Click here: Automobile Km reimbursement rate rises!!!
Struggling with how to offset a vendor and a customer account balance in QuickBooks?
When you have a vendor and a customer subledger account you want to offset in whole or in part, the best way to accomplish this using QuickBooks software is to effect a swap of funds between AR and AP is via a clearing account. I usually set up a clearing account as an Other Current Asset type of account, use an Item that links to both the vendor and the customer's transactions and ensure that it's always kept reconciled to a nil balance.
The easiest way to make the swap is to use the forms, a Bill or Bill Credit to clear the vendor's AP account and depending on whether it's an increase or decrease to the customer's AR account, I would use an Invoice or a Credit Memo, clearing the agreed amount with out tax consequences of course, using an Item (use Other Charge Item Type and set up both sides of the Item to point to the same Clearing Account you've just established.
Here's the sequence:
Set up an Other Current Asset called Clearing Account
Set up an Other Charge Item called Clearing Account and open up the purchases side of the Item to link both sides of this Item to the Clearing Account
Open a Bill and choose to make it a Bill Credit or leave it as a Bill, making an entry to the Vendor (v) for the agreed amount, using the Item tab to link the Item to the Account. It's a good idea to document any agreements in writing, print out the email, or get a signature of who agreed to this transfer as it's like a payment.
Open an Invoice or a Credit Memo and enter the same amount using the same Item to link the Customer (c)
Check the register for the Clearing Account, and in fact, use the bank reconciler feature to reconcile the account each time you make such a transfer to ensure that the Clearing Account is always nil.
Make 2012 the year you learn how to use QuickBooks effectively and efficiently.
If you want to learn best practices on how to master your use of QuickBooks software, I've recorded 20 hours of training, in 2 hour videos for use by bookkeepers, accountants and business owners and their spouses...
Click here to buy individual videos, or save by purchasing the entire set of 10 videos! To learn how to master the software on your own would probably take at least 100 hours. That's what it took me, just to get familiar with it, and then thousands of hours of experimenting with the best way to get it done.
So you aren't just saving money, you're saving valuable time!
CGA Canada's report on Occupational Fraud
Interesting list of what's considered fraud...Are the statistics are relevant for you and your business?
If so, what you are doing about internal control to minimize the risk? Two important ways to combat fraud are to design systems that segregate duties and to create a procedure manual everyone must follow.
My videos on Mastering QuickBooks Software and on creating Procedures Manuals can help you get on the right track.
www.taxdetective.ca/shop.html
Indian Act trumps other legislation including Income Tax and GST/HST
Did you know that the Indian Act S. 87 trumps other legislation like the Income Tax Act and the Excise Tax Act? But only if you are a 'status' Indians who carry the right card, and are earning income from property which includes income from sale of goods and services on a reserve.
If you are not a status Indian, if you visit a reserve to purchase goods or services, you should expect to pay GST/HST. There's only one card, and no, a Metis card won't cut it.
If a status Indian sells to another status Indian off reserve, it's a taxable event.
Want to know more? I've just added a web page on Native Indians with useful links to my TaxLinks Pro.
A TaxLinks Pro subscription, good until Oct 1, 2012 is $30 plus tax
(I'm not on a reserve nor am I a status Indian)
It's that time! Complete your TD1 for payroll deductions at source
Are you pondering your 2012 TD1 Federal and Provincial? Notice the fillable form.
If you are an employee, its that time! You've heard it's better to pay less tax at source and not have as big a refund next April? This is how it's done. The TD1 federal and the TD1 provincial provide you with an opportunity to pay less tax at source during the year so you have more money to pay down debts, and even more important, to put food in the fridge.
If the deductions and credits you claim aren't on the TD1, check out whether the T1213 is right for you. It requires approval from CRA.This form might help you with that cash crunch if you are paying spousal support or have other large expenses or credits that qualify to reduce your taxes. Watch your April filing to see how many expenses or credits you have that provide for a refund, and make sure to amend again during the year if your situation changes.
