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RISING WOMEN EXPERTS...
Can you explain some of the frequently missed deductions when doing small
business taxes?
By Dominique Dabolczi of I Care Accounting
Business owners are obligated to comply with detailed and often
confusing set of tax rules and regulations found on the CRA website
( www.cra-arc.gc.ca
) by topic or by form number. During the past seven years of preparing
thousands of returns, I have found business owners missing deductions or
suffering penalties due to confusion in key areas of GST, Payroll,
Subcontractors:
GST Registrant - You are required to become a GST registrant
when your income exceeds $30,000 (RC2, page11). You are responsible to remit
GST when required, whether you are registered or not. Prepare early to know
when you must collect GST from your clients.
GST Payable - You report the GST collected less the GST paid
on eligible business expenses claimed as Input Tax Credit (ITC. RC4022) Most
frequently missed ITCs are GST on capital acquisitions and the business use
of home.
Subcontractor Payments - Subcontractors are not employees.
They bill you and provide part of your service to your end customer. If you
are in the construction industry you must report these payments by issuing
T5018 income slips and by filing a T5018 Summary Return.
Family Members - Family members can be regular employees,
non-arms length employees exempt from EI, casual labour, self-employed, or
partners. The rules that govern these options are very specific and complex.
Please call me if you would like help in your situation. You may wish to
consult a tax professional if you are asked by EI and CPP rulings to
complete a questionnaire to determine if you are required to remit payroll
for your family member.
Capital Assets - Items of lasting value are called capital
assets. You list them in an asset class and claim the depreciation expense
(T4002, page 43-49)
Home Office Expenses - If you do not depreciate any assets in
your home and you claim only the allowable expenses, then you can reduce net
business income by the amount of your business use of home. This does not
affect your personal exemption as a principal residence.
Tax rules and regulations are complex and nuanced. Most individuals find
peace of mind and save taxes payable by contacting an experienced and
knowledgeable tax professional willing to work with them to find tax
savings.
For more tax advice, contact Dominique Dabolczi, owner of I Care Accounting
for a free 30 minute consultation by calling 403.386.0009.
www.iCAREaccounting.ca |
