How Tax Changes Affect the Upcoming School Year

We are officially into the fall season and students are fully immersed in their studies by now. Whether you’re a parent or post-secondary student, this is the first full school year affected by previously announced tax changes that we, your Kelowna accountants, spoke about in our article from June.

Unfortunately, the tax changes for students at all levels means higher after-tax costs for education-related expenses. For students enrolled in the public education system, there is no cost to attend school. Some public school kids are, however, enrolled in one or more after-school activities and almost all of these activities require out-of-pocket costs.

Depending on the activity, these costs can easily be covered or amount to several hundreds of dollars over the school year. Up until the recent tax changes, parents were able to offset these costs by claiming their children’s arts and sports activities.

Both credits were eliminated as of the 2017 tax year.

Kelowna accountants

Parents must now budget on the basis that they will be paying the full cost and will not be claiming any offsetting tax credit on their tax return for 2017.

Kelowna accountants will tell you there is some good news. For parents of elementary school-aged children, costs that are incurred for after-school care, a deduction can still be claimed for such costs. This deduction is part of the general child care expense deduction and can be claimed, within limits, where child care costs are incurred in order for parents to work either at employment or self-employment.

The amount of deduction claimable depends on the age of the child and the actual amount expended. The Kelowna accountants at our office, Kerr & Company, are happy to go through the rules in claiming child care expenses.  You can also find more information on the Canada Revenue Agency (CRA) website.

At the post-secondary education level, students and their parents have benefitted for many years from an “assist” through the Canadian tax system.  This has provided deductions and credits for some of the many associated costs.

Again, two of those credits are no longer available to be claimed.

Tuition for post-secondary education is always the biggest cost.  The tax credit provided for eligible tuition costs continues to be available for the upcoming academic and taxation year. Any student who incurs more than $100 in tuition at an eligible post-secondary institution can still claim a non-refundable federal tax credit of 15% of such tuition costs.

Equivalent provincial or territorial credits are also available. Talk to us, your Kelowna accountants at Kerr & Company, to find out what is available to you.  At both the federal and provincial levels, the credit acts to reduce tax otherwise payable. Where a student doesn’t have tax payable for the year, as is often the case, any credits earned can be carried forward and claimed by the student in a future year, or transferred in the current year to a spouse, parent, or grandparent.

Post-secondary students have also been able to claim two other federal tax credits — the education tax credit and the textbook tax credit. These tax credits have both been eliminated.  The only credit which will be claimable for the upcoming academic year is the non-refundable credit for 15% of tuition costs incurred.

If the education and textbook credits have been earned but not claimed in previous years, they are still available to be claimed by the student as carryover credits in 2017 or later years.

The CRA publishes a very useful guide to tax measures affecting students here.  If you have questions regarding these tax changes and what you can and cannot claim, talk to Kerr & Company, your Kelowna accountants and experts.

Contact us today for your free consultation.  Visit www.kerrtaxcpa.com

Kelowna Chartered Accountants: Useful Tips for Responding to a First Installment Reminder from the CRA

Right about now, Canada Revenue Agency (CRA) is sending out some unwelcome and surprising news to millions of Canadians.  As Kelowna chartered accountants, we work hard to ensure that these letters never make a surprise visit to your mailbox. However, if you were one of those Canadians who received an Installment Reminder from CRA to make payments of income tax on September 15th and December 15th of this year, then we are here to offer some advice on how to handle the news.

Receiving unexpected mail from the CRA, especially a letter asking for payments of tax to be made this year (instead of when the return is filed next April) can be alarming.  Kelowna chartered accountants are very familiar with these requests but it’s safe to say that most Canadians are not.

Why is the installment payment system so unfamiliar and how can Kelowna chartered accountants, help the situation?

The reason that all of this can be puzzling is that most of us pay income taxes through a different system.  As an employee, tax is automatically deducted from your paycheque by the employer before that paycheque is ever issued.

That tax is then remitted by the employer to the CRA on your behalf and you are credited with those remittances when filing the annual tax return for that year. Easy, right?