Oh yes, make sure you know that any time your marital status changes, the new budget requires you to report the change in status in the next month, you no longer have 90 days to ponder your change, it's much sooner, and hopefully will cause less stress when you don't have to pay back benefits you should not have received like GST/HST credits and Child Tax Credits.
Notice the new for 2012, Family Caregiver Amount (FCA)? This extra amount of $2,000 at 15% federal equates to $300 of tax reduction. It's worth noticing, but make sure you document your claim before you decide to make a claim, or you could be paying more tax than you planned in April 2013.
The additional amount is for infirmity and you'll find it is added on a five different lines, married, wholly dependent, child, caregiver and infirm, all found on the new TD1, but only on the federal TD1, it's not a provincial credit, at least it isn't in BC. It's not the only credit that's only federal.
There is no definition of infirmity in the Income Tax Act. Infirm is not the same as disabled. Infirmity takes its common meaning from the dictionary.
If your dependant is your child, spouse, parent, or other dependant and is considered infirm, it’s possible to make this claim, but only federally, and only once per person. In other words if your child is also your equivalent to spouse/wholly dependent claim, you can only claim $2,000 once, no double dipping.
It is possible to agree to share or apportion some credits including wholly dependent, caregiver, infirm over 18, disability, adoption, First Time Home Buyer, Public Transit, Children’s Fitness and Children’s Arts Credits.
Here is some guidance from the budget documents, federally and from CRA about the budget.
Note the written requirement for documentation below. I’ve clipped important passages for you to give them to the doctor to construct a letter to keep with your tax filing for 2012. You can bet that letter will be the subject of many a desk audit in the summer of 2013.
A dependant who is a minor will be considered to be infirm only if the dependant is likely to be, for a long and continuous period of indefinite duration, dependant on others for significantly more assistance in attending to the dependant’s personal needs and care when compared generally to persons of the same age. This test will apply to dependants who are under 18 years of age at the end of the year and who are claimed for purposes of the Child Tax Credit or the Eligible Dependant Credit.
If you are otherwise eligible for a non-refundable tax credit listed in Question 1 for a dependant, you may be able to claim the FCA based on the following conditions:
· For an individual age 18 or older, the individual must be dependant on you by reason of a mental or physical infirmity.
· For a child under the age of 18, the child must have a medical or physical infirmity and as a result of that infirmity is, and is likely to be for a long continued period of indefinite duration, dependant on others for significantly more assistance in attending to the child's personal needs and care when compared to children of the same age.
3. Do I have to obtain a statement from a medical doctor certifying that my infirm dependant is eligible for the Family Caregiver Amount (FCA)?
As with all the non-refundable tax credits related to infirmity, the CRA may request that you provide a signed statementfrom a medical doctor that gives the nature, commencement, and duration of the dependant's impairment.
For children under age 18, the letter should also indicate that the child, by reason of a mental or physical infirmity, is and is likely to be, for a long-continued period of indefinite duration, dependant on others for significantly more assistance in attending to his or her personal needs and care when compared to children of the same age.
QuickBooks maintenance
It's necessary to re-sort your lists every so often in order to assist the data integrity function in the background of QuickBooks software to do what it does best. You can sort some of the lists that are not included on the Master Names List such as your Items or Accounts by choosing to Edit and Re-Sort List, but did you know it's possible to re-sort your names list this way?
How to Re-Sort the Masters Names List in QuickBooks:
- Open "Write Cheques"
- Notice that the Payee field includes all Names
- Enter Ctrl L to open this master list of all names
- From the "Edit" menu choose to "Re-Sort List"
If it's not, follow the instructions to do a re-build, then check it again. If your re-build didn't fix the problem, don't keep doing it, call me for technical assistance. Did you know that ProAdvisors can contact Intuit for free under their service agreement, but ProAdvisors will charge you for their time?
If you want to know more about using QuickBooks effectively, one cost effective way to learn more is to purchase my ten, two hours videos created for the Institute of Professional Bookkeepers.
