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A Chartered Accountant shares important news about tax evasion scams

Important news from a Chartered Accountant: “Canadians be wary of tax evasion scams”

The O.P.P. and Canada Revenue Agency (CRA) are warning Canadians of fraudulent tax evasion emails and phone calls. Some residents of Tiny Township, Tay Township, and Penetanguishene have been victims of these emails and phone scams purporting to be from the CRA.

A young 18-year-old Chilliwack woman, Sasha Tuttle,  has also fallen prey to the CRA scam and lost $2,000 of her savings. Another Chilliwack resident, 86 year old, Norman Schott received the same phone call as Tuttle. The person on the other end of the phone claimed to be the CRA and told the senior that he has a warrant out for his arrest for tax evasion. Schott knew “something fishy going on” and immediately reported the incident to the police.

Ways to protect yourself against tax evasion scams

As a Chartered Accountant, these are some important precautions I share with my clients:

  1. If someone calls you saying that they are from the CRA and asks you for personal or financial information, really question the caller and ask yourself is the requester asking for information I would not provide in my tax return? (such as my passport number, health card, or driver’s licence) Is the requester asking for information I know the CRA already has on file for me? (such as my social insurance number).
  2. When in doubt, hang up and call the CRA through the official phone number to verify if you owe back taxes or are eligible for a refund. You could also check your online CRA Account to make sure that there is no problem with your tax account. Here are some examples of fraudulent scam stories.
  3. The CRA will never ask you for credit card information or for prepayments by prepaid credit cards or your personal information by email or text message. So if you receive mail, an email or a text message requesting personal information, know that these are fraudulent and never respond to them.  
  4. The CRA will never email a link to you and ask you to divulge personal or financial information. However, the one exception is if you call the CRA to request a form or a link for specific information. In this case, a CRA agent will forward the information you are requesting to your email during the telephone call. This is the only circumstance in which the CRA will send an email containing links.
  5. If you are a responsible citizen that pays your taxes on time and correctly, then it would not make sense for the CRA to claim that you committed a tax evasion. If in fact there are tax evasion allegations against you, then CRA will do so formally in writing.  And even in this case call the CRA through the official phone number to verify if you owe back taxes. You should also check your online CRA Account to check the status of your tax account.
  6. CRA will never use coercive or nasty language to threaten you. Cases of fraudulent communication could include using intimidation or coercive language to frighten taxpayers into paying a fictitious debt to the CRA.  The scammers may threaten to arrest you if don’t pay your fine. Yet, in reality, the CRA will never threaten to arrest you.
  7. Fraudulent communication could play out more subtly as well. The scammers could insist that personal information is needed to process a refund or benefit payment. Yet, in reality, the CRA will never request money or demand credit card information over the phone.
  8. The CRA never shares your taxpayer information with another person, unless you have given the appropriate authorization.
  9. The CRA never leaves personal information on your answering machine or requests you to leave a message containing your personal information on an answering machine.
  10. If you feel that you’ve been a victim of fraud or have received deceptive telemarketing, you should call 1-888-495-8501 or visit CRA fraud website. Follow these steps if you’ve been defrauded.

If you are unsure if the phone call, email or text message is legitimate or a fraudulent message, ask your Chartered Accountant. Your Chartered Accountant should know how the CRA communicates with taxpayers and your chartered accountant should be able to distinguish between fraudulent communication and legitimate communication from the CRA.

If you require consultation or a have any accounting inquires, please do not hesitate to contact us. We serve clients in Toronto, North York, Vaughan, Thornhill, Richmond Hill, and all other GTA cities.

Polina Presman, CPA, CA

T- 416-371- 6017
F- 416-667-0404

Shani Marzin, CPA, CA

T- 416-731-9031
F- 416-667-0404

S&P Accounting Services LLP
2727 Steeles Ave. W. Suite 300
North York, ON, M3J 3G9
www.spaccountingservices.ca

Five income tax tips for small business tax preparation

Five key tips for reporting your income tax

Are you a small business owner? Congratulations! It takes a lot of passion and dedication to get to where you are. There are many standard challenges that businesses face today. These hurdles include hiring the right people, getting and attaining customers, work fatigue, increasing cash flow and profitability, etc.

