Every time someone claims attendant care costs, it's necessary to cross check to see if it's better to claim the DTC and $10,000 of care costs, or whether it's better to claim the cost of care, and not claim the DTC.
Profile T1 has added a new neat little feature (check out the limitations column on the medical expenses form) so you can instantly do a what if to check which is more advantageous.
Remember in the year of transition to nursing home from attendant care, it is only possible to claim either the attendant care of $10,000 and the DTC or the nursing care, it's one or the other but not both. Infuriates people no end. But them's the rules.
One or the other but not both
Comments(0)
Are you teaching tax to high school students?
This was in my inbox today and with Tracey's permission...here's what she said...
Eileen, Thank you very much for this website. I am an Ontario Teacher
teaching Math for Everyday Living, grade 12.
The curriculum has a tax component where students are to use online tools to
file a tax return. I googled this morning and came across your website, and
then used your site today to do Case Study 1, just as an intro to online
software.
Most students were able to complete this case study and it was an
excellent exercise for them.
In the future, if I teach this course again I will most certainly use this
site again, and would plan to use it to a much greater extent. Are the videos
for case study 3-5 available?? Thanks again for such a
wonderful...Canadian...resource.
There are probably many other Ontario teachers charged with teaching this
unit in the MEL 4E course on paying income tax, who don’t have the background or
the resources to do go a good job with the online component. I have also seen
the CRA online site for students and it pales in comparison to the resource
you’ve provided. I will certainly spread the word to my coworkers about your
website. Keep up the good work. I certainly appreciate it.
Tracey Moffat, OCT Charlottenburgh-Lancaster District High School,
Williamstown, Ontario
Reminder to listen carefully
As you prepare tax returns remember to listen for clues that someone has a disability or an infirmity. Keep in mind that they aren't the same thing.
For disability: Review the RC4064 guide and complete an application on Form T2201 reviewing definitions with the help of videos created to assist doctors with certification found on this page by clicking on the definitions under Step 1
http://www.cra-arc.gc.ca/tx/ndvdls/sgmnts/dsblts/qlfd-prcts/rspnsblts-eng.html
Remember that it's not just impairment in ability, it's also about it taking an inordinate amount of time to complete an activity, that defines impairment in ABILITY
Consider cumulative effect of a significant impairment in two or more categories may qualify one for the disability tax credit.
http://www.cra-arc.gc.ca/tx/ndvdls/sgmnts/dsblts/menu-eng.html
For infirmity: Review my earlier post and a reminder, complete a new TD1 federal/provincial to have less tax taken at source now for 2012 if you expect a tax refund... why let them have the use of your money when you could put it to better use paying down your credit cards or other debts?
http://taxdetective.blogspot.ca/2012/02/what-does-infirm-mean.html
More reading on retirement
Click the title for another reading list on retirement topics
What always rips me up is involuntary separation and in particular how only one of the parties can claim the GST/HST credit. It's a fight to get to the post box first with the tax return as only the first to file gets the credit.
Service Canada handles GIS adjustments as a result of a separation that isn't voluntary. You'll be required to complete a number of forms to request consideration for income from pension splits to not be considered for GIS for prior years as they are calculated on the June 30th basis not the calendar year, and GIS can be amended without an amendment to the personal tax return for a pension split.
It's very time consuming to figure it all out, and requires a visit to their offices with documentation to verify the separation, (the ambulance invoice and hospital/care facility invoices will do).
If the cost of care is an issue for a funded bed, an amendment to the personal tax return for the prior year to reverse a pension split may be necessary, plus payment of the extra tax so that the combined income isn't factored into the calculation of income by the social worker. Net income is how the cost of care is calculated (in BC it's 80% of net income) and pension splits are included for the provincial calculation.
Thinking of staying in your home and hiring care?
Click the title for some topical reading about hiring a caregiver in Canada.
MOH correspondence
Click the title to access the Letter about what the MOH considers that it pays for when funding beds in BC.
Multiple claimants
This ruling provides some clarity around multiple claimants for the same patient.
Are you confused about claiming attendant care costs?
If you're confused about what changed about personal tax credits, when it comes to the $10,000 join the crowd...you have reasons to be confused.