As employees, you generally don’t have to worry about this efficient system as it operates without the need to take any additional steps.  However, when retirement begins, it’s not surprising that most people do not contact their Kelowna chartered accountants.  Consequently, they are not aware that it is now up to them to make specific arrangements for the payment of income taxes.

Kelowna Chartered Accountants

Some of you may have only had one income source your entire working life and that can add to the confusion.  As you enter retirement, there can be numerous income sources including Canadian Pension Plan and Old Age Security payments.  Maybe you received an employer-sponsored registered pension plan (RPP) or a registered retirement income fund (RRIF).  Unless you’ve already spoken to Kelowna chartered accountants and have made arrangements, none of these payors will deduct income tax from the payments or remit them to the CRA on your behalf.

You, as a taxpayer, may be required to pay installments if the amount of tax owed when a return is filed is more than $3,000 ($1,800 for Quebec residents) in the current (2017) year and either of the two previous (2015 and 2016) years.

First Installment Reminders are issued in August and this has to do with the schedule on which Canadians file their tax returns. Because of the April 30th filing deadline (or June 15th for self-employed and their spouses), the CRA will have the information needed by the end of July to determine whether you are one of the millions of people who should receive a First Installment Reminder.

A First Installment Reminder can be triggered by a retirement within the past two years.

Here’s an example:

John retires at the end of 2015 from employment in which tax deductions were always automatically taken from his paycheque. In January 2016, John’s sources of income change.  He doesn’t receive the paycheque from his employer anymore but received benefits from the Canada Pension Plan and Old Age Security, as well as a monthly withdrawal from an RRIF.

In order for John to have the appropriate amounts of tax withheld from those income sources during 2016, he would have calculated the amount of total tax liability for the year.  He also would have had to make arrangements for that amount to be withheld from one or more of those three income sources.

Most taxpayers who have paid taxes the same ways for many years, don’t realize that these arrangements and calculations are needed. They tend to focus on the excitement of retirement and the adjustment to their new lifestyle.

It is very likely that more than $3,000 in tax will be owed when John files his tax return for 2016. the taxpayer’s income levels and withholding amounts are unchanged for 2017 and it can be expected that, once again, more than $3,000 will be owed on filing, the criteria for the instalment requirement would be met and a tax instalment reminder would be issued in August 2017, after the return for 2016 is assessed.

Kelowna Chartered Accountants

If your income levels and withholding amounts are unchanged for 2017, it can be expected that, once again, more than $3,000 will be owed when filing.  This will result in a tax Installment Reminder being issued in August 2017, after the return for 2016 is assessed.

You may be confused why you’re receiving a “reminder” and not a “requirement” to pay.  It is not a law to make installment payments.

Kelowna chartered accountants can help you fully understand each of your THREE options.

1. Pay the amounts specified on the reminder

Pay exactly what the CRA has requested by the due dates of September 15th and December 15th.  This will ensure that you won’t have to pay any interest or penalty charges even if you have an additional amount to pay upon filing in the spring. If you end up paying more in installment payments than owed, a refund will be issued when you file your next tax return.

2. Make payments based on the total amount of tax owed and paid in the previous tax year

If your income has not changed between 2016 and 2017, and available deductions and credits remained the same, it is more than likely that the total tax liability for 2017 will be the same or slightly less than it was in 2016, owing to the indexation of tax brackets and tax credit amounts.

3. Make payments based on an estimated amount of tax owed for the current year (2017)

If your income has decreased from 2016 and 2017, there will be a reduction in tax payable making this option worth considering.  If you wish to take this approach, contact Kelowna chartered accountants at chris@kerrtaxcpa.com and we can discuss whether this option is best for you.

You can also get more info from CRA’s website here: https://buff.ly/2wKcl0O

Many people don’t prepare their own tax returns, so it’s understandable that this can be overwhelming and confusing to most.  As Kelowna chartered accountants, we want you to be aware of what these reminders are and that you have other options than those stated in the reminder. If you don’t want to bother with tax calculations, then pay the installments as set out in the reminder and you can be sure that you won’t incur any interest charges or penalties.

