Richmond Hill

Six tell tale signs of a CRA scammer

Although I’ve spoken about these CRA scams in a past post, I think it’s important to stress them again especially since CRA scammers have been on the rise (particularly during tax season).  In fact, from January. 1, 2017 to February. 26, 2018, there have been 111 incidents of citizens falling prey to the CRA frauds and leaving scammers with $311,736.21 from these citizens 1.  According to the Canadian Anti-Fraud Centre  (CAFC) only fewer than 5 % of victims report being scammed. The CAFC states that many individuals are likely too embarrassed to report that they got scammed.

Related: Edmonton fraud victim describes evolving CRA, Bitcoin scam: ‘I became a crazy lady’

In the past, vulnerable seniors or new immigrants (some of who may not yet be very familiar with how the tax system works) were more likely to be victims of these scams. Yet, the CRA frauds have become so sophisticated that even police who have been contacted by these scam artists, state that the calls are relatively believable and realistic. Detective Linda Herczeg who works with the Edmonton Police Service’s Economic Crimes Unit, states that the CRA scams are “getting better….it’s expanding and growing. It’s not going to stop.”

In some instances, targeted individuals have reported “that their telephone call display reads ‘Police’, ‘CRA’, or ‘Government’, with a phone number. With today’s technology, the fraudsters do have the tools to make their scam look extremely believable and they are well versed in convincing people that they are legitimate.”

One good example of how vulnerable individuals are not the only victims of scam artists is Tom Kane’s story.  74 years old, Kane who is a Toronto resident, has taught computer technology at Centennial College for 22 years. He is currently retired and takes photography night courses at Ryerson. Although he teaches people how to protect themselves against phishing and other computer fraud, he has fallen for the CRA scam and got conned to transfer $5,000 to CRA scammers in Bitcoins.

How does a thoughtful, articulate person become a victim of the CRA scam?

Kane recalls in hindsight that he “simply panicked when [the CRA scammers] threatened with the arrival of the police. He came to Canada as a draft dodger in the 1960s after growing up in Chicago, where, he says, he developed a distrust of cops. Even after paying the scammers, he was hesitant to return home thinking the police would be lying in wait.” He states, that “All the signs were there that it was a fraud but they scared the living daylights out of me. My sensibility just went poof. From the first call in the morning until I got home, I was basically operating in a state of panic.”

So how can we prevent these scams from happening? Detective Linda Herczeg states, We need to educate people. We need to give them the tools they need to deal with it.”

Here are 6 telltale signs of a CRA scam artist:

  1. CRA will not ask you to provide specific personal information like a bank number and passwords so if CRA calls and requests such info, know that it is a scam and never provide personal information on incoming calls.
  2. CRA will never request payment via iTunes or other gift cards or Bitcoin or a money service business. This is also a red flag for a CRA scam. Scam artists request payments via these methods because it makes them very difficult for police to track and investigate.
  3. CRA will never text message you, email you or leave you voicemail messages. Instead, CRA will send you a registered letter. CRA will also only email you if you request information.  CRA impersonators commonly leave a voicemail which is a clear warning sign that you are targeted.  
  4. CRA will never use threatening or aggressive language, demanding that you pay up or else you may go to jail or be deported. These aggressive and threatening modes of communication are meant to put you in a panic mode which may cause you to feel fraught with anxiety,  and deplete you of the resources required to stay fully in the present.2 This panic mode is precisely what’s needed to not think rationally about the situation and hand over your money to CRA scam artists.  So in such cases, it’s best to hang up the phone and contact the CRA to verify whether you owe back taxes or are entitled to a refund.
  5. CRA does not threaten that police have been dispatched.
  6. Since the CRA scams are sophisticated and have the ability “to hide a call’s origin and make it appear to be from legitimate government offices or financial institutions,” it is not enough to simply look up the caller id number and see that it matches the CRA number.  Call the CRA by accessing their phone number from the CRA website and then verify the status of your account.