One challenge that I will cover in this article is managing your business finances. As an accountant, I notice that individuals are sometimes hesitant to start a business because of fear that they won’t know how to properly prepare and file their taxes. Below I complied five key small business tax preparation tips that will hopefully give you the knowledge and confidence to run your business more smoothly and help you know that you’ve covered some essential tax preparation basics.

1.Report your income from any business you or your partner run

As a small business owner, you are obligated to report income from any business you run yourself or with a partner. Business income is defined as money you earn from a:

  • Profession
  • Trade
  • Manufacture or
  • an undertaking of any sort, an adventure or interest in the nature of trade, or any other enterprise you engage in for profit and there is proof to support that intention.

Please note that if you have a service business such as a restaurant, income from a service business is considered business income. However, business income does not include employment income, such as wages or salaries received from an employer.

2. Neglecting to report income may result in a penalty

Here is another important small business tax preparation tip. To calculate income for tax purposes, you must document and report all amounts of income. If you neglect to report all your income, you may be fined a penalty of 10% of the amount of income that you did not report.

3. It is crucial to keep your records detailed and complete

If you are a small business owner or are engaged in a commercial activity, it is crucial that your records are detailed enough and complete in order to calculate the tax you owe and to support any deduction or credit you are claiming. They also must be supported by original documents.

4. It is your responsibility to keep your supporting documents for six years

You must keep the supporting documents for six years after the end of the tax year to which they relate. Even if you are filing your return online or don’t have to affix specific supporting documents to your return, you must still keep the documents in case CRA reviews your return or audits your business. CRA may ask you to confirm your claims for deductions or credits with documents other than official receipts, like canceled cheques or bank statements.

5. Paying your income tax by installments

Here is a final small business tax preparation tip.  If you get income that has no tax withheld, or does not have enough tax withheld for more than one year, you may have to pay tax by installments. Some cases where this may occur are if you have rental, investment, or self-employment income, certain pension payments, or income from more than one job.

If you have any small business tax preparation questions or any other accounting related inquiries, we would be happy to assist you.

Polina Presman, CPA, CA

T- 416-371- 6017
F- 416-667-0404

Shani Marzin, CPA, CA

T- 416-731-9031
F- 416-667-0404

S&P Accounting Services LLP
2727 Steeles Ave. W. Suite 300
North York, ON, M3J 3G9
www.spaccountingservices.ca

 

Disclaimer:
We strive to ensure all information on our site is accurate and up to date. However, the contents of the site are naturally subject to change from time to time. That means, we can’t always guarantee the accuracy of all information on the site. YOU ARE RESPONSIBLE FOR CHECKING THE ACCURACY OF RELEVANT FACTS AND OPINIONS GIVEN ON THE SITE BEFORE ENTERING INTO ANY COMMITMENT BASED UPON THEM.

We offer bookkeeping services in the GTA

We offer bookkeeping services in the GTA

Whether you have a start-up business or a well-established business, S&P Accounting could provide you with professional bookkeeping to meet your business needs. We offer bookkeeping services to clients in the GTA which includes Toronto, North York, Thornhill, Vaughan and Richmond Hill.

We provide a full range of bookkeeping services 

Our bookkeeping services include:

  1. Books set-up,
  2. Data entry, banking, and reporting,
  3. Payroll setup, processing, monthly remittances and yearly tax reporting,
  4. HST, WSIB and Employer health tax filings….and more.

Our bookkeeping services are highly professional

In Canada, bookkeeping, unlike the accounting profession, is completely unregulated. This means that when it comes to bookkeeping, there are no criteria for educational credentials or for professional conduct. Virtually anybody with little to no education or training could call themselves a bookkeeper. Unfortunately, using the service of an unqualified bookkeeper, has had detrimental consequences for businesses. For instance, according to Edward Nagel, a forensic accountant,  unethical bookkeepers could create “large-scale misappropriation — from fictitious vendors and ghost employees to cheque fraud, and everything in between. And, since many bookkeepers and their employees often have no formal fraud-prevention training, this increases the likelihood of a fraud going undetected for months, if not years. ” Mr. Nagel proceeds to say that it’s important to stay clear of bookkeepers that profess to be knowledgeable in the profession, yet refuse to answer straight-forward accounting questions. That’s definitely a red flag!