Now that we’ve covered what the installment reminder is and what other options are available to you, the remaining question that most taxpayers have is how these payments can be made. Again, as your Kelowna chartered accountants, we can discuss the options available to you and which would be best.  More info can also be found here: https://buff.ly/2wK9CV6

If you have received an installment reminder, are confused about your options or need help choosing a payment option, please visit our website at www.kerrtaxcpa.com or call us at (250) 448-6299 in Kelowna or (604) 329-7072 in Vancouver to set up your free consultation.

 

Tips on Claiming a Deduction for Moving Expenses

Spring is a busy time, especially this year in Kelowna, with real estate sales.  Now that summer is here, kids are out of school, lives are being packed up and all of those spring buyers are making the move into their new homes.  If you’re one of the many moving to Kelowna or the surrounding area, you’ve likely racked up quite the pile of moving receipts. You may have questions for a Kelowna accountant in the near future about whether or not you can claim a deduction for these recent expenses and I’m here to clear up the confusion.

moving to kelowna

Many people moving to Kelowna are aware that a tax claim of some kind can be made in respect to expenses, but only a few discuss them with an accountant and are not aware that these tax claims can be made only in certain circumstances.

As your local Kelowna accountant, we can determine what can and cannot be claimed, making your life a whole lot easier come tax time.

Many people moving to Kelowna have done so by choice, but that doesn’t make the process of moving any less stressful or costly.

An accountant will start with an assessment of the reason for the move.  If your move to Kelowna was to bring you at least 40 kilometers closer to your new work location, eligible moving expenses will be deductible.

You can claim a deduction for eligible costs incurred, but that deduction can be made only from income earned at the new place of employment. So, if you moved to Kelowna in July, you can only deduct eligible moving costs from income earned between the date of the move and December 31st of that year.

Moving is never cheap, especially if the move has been a long distance one.  The extra costs incurred may be greater than the income earned.  In those cases, a Kelowna accountant can determine if any of those moving expenses can carry forward and be deducted from the income earned at the new place of employment in the following taxation year.

 

The following are moving expenses that The Canada Revenue Agency (CRA) WILL allow a deduction to be claimed:

  • Transportation and storage costs— You can claim transportation and storage costs for household items, boats, and trailers.  These costs would include packing, hauling, movers, in-transit storage, and insurance.

 

  • Temporary living expenses— You can claim any costs incurred for meals and temporary accommodation near the old or the new residence.  All members of the household are covered to a maximum of 15 days.

 

  • The cost of breaking a lease— It is not possible to claim any rental payments for any period of time prior to cancelling a lease but you may claim the cost of cancelling the lease.

 

  • Costs due to address change— The cost to replace legal documents, driver’s licenses and non-commercial vehicle permits due to the new address change are permitted.  This includes costs of utility hook-ups and disconnections.

 

  • Costs to maintain the vacant old residence— You can claim up to $5,000 in costs for interest, property taxes, insurance premiums, and the cost of heating and utility expenses paid to maintain the vacant residence while efforts were being made to sell the property.  The costs must have been incurred when the old residence was vacant and not occupied by the taxpayer or any of the household members.  Claims cannot be made for any period of time the residence was rented to someone else.

 

  • Costs to sell the old residence — Advertising costs, notary or legal fees, real estate commissions, and mortgage penalties can all be claimed as deductions.

 

The following are moving expenses that the CRA WILL NOT allow a deduction to be claimed:

  • expenses for renovations to make the old home more saleable;
  • mortgage default insurance;
  • travel costs due to house-hunting trips prior to the move;
  • the value of items movers refused to take (plants, frozen food, ammunition, paint, and cleaning products);
  • costs incurred during job hunting in another city;
  • expenses to clean or repair a rented residence;
  • costs to replace personal-use items such as tool sheds, window coverings, and carpets;
  • mail-forwarding costs;
  • costs of transformers or adaptors for any household appliances;
  • costs incurred in the sale of the former residence if you choose to delay the sale for investment purposes or until the real estate market improved; and
  • any loss from the sale of the former home.

moving to kelowna

You’ll more than likely drive yourself and your family to the new home.  Travel costs in doing so qualify for the moving expense deduction.  The term “travel costs” is quite broad but includes vehicle expenses and the cost of meals for you and your family.