According to Constable Scott Davis, Public and Media Relations Officer, the best way to deal with the CRA impersonators is to end the call as quickly as possible by simply hanging up on them. “They may call back but when they realize that you are not falling for their scam they will move on.”.3

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 require consultation or a have any accounting inquiries, please do not hesitate to contact us.  S&P Accounting Services has experienced Chartered Accountants and we serve clients in Toronto and other cities in the GTA which include, North York, Thornhill, Richmond Hill and Vaughan.

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.

This post was written by Biz Source, a content creation company and is for illustration purposes only. For professional advice, please contact S & P Accounting Services.

Five common mistakes that you could easily avoid when filing your tax return: Advice from a North York accounting firm

Soon enough your income taxes will be due and while you may be tempted to rush through the process and get it over with as quickly as possible, it’s best not to file your return hastily. The errors that you could make or omissions that could take place could result in a delay in receiving your refund or even not being granted certain benefits or credits. It may even result in a penalty.

S & P Accounting Services (a North York accounting firm) discusses five common mistakes that you could easily avoid when filing your tax return.  They are 1. Failing to file your income tax return, 2. Discarding records once your income tax has been filed, 3. Postponing filing your income tax return because of missing slips, 4. Not notifying CRA of any changes to your personal information, and lastly, 5. Failing to keep a record of the eligible medical expenses you could claim.

We discuss them in more detail below.

1.Failing to file your income tax return

Perhaps you didn’t show income in Canada for 2017 or perhaps your income is tax exempt. Even if you fall under one of these two categories, you are still obligated by law to file your tax return. In fact, you will only receive credits and benefits that you are eligible for if you file your return.  Here are some benefits and credits that you may qualify for:

2. Discarding records once income tax return has been filed

Another common mistake that people may make is that once they file their tax return, they discard their records. Records are  “organized accounting and financial documents that summarize your transactions” and include the documents to support these transactions. For instance, records include, purchase receipts, income tax returns, sales invoices, contracts, banks statements, canceled cheques, credit card receipts, work orders and all correspondence that supports your transactions. Here is a full list of documents that fall under the category of records.  

Keeping these documents is not limited to anyone who runs a business or carries out commercial activity. In fact, anyone who files a tax return is obligated by law to keep their records and supporting documents. Generally speaking, these records must be stored in a secure place for a period of six years from the end of the last tax year they relate to. Whether you decide to store your records as a hard copy or electronically, all records must satisfy the following requirements;

  • – be reliable and complete
  • – include the information needed to meet your tax obligations and to calculate your credits
  • – be supported by documents
  • – be kept in English, French, or a combination of these two languages

Keeping your records is vital in case the CRA  (Canada Revenue Agency) asks to inspect, audit or examine them. In the event that you are selected for review, all receipts and supporting documents that the CRA requests have to be provided at that time. If they are not provided within the set timeframe, your claim may be reduced or disallowed.

Here is a list of individuals and organizations that need to keep records.

3. Postponing filing income tax return because of missing slips

A third common, yet avoidable mistake that individuals may make is that they delay filing their tax returns because of missing T4s or other information slips. If you cannot find the missing slip(s) by the due date, use your pay stubs or statements to approximate your income and any deductions and credits that you may qualify to claim. Filing your taxes on time will help you avoid penalties.

For the majority of people, their income tax and benefit returns are due on or before April 30, 2018.  For self-employed individuals, and their spouses or common-law partners, their returns are due no later than June 15, 2018.1 It’s best to mark these days on your calendar and start filing your taxes as soon as possible. Otherwise, if you owe tax for 2017 and file your tax return past the due date, the CRA will charge you a late-filing penalty. You will be subject to pay 5% of your 2017 balance owing. Additionally, you will also be subject to pay 1% of your balance owing for each full month your return is late, to a maximum of 12 months.