Not only is there a rule that says that if you claim the DTC and up to $10,000 of attendant care costs, you can't claim in the same year for other types of attendant or nursing or group home care. It's one or the other but not both in the same year...so it's necessary to perform what if calculations for which is the optimal claim, but you aren't going to be able to claim, in a year of transition from attendant care to nursing home care, the entire cost of care. Not possible.
What changed is that the limit on claiming medical expenses for a dependent over 18 was $10,000 and now it's limitless as of 2011.
Well, that's only partially true. There are limits, also $10,000, found in the medical expenses S. 118.2(2)(b.1). If you're paying medical expenses for attendant care and the patient does qualify for the disability tax credit claim, it's possible to claim the DTC and up to $10,000 of attendant care. Those expenses are limited to $10,000 for the individual (if you read the Income Tax Act, S. 118.2(2)(b.1) says the limit is $10,000 or $20,000 in the year of death of the individual, which when you go backwards to the definition of individual, that's not really the patient, for whom the medical expenses are being paid, but the person making the claim for those paying those expenses, which is really confusing.
For anyone who's overly paranoid, this will fuel your paranoia. I once had a discussion with a senior finance officer in Rulings who told me that they have chosen to ignore that the ITA says, and go with it's the patient, not the individual claiming for whom this rule applies. They also ignore that it says that if you pay one penny more than $10,000 that you can't claim anything. They've chosen administratively to ignore that the ITA doesn't say what they want it to say. One does wonder how long this will continue to be the case.
To further compound your anxiety about how to apply the ITA when claiming for attendant care costs, the BC Gov't has stated in a letter to care homes that they pay the cost of care when it's a funded bed, and the 80% the tenants pay, that's supposedly not medical expenses, as those are covered by the gov't. They claim what you are paying is the rent and the non medical costs of living expenses, which means you really may not have a claim for medical expenses at all.
If you are a BC care facility, I'd be talking to a lawyer about an opinion on issuing receipts claiming that your tenants are paying attendant care costs when the gov't is saying they paid for that, and that your tenants are only paying rent.
Q&A Bookkeeping for Transitions
Q: Are the QuickBooks data files available?
A: Yes, they are available under the Links tab on my website
Q: I have a sole proprietor who incorporated Nov 23/11. She did nothing different about running her business after Nov 23rd. She has chosen October 31, 2012 as her year end. My question is do we STOP recording transactions in the sole proprietors data file on Nov 23/11 or on October 31/11 or do we continue to Dec 31/11? Would we still go thru the processes you discussed today to move balances from the sole proprietor's data file to the new compoany data file? There are no loans or assets for this client. GST became effective Jan 2012 for the Inc. (newco) so what happens to the GST for the sole proprietor from Nov 23/11 to Dec 31/11?
A: I don't really have answers for you as your first question is a legal one and I don't practice law. When your proprietor incorporated, was there a business with a valuation that should have been sold to the corporation? If so, where is the contract for the sale/purchase of the business? Why did GST become effective in Jan/2012 for the Newco? It should have become effective when the newco started operating if the sole proprietor was a registrant, there should not have been any lapse.
Just because you incorporate doesn't mean you own the right to the business automatically. There must be a contract to move the business (as in a purchase/sale agreement) to start using the corporation for the business.
Q: I was taught that personal income tax owed by a proprietor is never shown on the business financials - has that changed or is this just for the purposes of this lesson?
A: Good question. A financial report can have anything you want on it and if your standard is not to show the tax because it's personal, that's fine. It's also fine to show it if it makes sense to show it, and for the purposes of this exercise, where I was showing the rental and business income only and doing a pro-former (example in fancier words) I wanted to show the integration of tax. Remember integration is where the tax effect should be approximately the same, whether its personal or corporate, and when you want to choose between corporate or personal tax treatment, sometimes there is a difference or a deferral depending on the rates. We also talked about how if this was a personal services business there could be a huge difference as integration doesn't work because of the decision that this type of corporation would be penalized, and taxed exactly the same as if the person were an employee.
Q: If a sole proprietor purchases computer equipment for the purposes of the corporation 3 weeks before he gets his incorporation date, can these be posted in the corporation and offset to shareholder loan or do they have to be run through the sole proprietorship?
