Entrepreneurship & Small Business

Taxation - answering any questions here

  • Last Updated:
  • Oct 11th, 2019 12:58 pm
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fairbairn wrote:
Jan 8th, 2019 12:40 pm
Thanks for the response Philip. I am selling goods that are zero-rated and shipping within Canada only. Does the $30,000 mean sales to customers in Quebec or worldwide? I plan on registering gst/hst and pst but not sure if required for the others.
$30000 is all the sales. if you are selling zero rated, it will be a good idea to have your GST account because you can get a refund for the gst you paid.
thank you very much
Philip Kwok, CPA, CGA
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can small business buy a vehicle for use as delivery vehicle be written off as business expense? or is it capital depreciation? what form to use and how to go about it? also, can the vehicle be bought new or used?
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divx wrote:
Jan 9th, 2019 1:26 am
can small business buy a vehicle for use as delivery vehicle be written off as business expense? or is it capital depreciation? what form to use and how to go about it? also, can the vehicle be bought new or used?
yes, it is a capital asset, and can write off in a couple of years. about 5-6 years normally. new or used doesn't matter. also, there is a price max. to be $30000 plus tax, cannot be higher than this amount
thank you very much
Philip Kwok, CPA, CGA
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Nov 22, 2016
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We report our USD sales and USD HST collected/paid using the monthly average CAD rate as we do HST quarterly reporting throughout the year.

However, at the end of the year we want to use the annual average rate for the year for corporate financial statement filing. I know we make a simple adjustment to sales in the fourth quarter to reflect the change in rate, but what do we do about the HST/GST we have claimed throughout the year using monthly averages?

Thanks,

Michael
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Michael4357 wrote:
Jan 10th, 2019 10:09 am
We report our USD sales and USD HST collected/paid using the monthly average CAD rate as we do HST quarterly reporting throughout the year.

However, at the end of the year we want to use the annual average rate for the year for corporate financial statement filing. I know we make a simple adjustment to sales in the fourth quarter to reflect the change in rate, but what do we do about the HST/GST we have claimed throughout the year using monthly averages?

Thanks,

Michael
I don't think is a good idea to change method during the year, CRA always match your HST return sales to your annually financial statement sales. therefore, you should file your annually financial following the same method.
thank you very much
Philip Kwok, CPA, CGA
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Nov 22, 2016
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Hi Philip,

So anyone that reports quarterly HST can not use the annual average rate for USD sales? I thought we could simply make an adjustment in fourth quarter reported HST sales, then the numbers would match up fine and CRA would see no descrepancy. We have always used the annual average rate for USD but this year we are required to do quarterly returns. So now our only option for USD sales you believe is using monthly averages?
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Michael4357 wrote:
Jan 10th, 2019 10:28 pm
Hi Philip,

So anyone that reports quarterly HST can not use the annual average rate for USD sales? I thought we could simply make an adjustment in fourth quarter reported HST sales, then the numbers would match up fine and CRA would see no descrepancy. We have always used the annual average rate for USD but this year we are required to do quarterly returns. So now our only option for USD sales you believe is using monthly averages?
I am just saying not to change calculation method between HST and financial report, if you use annual rate for HST, then use annual rate for T2. so for the first 3 quatar, the sales you report for hst should match the T2 total of sales for the same period, then if last quatar you change the rate, it should match the T2 total sales as well.
thank you very much
Philip Kwok, CPA, CGA
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Nov 22, 2016
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PhilipK796978 wrote:
Jan 11th, 2019 9:19 am
I am just saying not to change calculation method between HST and financial report, if you use annual rate for HST, then use annual rate for T2. so for the first 3 quatar, the sales you report for hst should match the T2 total of sales for the same period, then if last quatar you change the rate, it should match the T2 total sales as well.
So what are my options? Is it monthly usd average rate, monthly usd average rate for 9 months, then annual rate for 3 months, or finally just use the annual rate? We have always simply used the annual rate but this year having to report HST quarterly instead of annually has made that a lot more confusing as we cant use the annual rate for the first 9 months as it is obviously not available.
[OP]
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Michael4357 wrote:
Jan 11th, 2019 10:52 am
So what are my options? Is it monthly usd average rate, monthly usd average rate for 9 months, then annual rate for 3 months, or finally just use the annual rate? We have always simply used the annual rate but this year having to report HST quarterly instead of annually has made that a lot more confusing as we cant use the annual rate for the first 9 months as it is obviously not available.
use the last 3 months average rate for the last period. it will make it the same method as the previous 3 you reported
thank you very much
Philip Kwok, CPA, CGA
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Jan 18, 2019
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Hi Phillip, I just stumbled upon this thread and its fascinating, thank you. Here is my question.