Note that if you are a self-employed person, and have a balance owing for 2017, you have to pay it on or before April 30, 2018. For more information on how to make your payment, see Make a payment.

Also, if you do not file your return on time (see exception to the due date of your return), benefits and credits that you might be eligible for such as Canada child benefit payments, old age security benefit, and other provincial tax credits and benefits payments may be delayed or stopped.

You should have received most of your slips and receipts by the end of February. However, T3, and T5013 slips do not have to be sent before the end of March. If you have not received, or have lost or misplaced a slip from 2017, you have to ask your employer, or the issuer of the slip, for a copy.

Yet, most important, even if certain slips are missing, file your return for 2017 on time.

4. Not notifying CRA of any changes to your personal information

A fourth common mistake people may make is not informing the CRA of changes to their personal information such as whether they are married, divorced, widowed, etc. and/or how many children they have. Changes to your personal information such as your marital status, the number of children in your care, your banking information and your address directly impact your benefit and credit payments. If there has been a change in your life, notify the CRA as soon as possible in order to ensure that you receive the benefits and credits that you qualify for.

5. Failing to keep a record of the eligible expenses you could claim

A final recurring yet avoidable mistake that people may make is that they neglect to keep a record of the expenses that are tax deductible. Generally speaking, you are required to have proper receipts to support all expenses claimed as eligible expenses.  

For instance, a proper receipt for medical expenses is one that indicates the purpose of the payment, the date of the payment, the patient for whom the payment was made and if relevant, the specialist (i.e., audiologist, dentist, medical doctor, etc.) who prescribed the purchase or gave the services.   A canceled cheque, on the contrary, is not acceptable as a substitute for a proper receipt.  

There are many expenses you may be able to claim when completing your income tax return such as child care expenses, employment expenses, medical expenses, education expenses, donations, etc.

Related: For information on eligible medical expenses, see Income Tax Folio S1–F1–C1, Medical Expense Tax Credit.

In order to reduce the taxes that you owe, it is best to keep a record of your receipts and any supporting documents. Receipts and supporting documents for employment expenses should go in a separate file than receipts and supporting documents for medical expenses. This way, when tax season rolls around, you will be able to accurately and efficiently claim your expenses on your income  tax return,

Summary

In summary, the five common mistakes that you could make on your income tax return are: 1. Failing to file your income tax return, 2. Discarding records once your income tax has been filed, 3. Postponing filing your income tax return because of missing slips, 4. Not notifying CRA of any changes to your personal information, and lastly, 5. Failing to keep a record of the eligible medical expenses you could claim. These common mistakes are completely avoidable and could easily be prevented by keeping your records in an orderly manner and filing your taxes accurately and on time.  And finally, making sure to keep all your records in a secure place, will be important in case the CRA wants to review them.

If you need assistance filing your taxes, you may be eligible for help

If you have a simple tax situation then you may be eligible to receive help filing your taxes from a free tax preparation clinic near you.

There are free tax preparation clinics nationwide. Here are several located in different regions of Ontario.

Markham

Mississauga

North York

Richmond Hill

Thornhill

Toronto

Vaughan

You are not considered to have a simple tax situation if you are:

  • – self-employed or have employment expenses
  • – have a business or rental income and expenses
  • – have capital gains or losses
  • – filed for bankruptcy
  • – are completing a tax return for a deceased person

If you need assistance with your tax return or have any accounting inquiries, please do not hesitate to contact us at S & P Accounting Services. We are a full-service accounting firm handling taxation, bookkeeping, payroll, and accounting. We happily serve clients in North York, Toronto, Vaughan, Mississauga, Richmond Hill and other cities situated in the GTA.

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.

This post was written by Biz Source, a content creation company and is for illustration purposes only. For professional advice, please contact S & P Accounting Services.

A Toronto accounting firm helps demystify the difference between an RRSP and TFSA

RRSP or TFSA, Which is the winning option?