A: There are some special rules about bringing assets into the corporation from personal and it would be best to read those rules. Having said that, the sole proprietorship is the person. The person owns an asset, and the asset is now being sold to the corporation. There should be a contract for purchase/sale and tax consequences must be effected.
Q: Is it possible to get a copy of the PowerPoint?
A: The PowerPoint really isn't very useful, it's just a talking point guide, better to get the video and it's for sale on my website now in the Store @ www.taxdetective.ca/shop.html. If you are an IPBC member, it's 50% off by accessing special pricing page found by going to my Partner page on the IPBC.ca website once you are logged in as an IPBC member.
Q: What are some of the major advantages of incorporation? ...given all the drawbacks discussed today?
A: LOL, now that's a good question. I'll leave that for the lawyers and your clients to discuss. It's expensive to incorporate, and to maintain a corporation requires special skills and knowledge. The reasons to incorporate should be legal ones relating to limiting liability, or sharing income with investors who have provided capital or sweat equity, via dividends, should there be excessive income over and above salaries. If you don't follow proper procedures to incorporate, and to purchase the business, as well as the assets, you may find that your corporation isn't doing business with the rights it requires to do the business. Don't forget to sell the business, not just the assets!
To download the QBB sample files, or if you aren't a QuickBooks user, access the samples of both proprietor and newco Journals or the GL in PDF format, click below:
http://www.taxdetective.ca/bkpgtransitions.html
Today's video on Bookkeeping for Transitions is now posted up for sale
Click here to go directly to purchase the video.
IPBC Members will find a link to the IPBC Partner page where they will find a 50% discount
If you want to learn more about this area of taxation in depth, CGA Canada PDNet
offers a course on S.85 rollovers.
Their course is $299 for CGA's or students and $349 for non CGA's.
http://www.cga-pdnet.org/en-CA/PDResources/2010/Pages/Section85PropertyTransferstoaCorporation2012.aspx
ITC on CCA spreadsheet
I mentioned a spreadsheet to calculate ITC's on CCA. Be careful, as it's use is limited to certain vehicles, certain claimants with specific % of use.
CGA Connect in the Fraser Valley tonight!
This page gets the most hits on my website. The first link at the top of the page (click the blue circle) was a panel discussion that the University of the Fraser Valley librarian for their NPO mgmt program took an interest in. She had the University Board authorize this page as a study link for students in the NPO Management program.
I'm going to be attending a CGA Connect event where students from the U of the FV will be this evening. If you're a student and interested in tax, please come talk to me.
http://www.taxdetective.ca/Nonprofitlinks.html
Be very careful where you take tax advice from!
The Income Tax Act and the Excise Tax Act which provides for GST/HST are not the same and you can't assume that because it says something is true for tax purposes, that the same holds true for GST/HST purposes.
Case in point: Acupuncturists
When you look at the list of who CRA will accept as a qualified medical practitioner, under the Income Tax Act, you will see acupuncturists listed in three provinces currently, because in those three provinces they have an association that licences them, and under the Income Tax Act that's what is required for a qualified medical practitioner:
www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/330/ampp-eng.html
When you look at who is exempt for GST/HST purposes, from charging the tax on taxable supplies, however, the list is much shorter. Only those who are members of the College of Physicians and Surgeons or on a specific list of 11 (only 11) listed other practitioners are exempted from charging tax.
You'll find that list of who is exempt, and only those 11 practitioners listed under A through K in Section 7 of Part II of Schedule 5 of the Excise Tax Act are exempt. Acupuncturists are not on the list.
How could they get on the list? Finance has a policy. The policy is essentially that they would have to be licensed in most of the provinces in Canada before Finance would entertain a request from their collective organizations to add them to this list of exempt practitioners.
To read the Excise Tax Act to get to where the exempt listing is and to understand it in context, content and purpose, start with the general theme that everything that is in the commercial activity realm is taxable supply in Canada. S. 165 says recipients of supplies have to pay tax and S. 221 says suppliers are required to collect tax.
Exempt supplies are defined in S. 123(1) and that applies to the entire ETA.
