Peterborough Chamber of Commerce Business Excellence Awards

We are so very honoured and excited to announce that we have been nominated as a finalist for the Peterborough Chamber of Commerce Business Excellence Awards in the category of Professional Services.  We are very proud to be part of and contribute to the vibrant and supportive business community in our region.  Being recognized as a leader in our business community is humbling but also a testament to our commitment to supporting local businesses and helping them succeed.

 

Home Buyer’s Plan and Lifelong Learning Plan

Written by:  Gwyneth James MBA CPA, CGA  Senior Partner

You’ve been moving around and renting for the past five years or more, but now want to buy a home.  Unfortunately, the only savings you have are in RRSPs.  Don’t cash them in!  The Home Buyer’s Plan (HBP) allows you to “borrow” up to $25,000 of your own savings.  Fill out Area 1 of Form T1036 and take it to your financial advisor.

OR you have decided to return to school full-time.  The Lifelong Learning Plan (LLP) allows you to “borrow” from your RRSPs up to $10,000 a year to a maximum of $20,000.  Fill out Area 1 of Form RC96 and take it to your financial advisor.

These withdrawals will not be taxable and will not have tax withheld, but they must be repaid by making an RRSP contribution and flagging it as an HBP or LLP repayment on Schedule 7 of your tax return.

  1. For the HBP, payments start the 2nd year after you withdrew under the plan.  You have 15 years to pay it all back.
  2. For the LLP, payments starts the year after you cease being a full-time student (to a maximum of four years).  You have 10 years to pay it back.

Any year you miss all or part of the repayment, the balance of the amount that you were supposed to pay is added to your taxable income as if you withdrew from your RRSP.  In some cases, for example a year of very low income, this is an effective tax saving strategy.

There are some restrictions that are beyond the scope of this article related to, for example, RRSP contributions in the 3 months before you withdraw under either plan, the definition of a “first-time homebuyer”, and the type of residence or post-secondary education that qualifies.  Be sure to read up on these or consult an expert.

3 Things You Need To Do When Starting Up A Corporation

Written by:  Suzanne Cody CPA, CGA

As busy as you are when you are just getting things going, it is important to be mindful of Tax issues. There is a great deal of juggling going on with so many puzzle pieces to put together when setting up a newly formed corporation. If you want to avoid starting out on the wrong foot, handling basic tax matters should be in your crosshairs.

You may have started your business to earn a little extra income in addition to your day job like many others have done and now you have a full-time venture on your hands. You have made the decision to incorporate and now need to transfer your existing business to it. You should consider filing an election with the CRA to roll the assets and liabilities into the corporation to avoid unwanted personal tax liabilities. This will require you knowing the value of your current operations.

Get a new business number from the CRA. Upon incorporation you will need to request a business number for the corporation. You will also need to register for a GST account assuming your sales are over $30,000. Depending on whether you plan to have employees and how you plan to compensate yourself, you may also need to register for a payroll account.

You must choose your year-end date within the first twelve months of incorporating. This date does not need to coincide with the anniversary of your incorporation date not with the end of the calendar year. The ideal year-end should be based on your business cycles. For instance, if you are a retail store, you would want to choose a date occurring just after the end of your busy season. This would mean that there would be less inventory to be counted, not as many transactions in progress, and more time for administration work required to close your books.

If you would like further information, please call the office at 705-876-6011 or I can be contacted directly at

The Mystery of TD1 Forms Solved!

Written by:  Gwyneth James MBA CPA, CGA  Senior Partner

It’s your first day on the job and you’ve been handed a pile of paperwork to complete and sign plus the employee policy manual to read and a Health & Safety video to watch. In the midst of the chaos, you probably don’t understand – or care – what the significance of the TD1 forms are. But they are important and can cause big problems if they aren’t completed properly.

There’s even a penalty levied by CRA on employees who do not provide their employer with a completed TD1 form within seven days – $25 per day, minimum $100, maximum $2,500!