Do we put the maximum allowable amount in an RRSP or in a TFSA?

Which savings account is a better option to house our retirement? To save for a rainy day? To renovate our basement or save for a dream vacation? 

What if I am a lower income earner? Are there clear advantages to housing my money in a TFSA over an RRSP?

These are some of the questions that our clients ask us. Below is a table that will help you make sense of some of the differences and similarities between an RRSP (Registered Retirement Savings Plan) and TFSA (Tax-Free Savings Account). 

RRSP TFSA
What is the eligibility age? Not applicable Must be 18 years old 1
What is the yearly contribution limit? You can contribute 18% of previous years earned income, less any pension adjustment, up to the maximum yearly RRSP  contribution limit for that year. For 2018, you can contribute $5,500 including the sum of money withdrawn in previous years.
Are contributions tax deductible? Yes, contributions are tax-deductible and they reduce your taxable income. No, contributions are not tax deductible.
Is the unused contribution room carried forward to subsequent years? Yes, unused contribution room is carried forward until the end of the year in which you turn 71 years old. Yes, unused contribution room is carried forward indefinitely.
Do the savings in the account grow tax-free and tax-deferred and what is the difference between these two terms? Savings in an RRSP are made with pre-tax dollars and grow tax-deferred which means that the money in the account will be taxed once it is withdrawn.

 

Savings in a TFSA are made with after-tax dollars and grow tax-free which means that the money in the account will never be taxed.
Do withdrawals negatively impact my eligibility to receive government benefits? Given that withdrawals are considered taxable income, the withdrawals that you make could negatively impact your eligibility to receive tax credits and income-tested government benefits such as Old Age Security. The income that you earn and the withdrawals that you make will not negatively impact your eligibility to receive tax credits and income-tested government benefits such as Old Age Security.
Where can I find my contribution room info? Your RRSP contribution room info can be found in one of the following CRA services:

Your TFSA contribution room info can be found in one of the following CRA services:

Do I  need to have earned income to contribute? Yes No
Are there any tax implications to withdrawing money? Yes, savings withdrawn from the account are added to your taxable income. No, savings withdrawn from the account are tax-free.
Are there any penalty taxes to over-contributing? Yes, there is a penalty tax of 1% per month to over-contributing. Note: That this penalty tax is only applicable if you go beyond the $ 2,000-lifetime over-contribution amount. Yes, if you contribute more than your allowable TFSA contribution room, you will be considered to be over-contributing to your TFSA and you will be subject to a tax equal to 1% of the highest excess TFSA amount in the month, for each month that the excess amount remains in your account. 

 

What is the main purpose of an RRSP and TFSA? It functions as a retirement savings account. It functions as a savings account for any purpose.

 In certain provinces and territories, the legal age at which an individual can open a TFSA is 19. 

Here are some articles worth reading about RRSPs and TFSAs:

Choosing the right RRSP: Pape ⁄The Toronto Star/By Gordon Pape

In this article, Gordon Pape talks about four different investment choices that you could make when creating an RRSP account. These four choices are 1. A savings plan, 2.  A GIC plan, 3. A mutual fund plan, and 4. A self-directed plan.

Why a TFSA is a great way to sock it away for a rainy day/The Toronto Star/By Gail Vaz-Oxlade

In this article, Gail Vaz-Oxlade describes how a TFSA is a flexible savings account which can be used as an emergency fund or a saving account for retirement. The writer explains the advantages of lower income earners housing their money in a TFSA.

TFSA or RRSP? Try these five tests/The Toronto Star/By Gordon Pape

In this article Gordon Pape describes five different tests that could help you determine if an RRSP or a TFSA is better suited for your situation (e.g., the age test, the pension test, the goals test, the support test and the income test).