The definition in that section says anything included in Schedule 5.
Schedule 5 lists exempt supplies and has parts. Part II lists exempt health care services.
There is a definition in S. 1 of Part II that applies only to Part II and it says that a medical practitioner is someone who is entitled to practice the profession of medicine or dentistry and is licensed as a member of the provincial college.
It also defines practitioners (non medical practitioners that is) and provides a list of 11 specific practitioners, and acupuncturists aren't on that list.
S. 5 of Part II of Schedule 5 discusses which supplies of which specific services are included as exempt and again, acupuncture isn't on that list, because that list is exactly the same list as the one above in the definition of practitioner (non medical).
Here is the Excise Tax Act: read it for yourself and again, be very careful where you get your advice from as Income Tax is not Excise Tax.
http://laws-lois.justice.gc.ca/eng/acts/E-15/page-1.html
and here's where you'll find Schedule 5 Part II
http://laws-lois.justice.gc.ca/eng/acts/E-15/page-323.html#docCont
Confusion about who is responsible and accountable...
This coming Wednesday I will be presenting a course on 'Bookkeeping for Transitions' for IPBC.
During a discussion on the Intuit Profile forum in the last several days about administrative preferences about recording the selling costs on the sale side of the equation when rolling assets tax free to a corporation from a proprietor, or whether you would record them as an increase in the ACB of the assets, a forum participant asked this question:
"Curious about your course/courses. Are you not blurring the lines between of what an
accountant can and is in comparison to what a bookkeeper is or should be?"
I responded:
"I am curious why you would want to discuss what I do in a software forum. You could always attend the course to find out if you are that curious"
They wrote back:
"Sorry, I overstepped my bounds.Please carry on encourage the button pushers to create situations. You are obviously the one encouraging the un-designated to venture beyond their means. it is always fun fixing their errors.
Good luck,
This thread has finally made me realize that I am wasting my time even lurking here. Back to doing!!!"
In the time since this exchange, even before this, I was struggling with how best to present a tax topic without talking about tax directly. Those were the instructions I received from IPBC. You can talk about the bookkeeping aspects of transitions from proprietorship to corporation, but this isn't to be a tax talk as we aren't encouraging our members to prepare tax returns, nor are we providing a tax education to them.
I totally agree on one hand, and on the other, I am totally conflicted, not with the instruction as I understand that if you don't know enough, you shouldn't be preparing tax returns.
accountant can and is in comparison to what a bookkeeper is or should be?"
I responded:
"I am curious why you would want to discuss what I do in a software forum. You could always attend the course to find out if you are that curious"
They wrote back:
"Sorry, I overstepped my bounds.Please carry on encourage the button pushers to create situations. You are obviously the one encouraging the un-designated to venture beyond their means. it is always fun fixing their errors.
Good luck,
This thread has finally made me realize that I am wasting my time even lurking here. Back to doing!!!"
In the time since this exchange, even before this, I was struggling with how best to present a tax topic without talking about tax directly. Those were the instructions I received from IPBC. You can talk about the bookkeeping aspects of transitions from proprietorship to corporation, but this isn't to be a tax talk as we aren't encouraging our members to prepare tax returns, nor are we providing a tax education to them.
I totally agree on one hand, and on the other, I am totally conflicted, not with the instruction as I understand that if you don't know enough, you shouldn't be preparing tax returns.
I'm conflicted about where the line is between accountants and bookkeepers. Let me tell you why. The line between what is an accountant and what is a bookkeeper is very blurry. Accountant's are legislated as to what they can do, not what they can't do. Bookkeepers on the other hand, have no such legislation in place. What they do operate under is much more onerous and I'll explain in a minute. But first, let's look at this historically.
Accountants do bookkeeping too. Some accountants do more bookkeeping than accounting. Some accountants were never trained to do bookkeeping as part of their training, especially CA's who were in the audit stream. They were always checking the bookkeepers work, but never actually doing the work. There is a huge difference between checking the work after it's done and doing the work. It's been a source of contention between CGA's and CA's forever. CGA's often would be the junior bookkeepers whose work would be checked by a CA student in a corporate audit. The tension between players in the two designations often develops at that stage. THe doer looks at the checker and says, you could never do what I do. You just know how to make check marks. That's how it starts.