You may choose to keep every receipt you’ve picked up along the trip and claim the total amount paid.  Or, if just thinking about calculating those costs gives you a headache, the CRA has a simplified method.  They allow vehicle and meal expenses to be claimed as a flat rate for each.

The vehicle expense claim is on a per-kilometre rate with a specific rate per province, using the rate in the originating province.  

The meal expense rate is the same regardless of the province in which the move began.

A move to Kelowna is positive and exciting!  Yet there’s no escaping the fact that every move is disruptive, stressful, and costly.

The tax system can’t alleviate any of the stress that comes with relocating but speaking to a Kelowna accountant and getting the facts right away will drastically lessen the stress during tax season.

You are entitled to claim a deduction because of your recent relocation and as your trusted Kelowna accountant, I will assess your moving expenses and get the eligible deductions owed to you. Let’s put your plan together now so there are no unwanted surprises at tax time.  Contact me here: chris@kerrtaxcpa.com

4 Changes To 2017 Personal Tax Credits You Must Know

The Canadian tax system is in a constant state of change and evolution. New measures are introduced and existing ones are “tweaked” through a never-ending series of budgetary and other announcements. As a Kelowna accountant serving the Vancouver and Kelowna area, 2017 is a year in which I’ve seen more than usual tax changes affecting individual taxpayers. Unfortunately, most of those changes involve the repeal of existing tax credits which are claimed by millions of Canadian taxpayers.

Kelowna Accountant desk with calculator and income tax

The repeal of credits will show up for the first time on the individual income tax return for the 2017 tax year, to be filed in the spring of 2018.

For the most part, the changes mean the loss of existing credits. Not being able to make those credit claims will mean a higher tax bill for taxpayers who have claimed them in previous years. Knowing what lies ahead allows taxpayers to make an accurate assessment during the year of the true after-tax cost of any contemplated expenditures and make their spending decisions in light of that knowledge.

Some of the changes for 2017 have been implemented since the beginning of the year, while others will take effect part way through 2017.

 

Changes to existing tax credits in 2017 include:

Textbook and education tax credits repealed

Post-secondary education is expensive.  For many years students and their families have been able to offset, to a degree, the costs to obtain an education through claims for federal non-refundable tax credits.

Kelowna Accountant discussing tax credits for textbooks and tuition

There are, effectively, four tax credits or deductions which have specific application to post-secondary students.

The education tax credit provides a non-refundable tax credit amount of $400 per month of full-time enrolment in a qualifying educational program and $120 per month of part-time enrolment at a designated educational institution.

The textbook tax credit provides a non-refundable tax credit amount of $65 per month of full-time enrolment in a qualifying educational program and $20 per month of part-time enrolment at a designated educational institution.

Both credit amounts are converted to tax credits by multiplying the total credit amount by 15%. There is also a federal tax credit claimable equal to 15% of eligible tuition fees paid during the year.

Finally, students who incur interest costs for student loans received from government student loan programs can deduct the cost of those interest payments, without limit.

As of January 1, 2017, the first two of those credits have been eliminated.  Neither the textbook tax credit nor the education credit will be claimable for 2017 or subsequent years. Unused education and textbook credit amounts carried forward from years prior to 2017 will be available to be claimed in 2017 and subsequent years.

The claim for a tax credit for tuition amounts paid and the claim for a deduction for interest payments made on qualifying student loans are not affected.

Taxpayers should be aware that the provinces also offered tuition and education tax credits which could be used to reduce provincial tax payable. While changes similar to the federal ones have been made at the provincial level, those changes are not uniform.

Some provinces have chosen to repeal both the education and tuition tax credits, effective July 1, 2017.

Others have announced that only the education tax credit will be repealed, and not until 2018. Still, other provinces have indicated that no change is planned to their current system of tuition and education tax credits.

Consequently, taxpayers will need to determine whether, and to what extent, claims for provincial tuition and education tax credits remain available for 2017 in their province of residence.

As a Kelowna accountant, I am fully aware of what the changes mean for all of my clients living in and outside of British Columbia and am happy to discuss these with you.

 

Children’s fitness and arts tax credits repealed

For several years, parents have been able to claim a federal tax credit for expenditures made to enroll their children in fitness and arts-related activities. The federal government has been moving to cut back on the availability of that credit, generally by reducing the amount claimable.