The Wealthy Barber explains: TFSA or RRSP?/The Globe and Mail/By David Chilton

This is a book excerpt from David Chilton’s book, The Wealthy Barber Returns: Significantly Older and Marginally Wiser, Dave Chilton Offers His Unique Perspectives on the World of Money.  This illuminating article explains the difference between TFSA and RRSP and some of the pitfalls that you could experience when housing your money in either type of savings account. The take-home message from this article is: “(1) If you go the RRSP route, don’t spend your refund; (2) If you go the TFSA route, don’t spend your TFSA; (3) Whatever route you go, save more!”

If you require additional consultation or want to learn more about our professional accounting services, 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

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.

This post was written by Biz Source, a content creation company and is for illustration purposes only. For professional advice, please contact S & P Accounting Services.

How to achieve your financial goals with these proven methods

January 2018 is soon coming to a close and by now you probably thought long and hard about your new year’s resolutions. Perhaps you pledged to call your mom more often, meditate once a day, lose 10 pounds, and become financially richer.  Have you acted upon your goals?

Spending money responsibly is one of the most important goals that you could achieve. The benefits of developing good financial habits are well worth the efforts. Having your finances under control could enable you and your family to abstain from straying into debt, enable you to keep a solid credit rating and help you to attain the financing you may need to buy a new home or a car or borrow money for business ventures.

One financial goal that could save you hundreds or even thousands of dollars per year is minimizing the amount of expensive coffee you buy per week, as well as the amount of money you spend on dining out per week.

On average, coffee costs about $4.00 per cup and dining out for lunch costs about $15.00. If you were to buy coffee and dine out every weekday, you would be spending whopping $4,800 per year! – that’s the equivalent of about four vacation getaways or about six plasma screen TVs. You get the point.  Conversely, If you were to just bring coffee from home and brown bag your lunch, you could save $4,800 per year and apply that money towards other bills or a savings account.

Related: A stop buying expensive coffee calculator and save more money

The problem is that sticking to this new year’s resolution is easier said than done. Even having an immense desire or motivation to stop buying your latte and chow mein for lunch is not enough to ensure that you will stick to this financial goal. A strong body of research reveals that motivation is not enough to attain your goals, including your monetary ones.  Fortunately, there are proven methods that could help you stick to your financial goals. In the following post, I will discuss seven proven methods that could help you minimize your spending and maximize your savings. These proven methods are 1. Writing down your financial goals., 2. Attaching your new financial habit to an existing one,  and 3. Modifying your environment to minimize spending.

  1. Write down your financial goals

Over 100 different studies in a variety of experimental situations have arrived at the same conclusion: Individuals who explicitly say when and where their new behaviors will happen to have a greater probability of adhering to their goals. Heidi Grant Halvorson, a professor at Columbia University states, “deciding in advance when and where you will take specific actions to reach your goal can double or triple your chances for success.

So one strategy you could perform to become more financially wealthy this year is to implement a plan on how you could spend less money on coffee and food.

You could write down a statement such as:  “If situation Y is encountered, then I will initiate goal‐directed behavior X!”).

Here is an example that applies to purchasing less coffee when at work.

“Every time I go to work, I will drink coffee (or tea) from the coffee machine at work and not buy coffee (or tea) at Starbucks/Second Cup/Timmy’s etc.”

Another example is:

“Every time I go to work, I will brown bag my lunch and not purchase lunch from the cafeteria/restaurants/fast food places/convenience stores.

You could also add the conditions in which you will purchase coffee and dine out and how much you will spend.

“I will only buy coffee (or tea) once a month on the weekends for no more than $5” and “I will only dine out once a month on the weekends for no more than $20.”

Remember write down your financial goals in advance and specifically, state when and where you will take specific action to reach your monetary goal.

Related: Achieve Your Goals: Research Reveals a Simple Trick That Doubles Your Chances for Success

  1. Attach your new financial habit to an existing one

While old habits are hard to break, new habits are hard to shape. This is mainly because our behavioral patterns are hard-wired in our brains. The promising news is that through consistency and repetition, you could shape new neural pathways and create and maintain new habits.