Accountants do bookkeeping too. Some accountants do more bookkeeping than accounting. Some accountants were never trained to do bookkeeping as part of their training, especially CA's who were in the audit stream. They were always checking the bookkeepers work, but never actually doing the work. There is a huge difference between checking the work after it's done and doing the work. It's been a source of contention between CGA's and CA's forever. CGA's often would be the junior bookkeepers whose work would be checked by a CA student in a corporate audit. The tension between players in the two designations often develops at that stage. THe doer looks at the checker and says, you could never do what I do. You just know how to make check marks. That's how it starts.
Bookkeepers dabble in preparation of financial statements, in part because the software these days allows them to create a financial statement with the push of a button. Bookkeepers may without an accounting designation, prepare and sign financial statements, as by law in some jurisdictions, they are allowed to prepare and sign a Notice to Reader. Only Reviews and Audits are restricted to designated accountants. And in some cases, even those, with special dispensation can be performed by non designated accountants.
And everyone can and does do compliance work including T1's, T2's, T3's, T4's, T5's, GST/HST, WCB...I could go on. Every single Canadian taxpayer has the responsibility and authority to be compliant. They have the right to hire anyone they deem competent to assist them. There's no such thing as it's required that you have an accountant prepare your tax compliance work. In fact, you can do it yourself with the right software. The accounting software even links to the tax program to download the numbers into the right boxes for you.
That's because compliance with law is not accounting. Accountants may record tax consequences, but they aren't by default compliance experts, they are designated as experts at presenting financial information for readers who expect that the figures have been reviewed or audited. Notice to Reader? Anyone can do those, which makes them meaningless, and yet that's what is often used as the standard to report to CRA. That's why CRA audits, because anyone can put numbers together.
Over the years I have had many accountants proudly tell me they don't do any tax work. Some only took Tax 1 which is essentially personal tax, and have never ever taken another course. That scares me more than a bookkeeper who wants to learn more about tax because they want to do it right.
Other accountants have made tax a specialty, and those who do tax will tell you that they won't cross the line in to legal work, as the Tax Act is law, and as such they don't practice law. Where is that line crossed? When you start to file papers appealing or objecting? I really don't know and I try not to go there and have no intention of discussing where that line between law and accounting is crossed. Let's stick with accounting versus bookkeeping.
I will make one comment before moving on. Lawyer's at least in BC, will tell you that you can't even store a minute book for a corporation in your office as that's practicing law. In many jurisdictions, lawyers do estate tax compliance work, and accountants only do corporate work, and some accountants only do corporate, others only personal, and some dabble in all forms of compliance.
But accountants aren't licensed to practice tax, they have taken on tax work as a right, when it isn't a right, it's a convenience because their clients have asked them to assist with the preparation of compliance.
And everyone can and does do compliance work including T1's, T2's, T3's, T4's, T5's, GST/HST, WCB...I could go on. Every single Canadian taxpayer has the responsibility and authority to be compliant. They have the right to hire anyone they deem competent to assist them. There's no such thing as it's required that you have an accountant prepare your tax compliance work. In fact, you can do it yourself with the right software. The accounting software even links to the tax program to download the numbers into the right boxes for you.
That's because compliance with law is not accounting. Accountants may record tax consequences, but they aren't by default compliance experts, they are designated as experts at presenting financial information for readers who expect that the figures have been reviewed or audited. Notice to Reader? Anyone can do those, which makes them meaningless, and yet that's what is often used as the standard to report to CRA. That's why CRA audits, because anyone can put numbers together.
Over the years I have had many accountants proudly tell me they don't do any tax work. Some only took Tax 1 which is essentially personal tax, and have never ever taken another course. That scares me more than a bookkeeper who wants to learn more about tax because they want to do it right.
Other accountants have made tax a specialty, and those who do tax will tell you that they won't cross the line in to legal work, as the Tax Act is law, and as such they don't practice law. Where is that line crossed? When you start to file papers appealing or objecting? I really don't know and I try not to go there and have no intention of discussing where that line between law and accounting is crossed. Let's stick with accounting versus bookkeeping.