At S & P Accounting Services, our Chartered Accountants perform the bookkeeping services.  This means that our high level of educational, professional and ethical standards ensures that our clients receive top level bookkeeping services. As our client, you could feel confident knowing that our Chartered Accountants will ensure that your books are properly maintained. We will accurately and proficiently perform all your bookkeeping services, as well as give you advice and answer any questions that you may have about your business’ finances. Our qualified bookkeepers are able to customize a bookkeeping solution around your financial and business needs.

We offer bookkeeping services in both QuickBooks and Simply Accounting, and we offer these services at your office or ours, whatever you prefer. Our office is conveniently located in the the GTA.

Our bookkeeping services are affordable and efficient

Our bookkeeping services are an affordable and efficient way to get small and large sized businesses up-to-date with their bookkeeping records. We regularly look over your file and help ensure that your books are properly and accurately maintained. By providing you with professional bookkeeping services, you will have more time to focus on what’s really important -running your business.

If you require additional consultation or a have any bookkeeping inquires, please do not hesitate to contact us. We serve clients in Toronto, North York, Vaughan, Thornhill, Richmond Hill, and all other GTA cities.

Polina Presman, CPA, CA

T- 416-371- 6017
F- 416-667-0404

Shani Marzin, CPA, CA

T- 416-731-9031
F- 416-667-0404

S&P Accounting Services LLP
2727 Steeles Ave. W. Suite 300
North York, ON, M3J 3G9
www.spaccountingservices.ca

Practical Information from North York Accountants

Useful information from North York Accountants

If you are living in North York, here is a list of CRA contact information (addresses, phone numbers) that will help you navigate your taxes more effectively.

Mailing your T1 form

If you are an Ontario resident living in either North York, Toronto Centre, Toronto East, Toronto North, Toronto West, Barrie, Sudbury and these other cities, mail your paper T1 to the following address:

Canada Revenue Agency

Tax Centre

1050 Notre Dame Avenue

Sudbury ON  P3A 5C2

Non-residents should mail their T1 return to the following address:

International and Ottawa Tax Services Office

Post Office Box 9769, Station T

Ottawa ON  K1G 3Y4

Canada

Where is the CRA drop box located in North York?

If you would like to drop off payments or correspondences, please visit the Toronto North -Barrie Tax Services Office:

Office/mailing address:

5001 Yonge Street

Toronto ON  M2N 6R9

Fax: 416-512-2558

If you have any tax inquires, you may call CRA. You may also call S &P Accounting Services. We are professional accountants with a firm in North York and will happily respond to any questions and/or requests that you have within 24 hours.

Please note that The Toronto North-Barrie Tax Services Office has a drop box only. Effective October 1, 2013, payment and inquiry services are no longer available at the Toronto-North Barrie Tax Services Office. An external drop box is available for correspondence and payments.

Drop boxes and late payment penalties

Here is an important note about the drop boxes which could help you file your return on time and avoid late payment penalties.

Drop boxes are typically emptied of their contents twice daily (more frequently during the personal tax filing season). The contents are stamped by the CRA mail operations the same day they are received. For the first clearance each morning, items are date stamped with the previous business day’s date.

So an important tax tip is even though you cannot pay your full balance owing on or before the due date (eg.,  April 30, 2017), you can avoid the late filing penalty by filing your return on time.  For instance, if you owed tax for 2016 and did not file your return for 2016 on time, CRA charged you a late-filing penalty. The penalty was 5% of your 2016 balance owing, plus 1% of your balance owing for each full month your return was late, to a maximum of 12 months.

If CRA charged a late-filing penalty on your return for 2013, 2014, or 2015 your late-filing penalty for 2016 may be 10% of your 2016 balance owing, plus 2% of your 2016 balance owing for each full month your return is late, to a maximum of 20 months.

Ensure your taxes are always filed on time

Forget about filing deadlines because from now on we will make sure that your taxes are always on time.

As professional Chartered Accountants, we are committed to excellent service so you could rest assured that we will file your taxes on time.
Our accounting firm is located in North York and we happily serve clients in North York, Toronto, Thornhill, Vaughan, Richmond Hill, Mississauga and other cities in the GTA.