If your goal is to stop dishing out money on dining out, then you could turn this goal into a habit by attaching this new habit that you wish to develop to an existing one.

Here is how you could make it happen:

Immediately after you clean up the kitchen table in the evening, pack yourself a portion of this evening’s dinner in your Tupperware for tomorrow’s lunch. In this example cooking dinner and cleaning the kitchen after dinner are old habits that you are accustomed to performing, packing a portion of tonight’s meal in Tupperware for tomorrow’s lunch is the new habit you want to acquire According to a study published in the journal, Neuron, the best way to convert “wishful goals into solid, automatic habit…[is by] being consistent.”  Work toward your goal every day, even if you don’t feel like it. You can set aside a specific time each day, or a specific context. For instance, you can brown bag tonight’s leftover dinner right after you clean up the kitchen table (a specific context) or at exactly 7 p.m. every evening (a specific time).  James Clear, a prominent author on habit formation states, “The more regular the behavior, the more easily your brain can convert it into a habit.”

  1. Modify your environment to minimize your spending

Sometimes changing the environment will help kick your brain into gear and change your daily habits. According to the journal, Psychology Today, “Environmental cues are essential when it comes to habit formation, in part because the brain is excellent at connecting an environment with a specific situation”. For instance, someone who regularly buys a cup of java from Timmy’s on the way to work might find it difficult to resist one even when they are not craving caffeine. Simply seeing Timmy’s logo (environmental cues) will be enough to send them racing to the drive-thru window.  “If you find yourself constantly giving up on your goals, take a look at your surroundings.” If you always buy a coffee at Timmy’s on the way to work, perhaps you could change your driving route to one where you don’t encounter a Tim Hortons. Without the environmental cues, you are less likely to crave a coffee.

On the flip side, if you want to develop a certain habit like brown-bagging your lunch or only drinking coffee from the coffee machine at work, make the habits you want to perform more visible. Place your lunch box in sight on your kitchen counter right after work and place a nice mug on your office desk.  In other words, make the habits that you don’t want to perform less visible and the ones that you want to perform more visible.

In conclusion, the three proven methods that could help you reach your financial goals are 1. Writing down your financial goals., 2. Attaching your new financial habit to an existing one, and 3. Modifying your environment to minimize spending. Don’t be discouraged if you have not been able to stick with your monetary goals for this year. With the above-proven methods, you could make the changes and develop healthy money habits. The pay off will definitely outweigh any latte or burger that you consume.  


About S & P Accounting Services

S & P Accounting Services is a professional accounting firm situated in North York, Ontario. We are chartered accountants with extensive experience with audit, review, tax and bookkeeping. We strive to operate in accordance with our principles of quality, professionalism, and integrity and are dedicated to excellent service.  We aim to ensure that our clients receive the highest quality of financial, tax and accounting services and advice. We happily serve clients in Toronto, North York, Mississauga, Vaughan, Richmond Hill and in other cities in the GTA.

If you have any questions or inquiries about our accounting services, please contact S & P Accounting Services.

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.

This post was written by Biz Source, a content creation company and is for illustration purposes only. For professional advice, please contact S & P Accounting Services.

T’is the season to be giving! Ten questions to ask yourself prior to donating

When you donate to charities you help make a positive impact on the lives of many Canadians, people around the world and on your life as well. Charities depend on our donation dollars to help Canadians and people around the world.  Yet, before you go out and support an organization, it is important carefully research the charity.  Here are the top ten questions you could ask yourself prior to donating to a charity.

1.Who can I donate to?