For 2017, both the children’s arts and fitness tax credits have been repealed.

 

Public transit tax credit repealed

For several years, individual taxpayers have been entitled to claim a refundable federal tax credit for costs incurred in taking public transit on a regular basis.

The definition of what constituted public transit was extremely broad, covering everything from buses to ferries. It was possible to combine qualifying amounts incurred by all family members and claim them on a single return, maximizing the value of the credit.

Kelowna Accountant discusses tax credits and public transitAs part of this year’s Federal Budget, the public transit tax credit will be repealed, effective July 1, 2017.

Taxpayers who have purchased an annual transit pass for 2017 (or who might be thinking of trying to beat the deadline by purchasing monthly passes for the rest of 2017 before July 1) will not escape the effect of the repeal.

The budget specifies that the cost of transit passes attributable to public transit use which occurs after June 30, 2017, will no longer be eligible for the credit, regardless of when the expenditure for those passes is incurred.

The public transit will be claimable on the 2017 return for qualifying expenditures made for travel on public transit before July 1, 2017.  Taxpayers should keep receipts to support those claims.

 

Caregiver tax credits replaced

Individuals who live with or care for relatives in a variety of situations have been able to claim one or more caregiver tax credits to help offset the cost of providing such care.

The number of tax credits related to caregiver activities has expanded over the years and became a confusing patchwork of credits.

In this year’s budget, effective January 1, 2017, the federal government acted to replace the patchwork of credits with a single Canada Caregiver Credit.

The new single credit, for the most part, will provide caregivers with the same tax relief as the old system, with one major exception.

Many of my clients in Kelowna and Vancouver have a retired grandparent who lives with them and can help out with child care while the parents are at work. Sometimes, especially in more expensive real estate markets, having multiple generations under the same roof is a matter of economic necessity.

Kelowna Accountant discusses senior caregiver tax credit

Prior to 2017, where an individual lived in the same residence with a parent or grandparent who was aged 65 or older, that individual could claim a caregiver tax credit with respect to the parent or grandparent.

There was no requirement that the senior parent or grandparent be disabled or infirm in any way.

As of 2017, no credit will be claimable in such situations. The new Canada Caregiver Credit will be claimable in a range of living situations and for individuals of various ages.

The one major exception?  The requirement to qualify for the credit is that the person in respect of whom it is claimed must be infirm.

The credits outlined above are claimed by millions of taxpayers every year. Those who made such claims for 2016 will see an increase in his or her tax bill for 2017.

If any of these changes affect you and your family, please contact me to discuss. As your trusted Kelowna accountant, I will uncover any and all credits that you may claim. A plan is needed to avoid a costly and unwelcome tax bill next spring.

 

Filing a Tax Return for 2016

The time is fast approaching when the annual chore of gathering together the various pieces of information needed to complete one’s annual tax return, and getting that return completed and filed can’t be delayed any longer. For those wishing to put that chore off as long as possible, there is one (very small) bit of good news. Individual Canadians (other than the self-employed and their spouses) are required to file the annual return by April 30 of the following year, and to pay any tax amount owed by the same deadline. This year, since April 30 falls on a Sunday, the Canada Revenue Agency (CRA) has extended that filing and payment deadline to the following day, Monday May 1, 2017. Self-employed taxpayers have until Thursday June 15, 2017 to file their returns for 2016, but they too must pay any outstanding tax amounts owed for that year by Monday May 1, 2017.

Aside from that administrative concession, there aren’t a lot of changes this year to the process of completing and filing the annual return. If the trend of the past several years continues, as it likely will, the vast majority of taxpayers will file their returns electronically, either by paying someone else to prepare and file the return, or by doing it themselves through the CRA website.

The CRA has for several years been encouraging taxpayers to move away from paper-filing of returns to online filing, and those efforts have been overwhelmingly successful. Last year, 84% of returns filed were filed online, while only 16% of taxpayers continued to paper-file.