Learn more about our accounting and bookkeeping services here.

Disclaimer:
We strive to ensure all information on our site is accurate and up to date. However, the contents of the site are naturally subject to change from time to time. That means, we can’t always guarantee the accuracy of all information on the site. YOU ARE RESPONSIBLE FOR CHECKING THE ACCURACY OF RELEVANT FACTS AND OPINIONS GIVEN ON THE SITE BEFORE ENTERING INTO ANY COMMITMENT BASED UPON THEM.

Accounting is not boring!

There is a common misconception that accountants are a bunch of math geeks who count beans, focus on crunching numbers and have zero communication skills. After years of working as an accountant, I’ve come to the realization that I rarely, if ever get bored with the profession.  And I am not the only one that feels this way. In a survey of more than 2,600 accounting professionals, nearly 7 out of 10 accountants said that they would stick with accounting if they could go back in time and choose a different career.

So what is so exciting about working in accounting?

Accountants are exposed to wide variety of career paths and solve complex problems. I will further delve into each of these points and and explore them separately.

Accountants are exposed to a wide variety of career paths

Accountants could make the profession their own.  Whether they choose to work for a government agency, school, charity, or professional agency to name a few, accountants could carve themselves a niche in the accounting industry. Michael Tumminia is one example of an accountant who did just that. Mr. Tumminia is an accountant who works  with top fashion models. He helps fashion models manage their financial lives and is the voice of reason and limits for the models. Mr. Tumminia says, “our job is to set up their life [models] in a way that is efficient, effective and allows them to focus on their careers.” Working with models such as Ashley Graham, Marquita Pring, Karlie Kloss, Toni Garn ”has made his ‘very programmatic, very technical job’ more fun and interesting”

Accountants may work full time for a given firm or they may take on multiple clients while being self-employed or as part of an accounting firm. Some accountants move vertically up the rungs of the accounting firm and some choose to move horizontally and may teach the profession.  There are some accountants that become high level managers, and others that start their own business using what they’ve learned during their time as accountants. For instance, “Mick Jagger may be known for his musical achievements and stage acrobatics, but did you know he could also rock a spreadsheet?”  “While studying accounting and finance at the London School of Economics on scholarship, Mick Jagger reunited with a childhood friend guitarist, Keith Richards” and pursued his interest in music.

Before they launched their music careers, Kenny G and Robert Plant of Led Zeppelin worked in accounting. Also, the person who invented the bubble gun was also an accountant.  Walter Diemer “was a fledgling accountant for the Fleer Chewing Gum Company in Philadelphia when he began testing recipes for a gum base – the part that makes gum chewy – in his spare time in 1928.  “He unwittingly created the first batch of bubble gum, making it pink because that was the only shade of food coloring on hand.” Now that’s something to chew on!

As you see there are a wide variety of career paths and many opportunities to explore different avenues and make accounting your own.

Accountants solve complex problems

Accounting is an intellectually challenging and even philosophical endeavor. Accountants employ a set of rules and concepts to prepare relatively simple financial statements that help capture and represent the financial truth of a company. Blogger Matthew Shaffer nicely articulates this: “The fundamental truth about a firm is actually fairly chaotic – a million different things of varying importance are going on at once -and we need to figure out rules for distilling some simple but accurate summary from this chaos.”

Another important point that blogger, Mr. Shaffer makes is that accounting is a ‘philosophical enterprise.’ “The world itself does not label things as ‘assets’ or ‘expenses’; rather, we humans decide which labels we apply to which things; and we set rules for doing so based off of imperfect intuitions and ideas that involve human social ideas like justice (i.e., we want accounting standards that will promote fair and beneficial outcomes for society as a whole via efficiency and transparency) and conservatism” (i.e., we want standards that will prevent managers of firms from being too optimistic when reporting the data).

Accounting helps companies distill useful trends and bring financial order to businesses. Joseph Rascoff, is one example of an accountant who is truly “intrigued by the challenge of bringing financial order to the [music] business”. Mr. Rascoff, was an accountant who displayed little passion for rock n’roll music. Yet, ended up becoming the powerful business manager and tour producer for music powerhouses such as the Rolling Stones, U2, and Paul Simon. “Although Mr. Rascoff preferred classical music, he immersed himself in the rock n’roll business and later in 2013 in electronic music because he was fascinated by the complexities of managing the business affairs of music artists.