I will make one comment before moving on. Lawyer's at least in BC, will tell you that you can't even store a minute book for a corporation in your office as that's practicing law. In many jurisdictions, lawyers do estate tax compliance work, and accountants only do corporate work, and some accountants only do corporate, others only personal, and some dabble in all forms of compliance.
But accountants aren't licensed to practice tax, they have taken on tax work as a right, when it isn't a right, it's a convenience because their clients have asked them to assist with the preparation of compliance.
Do I believe anyone should be licensed to practice tax? I don't know, but I can tell you I think it's coming. It will only be a matter of time before we follow what the IRS is doing, requiring a licence to file tax returns with a licensing exam.
What is really interesting is that the Income Tax Act doesn't require the same standards for record keeping as do accountants in their CICA Handbook. The Handbook allows for materiality, the Income Tax Act does not. I believe that the standard set by the Income Tax Act is higher than that set by the CICA Handbook.
The Income Tax Act requires record keeping and compliance with the letter of the law in the Act. The responsibility for that compliance rests not with the accountant, but with the taxpayer, the individual, officer, trustee, executor, they are responsible for compliance with record keeping and compliance.
Bookkeepers, aka, the keepers of records are trying to figure out how best to keep the records so as to provide the taxpayer, responsible for compliance, with the records prepared to the standards of the Income Tax Act, for the most part, and secondly, to assist accountants with the preparation of financial statements that comply with the CICA Handbook. The CICA Handbook has been completely revised with all these the new rules regarding the presentation of financial information, some of it at fair market value, which really doesn't concern someone preparing compliance returns, completing boxes on forms, unless of course, their are concerned with the fair market value of assets for valuation purposes in the case of a non arms length transaction.
Add to all of this confusion, the new rules for accountants around independence as a result of the world wide concern with fraud, because of cases like Enron. If you are preparing an audit or a review, you are to be independent of the preparation of the keeping of the records. That means you need a bookkeeper.
You need a bookkeeper, not just an accountant, who knows about tax compliance, because every single transaction in those records has tax consequences. Before an accountant can prepare financial statements, they need to know the bookkeeper has recorded the transactions appropriately.
What is really interesting is that the Income Tax Act doesn't require the same standards for record keeping as do accountants in their CICA Handbook. The Handbook allows for materiality, the Income Tax Act does not. I believe that the standard set by the Income Tax Act is higher than that set by the CICA Handbook.
The Income Tax Act requires record keeping and compliance with the letter of the law in the Act. The responsibility for that compliance rests not with the accountant, but with the taxpayer, the individual, officer, trustee, executor, they are responsible for compliance with record keeping and compliance.
Bookkeepers, aka, the keepers of records are trying to figure out how best to keep the records so as to provide the taxpayer, responsible for compliance, with the records prepared to the standards of the Income Tax Act, for the most part, and secondly, to assist accountants with the preparation of financial statements that comply with the CICA Handbook. The CICA Handbook has been completely revised with all these the new rules regarding the presentation of financial information, some of it at fair market value, which really doesn't concern someone preparing compliance returns, completing boxes on forms, unless of course, their are concerned with the fair market value of assets for valuation purposes in the case of a non arms length transaction.
Add to all of this confusion, the new rules for accountants around independence as a result of the world wide concern with fraud, because of cases like Enron. If you are preparing an audit or a review, you are to be independent of the preparation of the keeping of the records. That means you need a bookkeeper.
You need a bookkeeper, not just an accountant, who knows about tax compliance, because every single transaction in those records has tax consequences. Before an accountant can prepare financial statements, they need to know the bookkeeper has recorded the transactions appropriately.
Whether it's a meal, at 50% or 80% for a trucker, or 100% because it's reimbursable, whether it's a vehicle on which there will be a benefit for standby charges and operating cost benefits, or whether it's the imputed ITC on the tax free reimbursement of a km rate, or the adjustment of GST/HST to reduce the ITC claim for the non taxable portion of meals, or the personal use of company assets... the bookkeeper, you think, why should they care about any of that?
