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Accounting & Management Archives - Madan CA

What is a reasonable management fee?

Management fees are paid to the managers of a business for management services performed. Only reasonable management fees paid can be deducted as an expense. However, the Canada Revenue Agency has not explicitly stated what a reasonable amount is to charge for a management fee. Generally speaking, a reasonable management fee should be equal to … Continue reading What is a reasonable management fee?

I earn some investment income, in addition to my employment income, can I deduct the tax preparation/accounting fees from them?

That depends largely on the amount of the investment income, in relation to the total income. If the investment income is a small amount compared to the total income, then it will difficult to argue for it. For example, if employment income is about $100,000 and investment income is about $70, then it will be … Continue reading I earn some investment income, in addition to my employment income, can I deduct the tax preparation/accounting fees from them?

What is a T1-OVP?

A T1-OVP is a form where you report the contributions you made to your RRSP account, and disclose the deduction limit that you had. You are required to complete the T1-OVP when you contribute more than your deduction limit. The T1-OVP shows you how much you will have to pay in tax. The penalty for … Continue reading What is a T1-OVP?

Should I use Wave Accounting for my bookkeeping needs?

If you’re an independent contractor, IT consultant, or small business owner, then Wave Accounting is sufficient for your needs. It’s able to generate all of the financial reports required by your accountant and has the necessary tax codes such as HST. If you have multiple employees, a large customer base, or a lot of vendors, … Continue reading Should I use Wave Accounting for my bookkeeping needs?

Can you make quarterly instalments to CRA instead of monthly?

In order to be eligible to make quarterly corporate tax instalments, you must meet several criteria including being in perfect compliance history and having taxable income of $500,000 or less in current or previous years. For exact eligibility criteria, please click here.  

What is the difference between a GST/HST rulings and interpretations?

An interpretation is an anonymous rulings request to the GST/HST rulings department. You will supply the case facts to the CRA who will then provide a ruling of whether you have GST/HST responsibilities based on these facts. If it is determined that you have HST responsibilities, you have the choice to ignore the interpretation as … Continue reading What is the difference between a GST/HST rulings and interpretations?

How does the government grant affect my SR & ED claim?

If you receive a grant from a federal, provincial or other government body that is assistance for a SR & ED expense, the grant will reduce the claimable SR & ED expense amounts on the tax return. This can, in effect, increase your tax payable.  

What options do I have, for tax purposes, for inducement payments I receive on leaseholds?

There are two options available: first, you can reduce the un-depreciated capital cost (UCC) of the leaseholds by the amount of the inducement. For example, if the leasehold is $50,000, and you received an inducement payment of $10,000, you can choose to include the leaseholds at a UCC of $40,000. On the other hand, you … Continue reading What options do I have, for tax purposes, for inducement payments I receive on leaseholds?

As a small business owner planning on doing my own personal taxes, which tax software would you recommend?

Each individual’s tax needs are unique but the following tax preparation software will be able to effectively service the needs of most individuals: TurboTax This is a user-friendly Canadian tax software that makes preparing your taxes easy. It walks you through the tax preparation and filing process by asking easy-to-understand questions. Further, it offers tax … Continue reading As a small business owner planning on doing my own personal taxes, which tax software would you recommend?

What are the different methods of calculating tax installments?

The tax instalments can be calculated in 3 ways. Please see below for the different methods as indicated by the CRA. No Calculation Option: Instalments payments are based on taxes owing in last year and 2nd last year. This alternative is best if taxes owing are fairly consistent from year to year. Prior-year option: Tax … Continue reading What are the different methods of calculating tax installments?

I am trying to mail my return to the CRA. Will the CRA consider the date of receipt to be the date that I mail the return or the date that it arrives at the CRA centre?

The CRA will consider the date that the return is sent as the date of receipt. That means, as long as you send your personal tax return by April 30, the CRA will not impose late filing penalty. You should keep the mailing receipt as proof of the filing date.  

I am required to file a trust return for the year. When is the return due?

You have to file the T3 return and pay any balance owing no later than 90 days after the trust’s tax year-end. If you do not have all the tax slips required to complete the return by the due date, you should estimate the income. If, after you receive the slips, you find that the … Continue reading I am required to file a trust return for the year. When is the return due?

Is there ever a circumstance where the CRA can refuse to issue my refund?

Yes, one such circumstance where the CRA can refuse to issue your refund is when the taxable income for a tax year is reported after 3 years of the reporting period. For example, if the tax return for the 2008 year is filed on September 2013, the CRA can refuse to issue that refund because … Continue reading Is there ever a circumstance where the CRA can refuse to issue my refund?

What are the consequences of issuing tax slips late?

If you fail to file tax slips by the due date you will be subject to late filing penalty based on the number of slips you file late. For 1-50 slips, the penalty is $10 per day up to a maximum of $1,000. For more information check out this section on the CRA website. However, … Continue reading What are the consequences of issuing tax slips late?

How can I check whether the CRA has received my payment?

You can check by giving the CRA a call a few days after the payment is made. The CRA’s contact numbers are listed here. The other option is to log in to your “My Account” on the CRA website and access your information. The registration generally takes around 10 business days.

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