One of the purposes of the TD1 form is to inform the payroll department about the personal tax credits you usually claim on your tax return. If you are able to claim credits beyond the basic personal amount (examples are Family Caregiver Amount, eligible dependant, or disability tax credit), this form will allow your employer to deduct less tax at source. You will have more money in your hands throughout the year instead of having to wait for a refund the following spring.

Another purpose of the TD1 form is to instruct your employer to deduct additional tax each pay. This is useful if you have rental or investment income or are running a small business on the side. It will reduce the amount you have to pay in the spring when all your sources of income are added together, possibly pushing you into a higher tax bracket.

If you are working more than one job, be aware you can only claim the personal tax credits on one form. For the other employers, you will sign the TD1 form with a zero for the tax credits so every dollar you earn has tax withheld.

TD1 forms are in effect with your employer until you provide new ones, so be sure to complete an updated set if your tax situation changes.

Should You Or Shouldn’t You? Equipment Financing Options

Written by:  Suzanne Cody CPA, CGA  Senior Partner

When you need equipment you don’t necessarily have to buy it, you have options. You could lease it instead. Leasing is often a good alternative to applying for a loan. Equipment financing is designed specifically for the purchase of business equipment. There are three main options for financing your acquisition:

  • Purchase Financing
  • Operating Lease
  • Capital Lease

Once you have made the decision to lease, there are leasing options to consider. A question often asked by people is how will financing options affect them. Depending on which option you choose, there can be a great impact to your bottom line. It will affect both your financial statements and your tax return. There are a number of considerations that should affect this decision such as:

  • What financing options are available
  • Which option best suits your cash flow situation
  • Which option best suits your tax situation
  • Which option will be of the lowest overall cost after tax and discount rates are considered
  • What your lending institution’s perception of the effects to your financial statements will be

You might even be able to turn your old equipment into cash by entering into a lease back arrangement.  Remember you should consider the overall needs of your business. Making short-term purchases without long-term planning can be costly and not provide you with the desired or best results.

If you would like further information, please call the office at 705-876-6011 or I can be contacted directly at

Advocacy & Bill 148

Written by:  Gwyneth James MBA CPA, CGA  Senior Partner

The Peterborough Chamber of Commerce is a non-profit, membership-driven association that advocates on behalf of the Peterborough business community. Members of Chambers across Ontario, including yours truly, loudly and firmly stated their displeasure with one aspect of their government’s Bill 148 which introduced several updates to the Employment Standards Act.

That aspect was the public holiday pay formula – the method used by employers to compensate employees for time off (or worked) on statutory holidays. The new method looked only at the employee’s prior pay period and paid an average of the amount of that paycheque divided by the numbers of days worked in that period. That presented a huge issue for employers of part-time and casual employees because that individual now could receive as much as a full day’s pay for the holiday if they only worked one day in that prior pay period. Payroll costs for some businesses were skyrocketing and that had not been the government’s intention.

Several meetings, conference calls, letters and emails later, the Minister of Labour determined that this part of Bill 148 needed further review. It was announced that the method used to calculate statutory (or public) holiday pay would be rolled back to the old method for the period July 1 to December 31, 2018.

This means that the Victoria Day holiday was calculated using the new method, but Canada Day and subsequent statutory holidays will use the pre-2018 method of an average of pay over the previous four work weeks divided by 20.

Advocacy does work and it is ongoing by business organizations like the Chamber. Whether you add your voice through membership or not, submissions to the Ministry of Labour are encouraged to ensure that when the review period is completed, the method used to pay employees for statutory holidays is fair to all employees and employers.

For more information, please refer to this bulletin posted by the Ministry of Labour:  Click here 

We’re Here Longer for You!

Through tax season, we’ve extended our office hours.  Until April 30th our office hours are;

Monday to Friday 9am-5pm

Saturday 9am-3pm

We can also be available for evening appointments as required.  Please call our office to confirm availability.

 

1-888-511-2791
info@codyandjames.ca