In two words, CIVIL PENALTIES. Bookkeepers became liable to know about tax compliance to determine the tax consequences of every single entry when IC01-1 Third party civil penalties was issued in 2001. That was over 11 years ago now. Where have you been? Bookkeepers need to know about tax because they can be held personally liable if they don't know about tax. Where do I get that? Take a look at paragraph 32, where bookkeeping services are exempted from clerical or secretarial services.
Paragraph 33 specifically says in the last sentence:
"Bookkeeping services would include recording business accounts and transactions and could lead to penalties".
So, from my perspective, I'm looking at all of this confusion, and thinking, hmmm why isn't anyone talking to bookkeepers about taxation compliance because they really need to know they have an obligation to know about how much at risk they could be, personally, and they really don't get paid enough to take on this level of risk..so I started talking to bookkeepers, on their forum, when they would ask questions about how to account for something because they knew there were tax consequences, but they weren't sure what they were.
I have been listening to their questions very carefully for the past three years. They ask all the time, about meals, vehicles, capital cost allowance, capital vs inventory or repair, they ask intelligent questions and they deserve answers.
Where are they going to go for those answers? Well, they could purchase the 3 inch thick book from CCH, Preparing your Income Taxes, they could take tax courses at their local college, which are a joke, as they cover topics I would take 3-4 hours to review in about 5 minutes each.
Then there's the CRA website, which has a search engine that is laughable, and it's better to use Google to search the CRA website than it is to use the internal search engine, at least that's what someone told me recently, and there's courses from Evelyn Jacks, but those are extremely costly and have expiry dates at which you must pay more to access curriculum, and there's H&R Block's courses but you have to work for them, or you could pay thousands of dollars to attend tax courses by the Institute or the CGA's or CMA's who are working towards designation, plus then there's updates, like CGA's and CA's and CMA's where we spend a whole day, and pay more than $500 each, to listen to tax lawyers expound on what's new and how the rates changed from this year over last year, but they really don't get into the nitty-gritty of how to administratively deal with something like bookkeeping for a transition. Most of them have never prepared a tax return and wouldn't know how to combine tax knowledge with how to get accounting software to end up giving you the answers you need to get to...
And then there's the whole dilemma I have about how on earth do I scare these bookkeepers into realizing that they really need to hire a tax expert whenever there's capital property or tax free rollovers, or elections to sell receivables, and that they need to hire a professional valuator to establish the value of goodwill...
Because you know what? if you don't know what you're doing when it comes to this stuff, it will cost your client many multiples of what you are charging to fix it once it's messed up.
In two words, CIVIL PENALTIES. Bookkeepers became liable to know about tax compliance to determine the tax consequences of every single entry when IC01-1 Third party civil penalties was issued in 2001. That was over 11 years ago now. Where have you been? Bookkeepers need to know about tax because they can be held personally liable if they don't know about tax. Where do I get that? Take a look at paragraph 32, where bookkeeping services are exempted from clerical or secretarial services.
Paragraph 33 specifically says in the last sentence:
"Bookkeeping services would include recording business accounts and transactions and could lead to penalties".
So, from my perspective, I'm looking at all of this confusion, and thinking, hmmm why isn't anyone talking to bookkeepers about taxation compliance because they really need to know they have an obligation to know about how much at risk they could be, personally, and they really don't get paid enough to take on this level of risk..so I started talking to bookkeepers, on their forum, when they would ask questions about how to account for something because they knew there were tax consequences, but they weren't sure what they were.
I have been listening to their questions very carefully for the past three years. They ask all the time, about meals, vehicles, capital cost allowance, capital vs inventory or repair, they ask intelligent questions and they deserve answers.
Where are they going to go for those answers? Well, they could purchase the 3 inch thick book from CCH, Preparing your Income Taxes, they could take tax courses at their local college, which are a joke, as they cover topics I would take 3-4 hours to review in about 5 minutes each.
Then there's the CRA website, which has a search engine that is laughable, and it's better to use Google to search the CRA website than it is to use the internal search engine, at least that's what someone told me recently, and there's courses from Evelyn Jacks, but those are extremely costly and have expiry dates at which you must pay more to access curriculum, and there's H&R Block's courses but you have to work for them, or you could pay thousands of dollars to attend tax courses by the Institute or the CGA's or CMA's who are working towards designation, plus then there's updates, like CGA's and CA's and CMA's where we spend a whole day, and pay more than $500 each, to listen to tax lawyers expound on what's new and how the rates changed from this year over last year, but they really don't get into the nitty-gritty of how to administratively deal with something like bookkeeping for a transition. Most of them have never prepared a tax return and wouldn't know how to combine tax knowledge with how to get accounting software to end up giving you the answers you need to get to...
