.97 - 0.78) = $1.19?
In my bookkeeping, I would enter the $6.00 as an expense and the $15.18 as revenue earned.

What happens to the $6.00 expense @ Y/E. Does it get included in other meal expenses and subject to the 50% meals & entertainment reduction. Or because it is directly earning revenue do I allocate it to a separate expense account and claim the full $6.00 as an expense?

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