Table of Contents
Year-Round Tax-Planning Calendar xi
Preface xv
Acknowledgements xix
Round 1 – Get Off to a Good Start 1
What Is a Business? 1
Should I Keep My Losses Low in the Start-Up Years? 6
When Did My Business Start? 7
What Types of Expenses Can I Deduct? 8
Am I Really Self-Employed or Still an Employee? 8
Round 2 – Keep Accurate Records—and Save! 11
Why Should I Take the Time to Keep Records? 11
For How Long Do I Have to Keep My Records? 13
What Information Should I Keep? 13
What If I Don't Get a Receipt? 14
What If There Is No Description on a Receipt? 15
How Can I Develop a Simple Record-Keeping System? 15
How Do I Know If I Made Money? 21
Can I Use the Cash Method for Reporting Business Income? 22
What Is the Cash Accounting Method? 22
What Is the Accrual Accounting Method? 23
Do I Have to Use Accrual Accounting throughout the Year? 24
Round 3 – Start with the End in Mind 27
Must I Have a December Year-End? 27
Why Would I Want a Non-December Year-End? 28
Should I Have a December or a Non-December Year-End? 28
What Happens If I Elect to Have a Non-December Year-End? 29
What If This Is My First Year in Business? 30
How Can I Minimize the Non-December Year-End Tax Problems? 32
When Can I Choose a December Year-End? 34
What Year-End Should I Choose for My Corporation? 34
Round 4 – The Tax Rate Stairway: Easy Steps to Saving Money 37
How Do I Use the Tax Rate Stairway to Save? 38
What Are the Income-Splitting Techniques? 39
The Family Income-Splitting Technique 40
The Personal Income-Splitting Technique 52
The Corporate Income-Splitting Technique 57
Round 5 – To Incorporate or Not? A Taxing Question 61
What Are the Common Business Structures That
I Can Use? 61
What Is a Sole Proprietorship? 62
What Are the Advantages of a Sole Proprietorship? 62
What Are the Disadvantages of a Sole Proprietorship? 63
What Is a Partnership? 64
What Are the Advantages of a Partnership? 64
What Are the Disadvantages of a Partnership? 65
What Is a Corporation? 65
What Are the Advantages of a Corporation? 66
What Are the Disadvantages of a Corporation? 66
What Tax Savings Can Be Achieved By Using a Corporation? 67
Is There a Tax Advantage to Selling Shares of My Corporation? 70
Should I Take Advantage of the Capital Gains Exemption Now? 71
Can I Increase the Capital Gains Exemption? 73
Can I Take Advantage of the New Enhanced Dividend Rules? 74
How Do the New Dividend Rules Work? 74
How Do the New Dividend Rules Impact My Business? 76
So Which Structure Is Best for Me? 77
Round 6 – GST: Friend or Foe? 79
What Is an Input Tax Credit? 79
Do I Have to Register for the GST? 80
Should I Register for the GST? 82
Can I Simplify the Administration of the GST? 83
Can I Still Claim Input Tax Credits If I Forgot to File My GST Return? 87
Can I Be Denied a Legitimate Input Tax Credit? 87
How Can I Verify That One of My Suppliers Is Registered for GST/HST? 89
Can I Claim an Input Tax Credit on Capital Purchases? 90
Can I Claim an Input Tax Credit on an Asset Purchased Before I Registered for the GST? 90
Can I Claim Input Tax Credits on Personal Capital Property? 91
Can I Claim Input Tax Credits on Personal Vehicles? 92
Can I Claim Full Input Tax Credits on All General Business Expenses? 94
Are There Any Other Restrictions on Claiming Input Tax Credits? 95
When Do I Have to File My GST Return? 96
When Are the GST Returns Due? 97
What Happens If I’m Late in Filing My GST Return? 98
What Happens If My Customer Doesn’t Pay His Account? 100
What If I Offer My Customer a Discount for Early Payment or Charge Interest on Late Payments? 101
Do I Charge GST on the Sale of Used Capital Assets? 102
What Happens If I Give a Customer a Gift or Free Product or Service? 102
What Happens If a Customer Provides You With a Deposit? 103
What Is the HST? 103
Do I Have to Register for the HST? 104
I Reside in a Participating Province. How Will the HST Affect My Business? 104
I Reside in a Non-Participating Province. How Will the HST Affect My Business? 105
Round 7 – 365 Days to Save 107
When Is My Tax Return Due? 107
Why Should I File My Tax Return on Time? 108