And then there's the whole dilemma I have about how on earth do I scare these bookkeepers into realizing that they really need to hire a tax expert whenever there's capital property or tax free rollovers, or elections to sell receivables, and that they need to hire a professional valuator to establish the value of goodwill...
Because you know what? if you don't know what you're doing when it comes to this stuff, it will cost your client many multiples of what you are charging to fix it once it's messed up.
The commentator on the forum that started this whole rant today is right. It can be fun fixing the 'button pusher's' (read bookkeeper's) errors and it's definitely very lucrative.
So, if you want to know how to record the transactions to make sure you've dealt with the tax consequences of a transition from proprietor to corporation, sign up for my course.
So, if you want to know how to record the transactions to make sure you've dealt with the tax consequences of a transition from proprietor to corporation, sign up for my course.
If you are a bookkeeper, or an accountant who has taken up bookkeeping to service their clients, I admire your course and tenacity, your constant curiosity about how to record transactions and to get it right.
IPBC members attend this course for free.
And if you think the line is blurry, you would be absolutely right. And I'm not even going to touch on how accountant's should or shouldn't merge.
I will tell you I believe that we've all paid way too much to isolate and contain the three breeds, CGA, CA and CMA via multi-media branding instead of to education of everyone in the industry about compliance with law. We have a country full of accountants who look askance at bookkeepers who want to understand how they can help with compliance. I'm confused.
Something to think about discussing whether or not to incorporate?
T1-Efile requires the e-filer to see and vet the veracity and authenticity of every document on which you are reporting. You can't just take a NTR and pop in the numbers and e-file.
T2's not the same rule. NTR and the signature of the owner/manager/signing officer will suffice. Why the double standard? No idea. Maybe because it's easier to analyze when there's a balance sheet required..or to watch for ending RE and the opening RE that don't agree, or continuity of capital assets that doesn't add up to be audit prompts?
And if you think the line is blurry, you would be absolutely right. And I'm not even going to touch on how accountant's should or shouldn't merge.
I will tell you I believe that we've all paid way too much to isolate and contain the three breeds, CGA, CA and CMA via multi-media branding instead of to education of everyone in the industry about compliance with law. We have a country full of accountants who look askance at bookkeepers who want to understand how they can help with compliance. I'm confused.
Something to think about discussing whether or not to incorporate?
T1-Efile requires the e-filer to see and vet the veracity and authenticity of every document on which you are reporting. You can't just take a NTR and pop in the numbers and e-file.
T2's not the same rule. NTR and the signature of the owner/manager/signing officer will suffice. Why the double standard? No idea. Maybe because it's easier to analyze when there's a balance sheet required..or to watch for ending RE and the opening RE that don't agree, or continuity of capital assets that doesn't add up to be audit prompts?
Update Do NOT Call status today!
Cell phone #'s go public this month.
You will be charged for these calls!
To prevent this, go to the following website for Canadian Telephone #'s and update or register all of your phone #'s.
Take a minute to upate your #'s on the Canadian DO NOT CALL REGISTRY here:
https://www.lnnte-dncl.gc.ca/index-eng
Stretching the umbilical cord
New spring topic, just for the fun of it! Let's talk tech. Who needs all this tax and accounting drivel? If you're looking for a spring speaker to stretch your networking cord...
What? You’re still wired to your desktop 24/7? And just like that, everyone else is Poof! Gone! Vanished into a cloud?
Eileen Reppenhagen, aka the TaxDetective® takes you on an adventure tour to show you how to soar above the clouds with everyone else. It’s easy and way too much fun.
Outlook®, Evernote®, Microsoft OneNote®, Windows SkyDrive®, Twitter®, Blogger®, Facebook®, LinkedIn®, SmartArt®, SnagIt® and YouTube®
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