Many accountants will agree that they rarely get bored with accounting. Perhaps this is because they have an opportunity to explore a variety of different career avenues and like detectives, they have an opportunity to piece complex things together in order to understand and decipher the bigger picture.

If you require consultation or have any questions related to accounting, please do not hesitate to contact us.

Polina Presman, CPA, CA

T- 416-371- 6017
F- 416-667-0404

Shani Marzin, CPA, CA

T- 416-731-9031
F- 416-667-0404

S&P Accounting Services LLP
2727 Steeles Ave. W. Suite 300
North York, ON, M3J 3G9
www.spaccountingservices.ca

What does bookkeeping mean?

My clients often ask me ‘what does bookkeeping mean?

They wonder if bookkeeping is something that they could perform while running their business.

If you are amid the start up phase of your business, you might wonder if bookkeeping is something that you could perform yourself while running your business.  Whether or not you choose to employ a bookkeeper or are comfortable to bookkeep yourself, keeping your books in order is crucial to running any business. In fact, good bookkeeping practices will give you an excellent measure of how well your business is doing.

In the following article, I will explain what bookkeeping means, what are the different ways to bookkeep, as well as why it’s important to bookkeep.

What does bookkeeping mean?

Bookkeeping is a recording of financial transactions, which include purchases, sales, receipts, and payments by an individual or cooperation. Bookkeepers are responsible for accurately recording all the financial transactions of the business, whether it is a cash transaction or credit transaction. You would need certain skills and talents to perform a bookkeepers crucial job.

Bookkeepers must be detail oriented, be meticulous about accurately recording numbers in the books and it is to their advantage if they enjoy working with numbers. Bookkeepers must vigilantly maintain a paper or electronic trail, as well as filling and storing all essential backup data about the financial transactions recorded in the books.

What are the different ways to bookkeep?

A useful bookkeeping system is one that is easy to understand, simple to use, reliable, accurate, consistent and can provide you with the information you need in a timely manner.

The two different bookkeeping styles are: single entry and double entry bookkeeping
Single entry bookkeeping means that every dollar transaction is recorded only once, either as income or expense, an asset or a liability. All entries are recorded on a one page synoptic journal, also called a revenue and expense journal.

On the other hand, double entry bookkeeping means that each transaction is recorded twice, one account is credited with the given dollar amount and a second account is debited by an equal dollar amount.

You may use a one-write system or a computerized system to record your bookkeeping.
One-Write Systems are copyrighted systems are set up using carbon-backed cheques. As you write the information on a cheque, it also transfers the data to a record system.

Computerized Systems are programs that are advantageous because they usually have the ability to produce daily updated financial statements quickly and in versatile ways. Many of these systems are scalable, so you can add on as your business expands.

Why is it important to bookkeep?

It might seem tedious to record every financial transaction in your books, yet financial records can save you a great deal of effort and time in long run.

Good records will keep you up to date with your business’ past and present standing. They will assist you in making good business decisions. Good records will also help you meet different government agency requirements, which include: Canada Revenue  Agency, Canada Pension Plan, Employment Insurance, Department of Finance, Goods and Services Tax and Workers’ Compensation. Additionally, good records will help you make accurate and timely remittances. Finally, good records will increase the probability that your business will survive, stay in business and earn profit.

If you require additional consultation or a tax planning strategy, please do not hesitate to contact us. We serve clients in Toronto, North York, Vaughan, Thornhill, Richmond Hill, and all other GTA cities.