20 hours of training, is probably equivalent to about 100 hours of your time if you had to figure out how to use the software by yourself.
Download the videos, you own them. Or purchase the videos on a DVD so you can pass it around the office. Watch the videos more than once if you need to, or share them with your family and staff to ensure that everyone is using the program effectively and efficiently.
Resident in Canada; German pension income calculation
If your pension from Germany started prior to 2005, inclusion is at 50%, but if it's after 2005, it's higher...
See the chart at the end of this CRA webpage that explains how to include your German pension in your Canadian income tax return:
http://www.cra-arc.gc.ca/tx/nnrsdnts/ntcs/grmny2005-eng.html
German pension income received by Canadians requires reporting to Germany
German Consulate provides a list of who consults on German pensions (not necessarily licenced to file tax returns and even though called an accountant may not be one)
I don't know if these consultants are registered, but apparently to file German taxes, it's similar to the IRS, you are required to be registered with the German Taxation Authority and it's possible there's a list of who that might be in Canada if one were to contact the German Embassy, either in Ottawa or Toronto, not sure which.
Apparently (not confirmed) the tax rate is 25% on the taxable half of your pension, the same half that is taxable in Canada and for which you would be eligible for an FTC on that tax paid, and that is for filing only the pension income, which is what you'd do if your total Cdn income is about $25,000 or more. If it's less, you'd file to request not to pay tax as your income was low.
The story is that about 3 million Germans collect a German pension outside Germany and the taxing authority decided to demand 1/3 per year file returns to pay or prove they didn't need to pay because of low income retroactively for 2005 to 2009 starting in 2010. The last batch of pensioners will get their letters in 2012. It doesn't stop there, pensioners will be required to file and pay or declare your low income to not pay, every year going forward by April 30.
And here’s the skinny on the FTC from CRA directly as of June 2011:
http://www.taxmentor.ca/av/2011-0400781E5.pdf
Anyone out there who knows German Taxation?
Looking for a qualified accountant in Canada who knows German tax and speaks German of course...
If you know someone please pass along these links as I need someone who can file returns, not just interpret:
CRA has more info on German Pensions Nov 18, 2011
It seems that if you have quite a bit of other income other than the German Pension, you may just want to opt to pay the tax and claim the tax credit in the year you pay the tax.
I'd like to know the difference between limited and unlimited liability if anyone has the inside edge...
Please leave a comment, or email me, if you know something about this!
eileen@taxdetective.ca
Rent a Christmas Tree (Live 7' Fir)
Real Christmas trees are great but what do you do with them afterwards? Brad Major at CarbonSync has solved the problem. He rents Christmas trees for the holiday season. Check out his website at www.carbonsync.caor call him at 604.626.7668 or email him at brad@carbonsync.cato order your 7ft Canadian fir tree. Brad drops the tree off at your home or office and picks it up after the holidays. It’s only $179.99 for all this service. Part of the net proceeds comes to the Burns Bog Conservation Society
Powerful food for thought: Does socialism work?
This is BIG food for thought. I don't know who wrote this, but hopefully they are ok with it being passed on...
An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class. That class had insisted that socialism worked and that no one would be poor and no one would be rich, a great equalizer.
The professor then said, "OK, we will have an experiment in this class on socialism". All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A.... (substituting grades for dollars - something closer to home and more readily understood by all).
After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.
The second test average was a D! No one was happy.
When the 3rd test rolled around, the average was an F.
As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.
To their great surprise, ALL FAILED and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great, but when government takes all the reward away, no one will try or want to succeed.
It could not be any simpler than that. (Please pass this on). Read the following:
These are possibly the 5 best sentences you'll ever read and all applicable to this experiment:
1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.
2. What one person receives without working for, another person must work for without receiving.
3. The government cannot give to anybody anything that the government does not first take from somebody else.
4. You cannot multiply wealth by dividing it!
5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.
Can you think of a reason for not sharing this? Neither could I.
Subscribe to:
Posts (Atom)