Taxpayers who want to paper-file their returns have found it more difficult in recent years, as the CRA has discontinued its practice of mailing personalized returns to Canadians who had used the paper-filing option in the past. However, it is still possible to obtain and use a paper return. Tax return forms and guides (including a return envelope for mailing) are available from Service Canada offices and post offices across the country. If those sources run out of return packages (as has happened in previous years), taxpayers can have a return package mailed to them, by calling the CRA’s Individual Income Tax Enquiries line at 1-800-959-8281 and making a request. As well, a printable version of the return can be found on the CRA’s website at www.cra-arc.gc.ca/formspubs/t1gnrl/menu-eng.html.

The majority of taxpayers who choose to file online have two options – NETFILE and E-FILE. The first of those – NETFILE – involves preparing one’s return using software approved by the CRA and filing that return on the Agency’s website, using the NETFILE service. The second method – E-FILE – involves having a third party file one’s return online, and the group of service providers which are authorized by the CRA to E-FILE individual income tax returns include both tax return preparation services and tax discounters.

It seems that most Canadians prefer to have someone else prepare and file their tax returns. Last year, 56% of individual income tax returns filed came in by E-FILE, while exactly half that number, or 28% of returns were filed using NETFILE, and the balance of 16% were paper-filed. (A fourth option – TELEFILE – which allowed Canadians to file using a touch-tone phone was discontinued by the CRA several years ago and is no longer available.)

The majority of Canadians who would rather have someone else deal with the intricacies of the Canadian tax system on their behalf can find information about E-FILE on the CRA website at www.cra-arc.gc.ca/esrvc-srvce/tx/ndvdls/fl-nd/menu-eng.html. That site will also provide a listing (searchable by postal code) of authorized E-FILE service providers across Canada.

Those who are more comfortable preparing their own tax returns and filing online can use the CRA’s NETFILE service, and information on that service can be found at www.cra-arc.gc.ca/esrvc-srvce/tx/ndvdls/netfile-impotnet/menu-eng.html. While there are some kinds of returns which cannot be NETFILED (for instance, a return for a taxpayer who died in 2016), the vast majority of Canadians who wish to do so will be able to NETFILE their return. As well, while it was once necessary to obtain an access code in order to NETFILE, that is no longer the case. The CRA’s NETFILE security procedures can be satisfied by providing specific personal identifying information, including social insurance number and date of birth.

NETFILE can only be used where a return is prepared using tax return preparation software which has been approved by the CRA. While such software can be found for sale just about everywhere this time of year, approved software which can be used free of charge is also available. A listing of both free and commercial software approved for use in preparing individual returns for 2016 can be found on the CRA website at www.cra-arc.gc.ca/esrvc-srvce/tx/ndvdls/netfile-impotnet/crtfdsftwr/menu-eng.html.

Finally, taxpayers who are not comfortable preparing their own returns, but for whom the cost of engaging a third party to do so is a financial hardship have another option. During tax filing season, the CRA runs a number of Community Volunteer Tax Preparation Clinics where taxpayers can have their returns prepared free of charge by volunteers. A listing of such clinics (which is regularly updated during tax filing season) can be found on the CRA website at www.cra-arc.gc.ca/tx/ndvdls/vlntr/clncs/menu-eng.html.

What You Can and Cannot Deduct as a Small Business

To own a small business in Kelowna is an entrepreneur’s dream.  Work hard and when the day is done, enjoy this beautiful four season playground. The area is made up of numerous small businesses with a variety of things to offer. Whether your business is established or just getting started, Kelowna accountants follow rules when it comes to your small business deductions and you should know these rules as well.

Personal taxes overwhelm most of our clients but filing as a Kelowna small business, sifting through receipts and paperwork, can be much more complicated.  Though you should utilize the services of Kelowna accountants and tax professionals to be safe,  it is always good to have a basic knowledge of your own.

Kelowna Accountants give advice on small business deductions

Here are some basic tax tips on deductions for small businesses:

 

Travel Costs

The Okanagan is a big place and travel may be necessary when you own a small business centrally located in Kelowna.  Many expenses due to travel are completely deductible.  Some, are not!