Polina Presman, CPA, CA

T- 416-371- 6017
F- 416-667-0404

Shani Marzin, CPA, CA

T- 416-731-9031
F- 416-667-0404

S&P Accounting Services LLP
2727 Steeles Ave. W. Suite 300
North York, ON, M3J 3G9
www.spaccountingservices.ca

The benefits of good business accounting services

Good Business Accounting Will Help You Focus on What’s Important…Your Business

Professional business accounting services can save you money and time, but that is not all. A good accountant can also help you make more money, grow your business and avoid bad business decisions. Here is how:

Good business accounting services help save on taxes

If you are in any way similar to the typical business owner, you may be paying more tax than you should. A good accountant will make sure that you are reporting all the right business expenses without missing any opportunity to lower your tax bill. A good accountant will also find ways to structure your return, in compliance with the regulations, in a way that will minimize your taxes. The time invested in finding a good accountant can save you thousands in taxes. Note that tax laws are changing all the time and what worked for you last year may not be effective or even allowed this year. A good accountant will be up to date with the latest changes.

You won’t pay unnecessary fees and penalties

Once you’ve found a reliable business accounting service, you can relax knowing that your accountant keeps a watchful eye and won’t let you fall behind on your payment to government agencies and regulatory bodies. This will not only save you from unnecessary payments, but also from the unpleasant and restrictive effects of penalties for late payment.

You’ll save time on bureaucratic stuff

As a business owner you are probably less familiar with the accounting world than you are with your own business. This can become a time consuming issue in situations when you need to fill out specific forms, apply government programs or just deal effectively with CRA. Your accountant can save you precious time by helping you with these issues.

Your business will grow faster and safer

An experienced accountant may have already seen businesses in situations that are somewhat similar to yours. Your accountant has intimate knowledge of the financial aspects of your business and can help you evaluate new opportunities probably better than other advisors can. A good accountant should have the ability to analyze those opportunities from a cold, financial perspective that you may not have as someone who is deeply involved. Your accountant can help you identify opportunities for growth as well as those that need to be avoided.

If you require additional consultation or a tax planning strategy, please do not hesitate to contact us. We serve clients in Toronto, North York, Vaughan, Thornhill, Richmond Hill, and all other GTA cities.

Polina Presman, CPA, CA

T- 416-371- 6017
F- 416-667-0404

Shani Marzin, CPA, CA

T- 416-731-9031
F- 416-667-0404

S&P Accounting Services LLP
2727 Steeles Ave. W. Suite 300
North York, ON, M3J 3G9
www.spaccountingservices.ca

The role of a good small business CPA

A good small business CPA will provide its clients with advice beyond the areas of tax preparation and auditing

Many of our clients are small business owners. Even those who own big companies started a few years ago as small business owners. Small business is the backbone of our Canadian economy and should be treated as such. Therefore, A good small business CPA will provide its clients with advice beyond the areas of tax preparation and auditing, and will also help its clients capture the many business opportunities that are available to them in order for the maximize their profitability and reduce their liabilities.

Good small business CPA provide clients with advice in areas that are beyond tax preparation and auditing

In our role as a small business CPA, we meet many clients who can benefit from advice in areas that are beyond tax preparation and auditing. Many business owners can increase their profitability through a better understanding of how cash flows in their business, the true value of different business opportunities and the true value of assets and liabilities. For instance, the type of business structure you choose to have, whether it is a proprietorship, partnership, or corporation  will impact how you report your business income, the type of returns you have to complete, and many other aspects of your business. A good CPA will advise you on which business structure is most suitable for your business and the benefits that you are eligible for and how to increase your profitability.

Good small business CPA help clients capture business opportunities

A small business CPA should also help business owners capture opportunities for increasing profits that are not always so obvious to the untrained eye. An accountant has the advantage of having the full perspective of the financial situation of the business as well as the experience of dealing and improving different business situations for its clients. For instance, the following is one example of how a small business CPA could help clients improve their business situation. The Federal Budget 2017 has made changes to the way business professionals will report work in progress (WIP) on their income. This policy could mean that professionals such as lawyers, doctors, accountants, veterinarians, and chiropractors will have to pay more taxes upfront and stain their cash flow.  In order minimize this strain on business professionals income,  a good CPA will advise such professionals on the different options that are available to them.  Such recommendations  could include how they could change the way their WIP is calculated, the benefits of incorporating their practice, the advantage of creating a holding company for excess cash, as well as the value of splitting income with family members.  A good small business CPA will be well versed in the federal policies in place and will know which options are best for its clients in order to maximize opportunities and minimize any strain on their income so that the could carry on business as usual.