What Are Tax Instalments? 109
Do I Have to Make a Tax Instalment? 110
When Are the Tax Instalments Due? 110
Why Should I Make Tax Instalments? 111
What Are My Instalment Options? 112
What If I Miss a Tax Instalment? 116
What Is the Penalty for Forgetting to Remit Employee Deductions on Time? 117
When Are Employee Remittances Due for Filing? 118
When Are Employee Information Returns Due for Filing? 120
What Is the Contract Payment Reporting System? 121
What Fines and Penalties Are Tax Deductible? 122
How Can I Maximize My Deductible Interest? 124
Can I Deduct the Cost of Life Insurance? 125
As a Self-Employed Entrepreneur Can I Deduct Health and Dental Premiums? 125
As a Self-Employed Entrepreneur Can I Deduct CPP/QPP Contributions? 126
How Much Can I Deduct for Meals, Beverages, and Entertainment Expenses? 127
Can I Deduct the Costs Associated with Entertaining Clients at a Club, Camp, Lodge, Yacht, or Golf Course? 129
Can I Deduct the Cost of a Meal Before or After a Round of Golf? 130
Can I Give a Tax-Free Gift to My Employees? 131
How Can I Maximize My Tax Savings on the Courses I Take? 132
What Are the Tax Results If I Pay for an Employee's Training? 133
How Can I Maximize My Tax Savings on the Conventions I Attend? 134
Why Is Some of My Business Advertising Not Tax Deductible and How Can I Ensure 100% Will Be Deductible? 135
What Are Some Year-End Tax-Saving Tips? 136
Round 8 – Home Sweet Home 139
Am I Eligible to Deduct Home Expenses? 139
How Do I Calculate the Home Expense Deductions? 140
What Kind of Home Expenses Can I Deduct? 141
Are There Any Limitations on Deducting Home Expenses? 142
Can I Claim Moving Expenses? 143
What Moving Expenses Can I Deduct? 144
Do I Need to Keep Receipts? 145
Are There Any Restrictions to Claiming Moving Expenses? 147
Round 9 – Capital vs. Expense: A Wealth of Distinction 149
What Is a Capital Expenditure? 149
What Is Capital Cost Allowance (CCA)? 152
Are There Any Special Rules in the Year of Purchase? 152
What Happens When I Sell an Asset? 153
Do I Have to Claim Full CCA? 154
Is There a Right Time of the Year to Purchase Assets? 155
Is There a Right Time to Sell Capital Assets? 156
How Can I Save Tax Dollars with Capital Assets? 157
Can I Deduct the Cost of a Personal Asset That Is Now Being Used in the Business? 160
Can I Claim CCA on Assets Used Only Part of the Time in My Business? 162
Should I Claim CCA on My Personal Residence? 162
What Is an Eligible Capital Expenditure? 163
Can I Deduct Eligible Capital Expenditures? 163
Can I Deduct My Own Goodwill? 164
Am I Taxed on the Goodwill I Sell? 164
Round 10 – AUTO-matic Savings 165
What Automobile Expenses Can I Deduct? 165
What Is Considered "Business Travel"? 168
Can I Deduct the Cost of My Car in the Business? 168
Are There Any Restrictions on Lease Costs? 172
Can I Deduct All Interest Charges on My Vehicle? 173
Should I Own My Passenger Vehicle in My Corporation? 174
How Can I Reduce the Amount of the Standby Charge? 176
If I Own My Car Personally How Should the Company Reimburse Me for Business Travelling? 177
Round 11 – Saving by Spending 179
What Is an Investment Tax Credit? 180
Who Can Claim Investment Tax Credits? 180
How Do I Claim an Investment Tax Credit? 181
What Expenditures Qualify for SR&ED? 182
What Are the Tax Benefits of Claiming SR&ED? 185
How Do You Claim a SR&ED Tax Benefit? 187
How Long Do I Have to File the SR&ED Forms? 187
What Happens When I Receive the Refund? 188
What Is the Apprenticeship Job Creation Tax Credit? 189
What Is the Investment Tax Credit for Child Care Spaces? 190
Round 12 – Surviving a Visit from the Taxman 193
What Happens After I File My Tax Return? 193
What If I Disagree with the Notice of Reassessment? 197
Should I Pay Tax That Is Under Dispute? 199
What If I Have Discovered an Error in a Prior Year's Tax Return? 199
Is There Any Relief If I Have Never Filed a Tax Return or Did Not Report All of My Income? 201
Can Penalty and Interest Charges Be Reduced? 203
What Are Some Do's and Don't's If I Get Audited? 204
Round 13 – And the Winner Is... 207
Quick Reference to Tax Beaters 209
Appendix 221
Index 227