I have a sole proprietorship and have done for 5 plus years. I have one client, who I need to keep with this company because of a number of reasons but basically this one large client needs to be invoiced through my sole proprietorship.
I have just got involved with a business parter and set up a company with him (it is incorporated), we do the same work as I do with the sole proprietorship. All my other clients have moved to this.

Question. How do I move the money earned from the sole proprietorship into the incorporation? One, because my partner is due 50% of that and second to move it from personal income to it being profit for the incorporation?

Thanks,

Andrew
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video77 wrote:
Jan 19th, 2019 9:37 pm
Hi Phillip, I just stumbled upon this thread and its fascinating, thank you. Here is my question.

I have a sole proprietorship and have done for 5 plus years. I have one client, who I need to keep with this company because of a number of reasons but basically this one large client needs to be invoiced through my sole proprietorship.
I have just got involved with a business parter and set up a company with him (it is incorporated), we do the same work as I do with the sole proprietorship. All my other clients have moved to this.

Question. How do I move the money earned from the sole proprietorship into the incorporation? One, because my partner is due 50% of that and second to move it from personal income to it being profit for the incorporation?

Thanks,

Andrew
Hey Andrew.
are we just talking about moving $$ from your sole to the corporation? if that is the case, it is simple, you can simply deposit $$ to the corporation and do it as a loan. However, this won't be able to transfer income. if your big client doesn't want the engage with your corporation, and the earned income still need to report in personal level.

The best solution from your setting is to have your corporation bill your sole for the work you did for this project for your big client. to do this, you need to be very client because your sole will act as only an agent but the actual work is done by the corporation and therefore income is earned under the corporation and your sole is only charging an agent fee.
things you might need to consider will also include HST and how they are paid from your client and charge by your corporation.

you should also discuss with your accountant of how to set this up and have all the necessary agreement drafted.
thank you very much
Philip Kwok, CPA, CGA
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Nov 10, 2018
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Asking for a family member.

Can a small business (sole proprietorship) claim moving expenses if they move from one place to another, exceeding 40km, but in both cases they work from home? There's no "need" per se to move, but the fact remains that they moved, and in excess of 40km.

My interpretation of rulings made in the TCC seem to indicate no, but that's based on my legal experience, and I have 0 accounting experience, so thought I'd ask here.
For legal topics and discussions, the opinion, guidance, and thoughts provided are my own and are not considered to be legal advice, in any manner.
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angryaudifanatic wrote:
Jan 21st, 2019 12:46 pm
Asking for a family member.

Can a small business (sole proprietorship) claim moving expenses if they move from one place to another, exceeding 40km, but in both cases they work from home? There's no "need" per se to move, but the fact remains that they moved, and in excess of 40km.

My interpretation of rulings made in the TCC seem to indicate no, but that's based on my legal experience, and I have 0 accounting experience, so thought I'd ask here.
you mean if a business move a office from one location to another? of course it can. and there is no limitation of the 40km. the limit is only for personal tax to claim. any expenses for business for income earning can claim against income tax
thank you very much
Philip Kwok, CPA, CGA
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Nov 10, 2018
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PhilipK796978 wrote:
Jan 21st, 2019 12:48 pm
you mean if a business move a office from one location to another? of course it can. and there is no limitation of the 40km. the limit is only for personal tax to claim. any expenses for business for income earning can claim against income tax
Hi Philip,

Sorry, it's a small business which is a sole proprietorship. Income from her business is filed as regular "income tax". Are you saying there is no limitation to the 40km in that case too? This is all new to her, and also me. She is 'self employed'

Thanks
For legal topics and discussions, the opinion, guidance, and thoughts provided are my own and are not considered to be legal advice, in any manner.
[OP]
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Oct 30, 2017
170 posts
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Ottawa, Ontario
angryaudifanatic wrote:
Jan 21st, 2019 12:54 pm
Hi Philip,

Sorry, it's a small business which is a sole proprietorship. Income from her business is filed as regular "income tax". Are you saying there is no limitation to the 40km in that case too? This is all new to her, and also me. She is 'self employed'

Thanks
if she is operating a business, she will need to complete the T2125 in her personal tax return. then in there, she report all her revenue, and expense. moving expense can include there
thank you very much
Philip Kwok, CPA, CGA

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