We believe that as a small business owner you can expect your CPA to give you this level of consulting.

If you require additional consultation or a tax planning strategy, please do not hesitate to contact us. We serve clients in Toronto, North York, Vaughan, Thornhill, Richmond Hill, and all other GTA cities.

Polina Presman, CPA, CA

T- 416-371- 6017
F- 416-667-0404

Shani Marzin, CPA, CA

T- 416-731-9031
F- 416-667-0404

S&P Accounting Services LLP
2727 Steeles Ave. W. Suite 300
North York, ON, M3J 3G9
www.spaccountingservices.ca

A Tax Accountant shares the nitty gritty of being tax audited

As a Tax Accountant, I believe that it is my responsibility to reduce the chances of my clients being audited.

In fact, being audited can be overwhelming and it is definitely something you’d want to avoid. In this article, I explain, Why CRA audits? and What a tax audit is?

Why does CRA audit?

Canada Revenue Agency (CRA) is responsible for administering tax and benefit programs for all Canadians.  In order to ensure that the tax system is fair for everyone and that all Canadians receive the benefits and amounts that they are eligible for, the CRA audits businesses that may not have calculated their taxes correctly. In fact, the Canadian tax system relies on self-assessment. This means individuals register their business as applicable and at the end of the year or at the end of the reporting period, individuals calculate their own taxes and submit a tax return to the CRA along with any payments required. So the auditing is one way to ensure that businesses fulfill their obligations and receive any amounts and benefits that they are eligible for.

What is a tax audit?

When CRA receives a tax return it typically goes through an initial processing that checks basic information and calculates the information. From this initial processing, you receive a notice of assessment

A tax audit, on the other hand is a more detailed examination of your books and records. Records are financial documents that sum up your transactions and include documents to support these transactions. A tax audit is conducted after you’ve received your notice of assessment to find out if you’ve calculated your taxes correctly.

While undergoing a tax audit, the CRA first reviews the income and expenses you’ve reported. GST registrants might be more familiar with the terms supplies and input tax credits.

Next, the CRA may compare the income and expenses you’ve reported with other sources they have on file in order to affirm that you’ve followed the tax laws and that your calculations are accurate.

During this time, CRA also checks to see that you’ve reported revenues from all sources and that the expenses you claimed are deductible and supported by receipts. For GST/HST audits, CRA ensures that GST/HST is collected and reported on all taxable supplies, that you are entitled to the input tax credits you’ve claimed and that you have receipts to support your claims.

Finally, at the end of the audit, CRA will send you a letter and affirm one of three things.

1) that the previous Notice of Assessment was correct and nothing more needs to be done, or 2) that an adjustment needs to be made in more tax (reassessment) and you will have to pay the balance owing or 3) that an adjustment needs to be made, resulting in less tax (reassessment) and you will qualify for a refund. In most cases, audits result in a reassessment with mores taxes being owed to the Government of Canada.

If the adjustment results in more taxes being owed, the auditor can provide you with an approximation of the balance owing before the CRA issues a notice of assessment or notice of reassessment. This will give you the chance to prevent more interest charges from accruing by paying all or part of what you owe immediately. For more information, go to Make a payment to the Canada Revenue Agency.

I believe that a good Tax Accountant reminds clients of their responsibilities and requirements as tax-paying citizens. Businesses are obligated to to meet registration, reporting, filing and payment responsibilities which are written under the CRA laws.

Specifically, this means that you must keep your books and records up to date and generally for six years from the day that you file your tax return. You must also keep your books and records in an accessible and readable format either on paper or electronically.  Lastly, you must also provide your books and records and supporting documents to the auditor upon request.  All these steps will help reduce the chances that you will be audited and help ensure that you report your taxes correctly.  

If you require additional consultation or a tax planning strategy, please do not hesitate to contact us.

Polina Presman, CPA, CA

T- 416-371-6017
F- 416-667-0404

Shani Marzin, CPA, CA

T- 416-731-9031
F- 416-667-0404

S&P Accounting Services LLP
2727 Steeles Ave. W. Suite 300
North York, ON, M3J 3G9
www.spaccountingservices.ca

Source:

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/lf-vnts/dt/menu-eng.html

A Chartered Accountant advises parents on how children could become more financially literate

As a Chartered Accountant, many of my clients ask me how they could help their children become more financially literate.