Airfare, hotels, car rentals, mileage, and other miscellaneous expenses such as laundry costs can be written off.  But you would likely have to eat whether you were traveling or not, so the government only allows up to 50% deductions on food.  Here’s what you need to know about traveling expenses

  • Client meals are 50% deductible.  Write on the receipt who the client was and the reason for the meeting.
  • You can take your family along on business trips however only the costs directly associated with you and your business will count towards the deductible expenses.
  • Conference fees will qualify if the conference was related to your business and provided education to grow and run your company.  Comic book conventions, concerts, and any other entertainment type of event will not qualify.
  • Disneyland, the Eiffel Tower, or other tourist attractions are not deductible.  You are certainly allowed to mix business with pleasure but when it comes to business deductions, these expenses have to be kept separated.

 

Home Offices

Many small Kelowna business owners are confused about “home office” deductions and fear that if they start claiming these expenses, an auditor will find them. This should never keep you from claiming legitimate deductions. Keep well-organized records that prove your deductions are business related and you’ll be fine.  When in doubt, ask a Kelowna accountant who is experienced in dealing with small businesses and follow these suggestions:

  • The office area needs to be separate from the rest of the house.  Whether it’s a room on its own or part of a larger living area, there should be a clear line between your work space and the rest of the home.  Dual usage such as a spare room or play room for the kids will not be acceptable. Kelowna Accountants Home Office Deductible
  • Claiming a computer won’t be difficult if you only use that computer for work.  If there is only one computer in the house, an auditor will have a hard time believing that it is not used for personal reasons as well.  Either dedicate a computer solely for work or omit the computer area from the office space you wish to use as a deduction.
  • It’s easy to figure out the percentage of home expenses that is deductible.  Measure the office space and divide by the total square footage of your home.  Use that percentage for rent or mortgage, taxes, maintenance, and utilities.

 

Software & Equipment Purchases

New Kelowna businesses are starting every day so you’ll need to be up-to-date on software and equipment. A vehicle with the company logo can be great advertisement.  Computers, printers, and vehicles used for the business are all tax-deductible.  But only to a certain amount. You may be able to deduct the full cost in the year of purchase or split it over numerous years.  This is an area where an accountant can help.

Any vehicle used for the business cannot be used as the family car. Again, if you only have one car for the entire household, an auditor may not see that as a deduction.

Businesses are encouraged to stay informed and educated about their industries.  If you require subscriptions to websites or magazines, those are also fully deductible.

Kelowna accountants will agree it’s critical with finances, especially taxes, to keep your receipts and reasons for every purchase. It may seem overwhelming at first but it gets easier once you get into the habit.  Do your research and if you don’t have the time or knowledge to handle all of this yourself, contact us.  The more organized your finances are, the more you can focus on making your Kelowna small business successful.

For more tips and advice, please contact us at Kerr & Company, your local Kelowna accountants.  We provide accounting, tax planning, bookkeeping, and business advisory services to a variety of businesses in the Kelowna and Vancouver area.

Tax Deadlines for the 2017 Taxation Year

Each new tax year brings with it a new list of tax payment and filing deadlines, as well as some changes with respect to tax planning strategies. Some of the more significant dates and changes for individual taxpayers for 2017 are listed below.

RRSP deduction limit increases to $25,370

The RRSP contribution limit for the 2016 tax year (for which the contribution deadline is Wednesday March 1, 2017) will increase to $25,370. In order to make the maximum contribution for 2016, it is necessary to have had income of $140,950 in 2015.

TFSA contribution limit for 2017

The TFSA contribution limit for 2017 is unchanged at $5,500. The actual amount which can be contributed by a particular individual includes both the current year limit and any carryover or re-contribution amounts from previous taxation years.

Individual tax instalment deadlines for 2017

Millions of individual taxpayers pay income tax by quarterly instalments, which will be due on the following dates in 2017:

Wednesday March 15;

Thursday June 15;

Monday October 16; and

Friday December 15.

Individual tax filing and payment deadlines for 2017

For all individual taxpayers, including those who are self-employed, the deadline for payment of all income tax owed for the 2016 tax year is Monday May 1, 2017. Taxpayers (other than the self-employed and their spouses) must also file a tax return for the 2016 tax year on or before Monday May 1, 2017. Self-employed taxpayers and their spouses must file their tax returns for 2016 on or before Thursday June 15, 2017.

The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.