FAQs

You are required by law to keep records of all your transactions to support your income and expense claims. There are many record books and bookkeeping systems available. For example, you can use a book that has columns and separate pages for income and expenses. You also need to keep your banking records including deposit slips, bank statements, and cancelled cheques.

While keeping, sorting and recording business records is time consuming and can become complicated but it does not have to be.  Tell us about your business and the way you conduct business and we will organize you to easily keep your business records in compliance with the legal requirements.

If you do not keep the necessary information and you do not have any other proof, CRA may have to determine your income using other methods. CRA may also disallow expenses you deducted if you are unable to support them.

According to the Income Tax Act expense is deductible for tax purposes if it is:

• Deductible using Generally Accepted Accounting Principles;
• Incurred to earn taxable income;
• Not personal or living expense;
• Reasonable in the circumstances.

However there are expensed that qualify as deductible but in practice you cannot claim them. Among such expenses are the following:

• Life insurance premiums (there is an exception where such insurance policy is used as a collateral for a business loan);
• “Capital” expenses – those expenditures, for tax purposes, are subject to the capital cost allowance (CCA), which provides for deduction based on a percentage of cost
• Personal expenses (there still could be a “business part” in some of them);
  Prepaid expenses (for future periods);
• Financing of business projects (such expenses should be amortized);
  Most types of CRA’s interest and penalties;
• Interest for vacant land (there is a limit you still can deduct);
• Golf/sports clubs memberships (there are circumstances where you can deduct a portion of such fees – consult with your accountant for details);
• Payments for some legal and accounting services;
• Most payments for advertising in a foreign media;
• 50% of meals and entertainment expenses (some of them qualify for 100% deduction, check the CRA’s website or consult with your accountant for details).

If your business worldwide gross revenue from your GST/HST taxable sales, including those taxed at 0% (zero-rated) and those of all your associates, is more than $30,000 in a single calendar quarter or over four consecutive calendar quarters you have to register for the GST/HST. If you operate a taxi or limousine service, you have to register for the GST/HST regardless of your income.

If you’re an independent contractor, IT consultant, or small business owner, then Wave Accounting is sufficient for your needs. It’s able to generate all of the financial reports that you may need. However, If you have multiple employees, a large customer base, or a lot of vendors, then you should consider purchasing Simply Accounting or Quick Books. These programs are more robust than Wave Accounting

The most important factors in selecting an accounting firm include the reputation, experience, knowledge and the quality service the firm offers. As such to satisfy yourself of the quality of the service you can expect from an accounting fee, ask for references, scan through the reviews on their website and finally meet with them to assess the professional conduct

Business accounting services can be defined as “tools that enable you to make effective management decisions for a business”. To elaborate, business accounting services include (but are not limited to):

• Financial Statement Preparation
•  Bookkeeping
•  Tax return preparation
•  Tax planning

All businesses, regardless of size require among other things the means to quickly evaluate their cash-flow, profitability, and financial strength.  In fact, by law each business is required to maintain an accurate set of accounting records, which may be audited by the Canada Revenue Agency. 

An interpretation is an anonymous rulings request to the GST/HST rulings department. You will supply the case facts to the CRA for it to issue an interpretation on whether you have GST/HST responsibilities based on these facts. If it is determined that you have HST responsibilities, you have the choice to ignore the interpretation as it is based on generic facts. It is noteworthy that an interpretation (regardless of the outcome) is not binding and cannot be used as a valid defense in the event of an audit.

On the other hand, a ruling is an official verdict on your GST/HST responsibility. You will submit all the facts to the CRA including your account details (business number or social insurance number). The ruling provided by the CRA will be final and binding. If the CRA determines that you have a GST/HST responsibility, you will be forced to collect and remit GST/HST as required (no choice in the matter).

The tax instalments can be calculated in 3 ways. Please see below for the different methods as indicated by the CRA:

• No Calculation Option: Instalments payments are based on taxes owing in last year and 2nd last year. This alternative is best if taxes owing are fairly consistent from year to year.
•  Prior-year option: Tax instalments are based on taxes owing in last year. This alternative is best if taxes owing in the current year is similar to last year but drastically different from the 2nd last year.
• Current-year Option: Instalments are based on an estimate of current year’s taxes owing. This alternative is best if taxes owing in the current year will be drastically different from prior years. In that case, payments can be based on an estimate of this year’s taxes owing. However, if the estimated instalment payment made is lower than the actual taxes owing for the current year, then instalment interest and penalty may be charged.

If you fail to file tax slips by the due date you will be subject to late filing penalty based on the number of slips you file late. For 1-50 slips, the penalty is $10 per day up to a maximum of $1,000. For more information, check out here on the CRA website.

However, the CRA has implemented a new administrative policy for small businesses that applies to T4s, T4As, T4Es, T5s, T5018s, and NR4s. If you issue less 5 or fewer information slips, your penalty is a flat rate of $100.

The filing due dates for information returns and slips vary:

• T3s should be filed no later than 90 days after the trust’s year end.
• T4s should be filed by the last day of February.

For more information on due dates, click here.

February 28 — If you have employees, file your T4 and T4A information returns by the end of February for the previous calendar year. Also, give your employees their copies of the T4 and T4A slips by this date.

March 15 — Make your first installment payment by this date.

March 31 — Most partnerships will file a partnership information return by March 31.

April 30 — Pay any balance owing for the previous year by this date.

June 15 — Make your second installment payment by this date. Also, file your income tax return by this date if you have self-employment income or if you are the spouse or common-law partner of someone who does, unless the expenditures of the business are mainly the cost or the capital cost of tax shelter investments. Remember to pay any balance owing by April 30, to avoid interest charges.

July 1 — If you’re working in construction area and have subcontractors, file your T5018 information return by this date. Also, give your subcontractors their copies of the T5018 slips by this date.

September 15 — Make your third annual installment payment by this date.

December 15 — Make your fourth annual installment payment by this date.