As a Chartered Accountant and parent, I could understand why they are concerned. Being financially literate is a life skill that children will carry with them even after high school. They need this knowledge in order to responsibly file their tax returns, help pay off debts and credit cards and save for their future. Lacking financial skills could definitely lead to financial troubles.

The good news is there are many different initiatives across Ontario that are helping children and youth gain money skills. For instance, the Ontario Ministry of Education is engaged in a pilot project that is helping revamp the Grade 10 careers courses and is laying the groundwork for financial literacy to become part of the curriculum for the fall of 2018.

Also, findings released this week by the Organisation for Economic Cooperation and Development (OCED) reveal that Canadian youth are among the top global performancers in financial literacy. Canada came second in financial literacy out of 15 countries that participated in the Programme for International Student Assessment (PISA) survey. Eighty-seven per cent of about 3,400 Canadian students who participated in the survey, demonstrated at least a baseline level of financial literacy and Twenty-two per cent of Canadian students demonstrated advanced levels of financial literacy, well above the OECD average.

What could you as parents do to help your children gain money skills?

I recommend talking with your children about money early on and doing so as often as possible. In fact, the PISA survey revealed that Canadian students who discussed money issues with their parents tended to score higher with those discussing money issues at home once or twice a week scoring the highest.

As a Chartered Accountant, from my experience, it is also beneficial for parents to encourage their youth to start handling money early on that way the youth gain greater practical knowledge on how to budget, save and spend wisely. In fact, the PISA survey found that Canadian teenagers who held occasional jobs like gardening and babysitting had, on average  the highest financial scores. Children and youth learn about money by doing. Here is an example of about 100 summer jobs for teens, one of them might peak your children’s interest.

What unbiased resources are out there that could help us parents discuss money matters with our children?

Chartered Professional Accountants Canada (CPA) offers free unbiased financial literacy sessions to the general public. The program is run by Chartered Accountants that volunteer their time and expertise and is available to adults, seniors, workplace, new Canadians, schools, post-secondary students, small and medium businesses and entrepreneurs. For instance, some of the topics that parents could learn at the sessions are how to teach their kids to be money-smart and how to become good financial role models for their children. If you are interested, you may request  a session here.

Another informative website is Teaching Children About Money which offers many programs and activities for youth and children. Some topics discussed are:  “What to consider when deciding to give an allowance: how much to give, how often to give and if it should be earned” as well as “What to teach your preschool, school-aged, preteen and teenaged children about money management.”

There is a also a Financial Literacy Database for Canadian parents which offers some educational and fun resources such as how to teach children about money management in a fun and interactive way, how parents could save for their children’s education and an e-book on how children could learn to be smart spenders.

Also, besides teaching children and youth about the value and importance of money and helping them take on seasonal jobs early on, it is important for parents to attend financial literacy workshops. Such workshops will give parents more confidence in their knowledge and skills about money, help them be better role models when it comes to handling money and make them feel more comfortable to initiate such conversations at the dinner table.

If you require additional consultation or a tax planning strategy, please do not hesitate to contact:

Polina Presman, CPA, CA

T- 416-371- 6017
F- 416-667-0404

Shani Marzin, CPA, CA

T- 416-731-9031
F- 416-667-0404

S&P Accounting Services LLP
2727 Steeles Ave. W. Suite 300
North York, ON, M3J 3G9
www.spaccountingservices.ca

Sources:

https://www.thestar.com/news/gta/2017/03/23/ontario-launches-plan-to-teach-high-school-kids-financial-skills.html

https://www.cpacanada.ca/en/the-cpa-profession/financial-literacy/financial-literacy-program-faqs

http://theprovince.com/opinion/op-ed/opinion-canadian-students-among-top-global-performers-in-financial-literacy

https://itools-ioutils.fcac-acfc.gc.ca/RDCV-BRVC/sear-rech-eng.aspx

https://www.thepennyhoarder.com/jobs-making-money/100-summer-jobs-for-teens/

https://www.canada.ca/en/financial-consumer-agency/services/teaching-children-money.html

 

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