taxdetective-Sandusky-Register

I'm finding this really interesting. This woman, who is really smart by my estimation, wants to do bookkeeping. She's learning QuickBooks software because business owners are using it.  She's taking all kinds of courses on how it's supposed to work, but she's not getting it. There are so many ways to do things that she's hung up on all the different choices.  So we've started with stories about her clients, one at a time, or stories about what she's found after doing about 50 different types of clients, what isn't being done properly by other accountants or bookkeepers when she takes the books over.

Today, it was about fixed assets and how to record the purchase, and when the asset is sold, how to record the asset sale in the books and on the tax return.

I've been recording key parts of the conversation and those conversations are for sale on my website.  If fixed asset / capital asset recording has always stymied you, it's no surprise.  I spent ten years doing extensive work on capital asset dispositions and acquistions, as the group of companies I worked for at the time, 30 companies in the group, about 10 operating, and 20 holding companies, re-organized, refinanced, and then sold or disposed of every single asset in the group, including 750 units in the fleet.

As a result, I know a thing or two about capital assets.  If you're looking for simple ways to handle the recording and reconciliation of assets using QuickBooks software, this 23 minute conversation might completely change your outlook on this complex area of accounting.

I'm building an inventory of stories like this one, each between 20 minutes and an hour, to showcase different challenges users might face in the design and structure of their use of the software.

Check out the list so far, and if you have a challenging story, contact me with the story.  We can have a similar conversation and we can if you like, record the conversation, for your use only, and yes, fees apply.

Story telling project

New for 2011:  not just men with hammers will have to report based on T4A's

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/rtrns/t4a/nw-cds-eng.html

Watch for more details

Register now for “Shake Out BC”  @ www.shakeoutbc.ca

CRA provides for taxpayer relief, a special program you have to know to apply for if your situation warrants it. This used to be called fairness, or administrative relief. 

Voluntary Disclosures is another program under the programs and services banner on the CRA website.

Just last month, in August 2011, the procedures for requesting relief from penalties, or fairness to collect refunds for beyond 3 years changed. 

There is an interesting new form, RC4288 that sets out the terms and conditions for a request, providing instructions and examples of supporting documentation required. 

It isn't mandatory to use the new form, but it seems like it might be useful to make sure you've adequately addressed all the possible questions that might be raised and pin point exactly what you are asking for in an efficient manner.  I'm impressed.

If you are in business, and are faced with catching up and keeping current with record keeping, I have a solution for you. In March, 2011, I presented a series of ten sessions online for a live audience over two weeks.  The host was the Institute of Professional Bookkeepers of Canada. 

In BC, if you haven't been looking at your cash register tapes, you might wonder if you bought certain products, why there's a 5% tax and a 12% tax on your cash register tape.

That's because there's a reduction called a "point-of-sale rebate" (click for more details) for certain limited types of items, a primary one being books and motor fuel.  Children's clothing and feminine hygiene products qualify too.

The store is allowed to either charge the full amount and then credit you back, or just charge the net 5%.

This morning I had someone email me that their mom had a cash register receipt from Wal-Mart that had both 5% and 12% on it and the store manager didn't want to explain why.  If they had done the math, they would have found tax on the books was not charged at 12%, but rather at 5%.

In 2005 the Minister of Finance decided to add amendments to many of the medical expenses to require 'certification in writing' in order to make a claim for most of the 150 medical expenses.  Now that's easy when it's a prescription for a medication that pharmacist fills, because pharmacists and doctors have figured out each other's writing. They have a code by which they communicate in writing.

Not so much between CRA and those doctors, whom CRA has give the title of "Qualified Medical Practitioner".

In mid 2005, I volunteered to advise CRA about disability administration and was invited to Ottawa to meet with a committee of like minded souls.  We met with about several senior administration finance related teams, Benefits Admin being chief among the teams. In early 2006, that and every other committee advising CRA was terminated due to budget constraints, so we approached the Benefits Admin team to ask if we could continue to meet at no cost by teleconference. We met until the end of 2010 until the team leader for that team retired.  During that time the discussion about medical expense certificate in writing was brought up many times.  We wanted to have templates for each 'certified in writing' to communicate correctly what needed to be said, if indeed it should be said at all, and to clarify for non tax professionals when it was appropriate to attempt certification. 

You see, what needs to be communicated, is exactly what the Income Tax Act requires be certified, otherwise you don't have a claim.  Judges in tax courts write about this in their deliberations.  The content, context and purpose of the Income Tax Act is held up to the mirror with it's facts of the case, and the facts must fit the Act or there is no claim. 

But the Medical Expense claims section at CRA who would have no part in this discussion and felt that this was an infringement on their right to interpret what they received.  Maybe they felt it would taint the doctor's communication to know what was actually expected to be received. 

To me, this attitude seemed disrespectful of qualified medical practitioner's ability to understand what is to be communicated and it's expensive.  It is, I believe the cause of much time, time for Finance Rulings officers, Tax Court, Appeals and up to the Supreme Court.

Where doctors and taxpayers don't understand what the requirements are, how can they reasonably be expected to meet those requirements, or to in their own minds decide that their fact pattern doesn't fit the situation and not even begin the process in the first place? 

Here is an example from the Child Care expense claim world.. If mom is 'infirm' a condition which has no definition, but takes it's common ordinary meaning from the dictionary, dad may on T778 claim the child care expenses if mom has no income to claim again, if the doctor were to write a letter that said exactly this and I quote from the Income Tax Act: S. 63(b)(i)(B)(II):

"(II) was in the year, and is likely to be for a long, continuous and indefinite period, incapable of caring for children, because of the person’s mental or physical infirmity,"

Now the doctor could choose to elaborate, but they don't have to, it's enough that they have written and signed this statement.  If they chose to elaborate, but didn't say this exactly, it likely might mean that the claim could be denied if their description of what was going on didn't seem to exactly fit with these words.

I believe we should respect that the 'qualified persons' being asked for certification have enough intelligence to figure out that they can't sign off on the wording if it's not appropriate, but first, we must actually share with them what that wording is. 

For more wording of what's exactly required, the qualified medical practitioner currently must access the Income Tax Act, and it is accessible for free on the Justice Minister's website and S. 118.2 can be found here;
http://laws-lois.justice.gc.ca/eng/acts/I-3.3/section-118.2.html

There are devices and equipment mentioned in this section under the sub-heading (m) and those can be found in Regulation 5700
http://laws-lois.justice.gc.ca/eng/regulations/C.R.C.,_c._945/page-121.html#h-292

There are over 150 medical expenses plus devices and equipment, many of which require 'certification in writing'.  Most of the time this certification is required to be by a 'qualified medical practitioner' but there are time when it is required by 'an appropriately qualified person' as in the case of S. 118.2(2)(e) care or care and training at a school, institution or other place.