Although there are plenty of important causes in Canada, only registered charities can provide you with a donation receipt and thus help you reduce your taxes. The key word here is registered. Registered charities differ from not-for-profit organizations such as clubs and sporting leagues. Registered charities function under specific rules that are set out by the Canada Revenue Agency (CRA). Some of the stipulations that charities must follow include: ensuring that the money that they raise goes to charitable activities, keeping proper books and records, and sharing their financial and activity information annually with all Canadians through the CRA. There are other rules that charities must adhere to which you can read more about on the CRA website. In exchange for adhering to these stipulations, charities earn the right to a charitable registration number. This number is important to you, the donor because it makes you qualify for a tax credit.

Related: The difference between a registered charity and a non-profit organization

2. How can I find out if a charity is registered?

You could ask the charity for its registration number and verify its status on the List of Charities. You could also call the Charities Directorate at 1-800-267-2384.

Related:  The information that must be on an official donation receipt 

3. What can I donate?

You could donate cash, land or listed securities such as stocks to a registered charity or other qualified donees. Note that although gifts of service are valuable to charities, they don’t qualify for a tax receipt. These include donated time, skills and effort.

A good example of a gift of service is the following scenario. Let’s pretend that you are a software company and you offer to build a website for XYZ charity. After the website is completed, your company suggests that instead of invoicing the charity $16,000, the charitable organization issue you with a tax receipt of $16,000. Is the charity able to issue you a tax receipt? No, the charity is not able to issue you a tax credit because the website that you built for the charity is considered a gift of service and its an example of how you donated your time, skill and effort.

Lets now look at another scenario. You are still the same software company, yet in this case, you created a pre-designed software product, specifically a website template designed for charities (not only for XYZ charity but many charities). Your software company sells this product for $4000 and as long as you have documents to verify that this the fair market value of the product, then XYZ charity could issue you a donation receipt for $4000.

So the difference between scenario 1 and scenario 2 is that the former scenario is an illustration of a gift of service whereas the latter scenario is an example of a gift of property. In scenario 1, your software firm created a website specifically for XYZ charity, which could not be sold in the free and open market and therefore doesn’t qualify for a tax credit.  On the contrary, in scenario 2, your software company designed an off the shelf software that could be sold in the free and open market, and thus qualifies for a tax credit.

4. How much do I need to donate to receive a tax credit?

You could donate any amount to benefit from a tax credit. Just ensure that you have an official donation receipt.  Note that a charity is not required to give a receipt when it receives a donation. The CRA advises charities to tell potential donors when they will or will not be issued a receipt.

5. How do I claim a donation?

When you file your income tax and benefit return, there is an area on your return that is specifically for claiming your donations. Remember to fill out the donations section on your provincial and territorial tax and credit form. Additionally, ensure that you store all supporting documents such as official donation receipts, canceled cheques and pledge forms and stubs in the event that the CRA decides to review your return.

Related: The documents you will need to claim your charitable donation

6. Do I need to claim my donation receipts on an annual basis?

You can claim your receipts up to 5 years after you’ve made the donation, You can also combine your receipts with those of your spouse or common-law partner. In fact, donations of over $200 are equivalent to a deduction at the top tax bracket regardless of whether or not the donor is in the top tax bracket.

7. Is it fine if a registered charity gives me something in return for my donation, such as sporting or ballet tickets?

Yes, this totally fine and it is called an advantage. When a charitable organization gives you something as a token of their appreciation in exchange for your donation, the charity is required to subtract the value of the advantage from the amount of your donation to calculate the eligible amount to put on your donation receipt.

For example, you donated $1,500 to a registered charity called ABC Ballet Company. In order to show their appreciation, the company gives you three tickets to a performance that are valued at $150. You are therefore considered to have been given an advantage of $150. The eligible amount of the gift is $1350 ($1,500  $150).

8. What if the organization that I donated to is no longer registered. Can I still use my donation receipts to claim a tax credit?

Yes, if the charitable organization was registered when you first made the donation, then you can still use the receipt to claim a tax credit.

9. What are some tips that could help me ensure that I donate wisely?

a. Prior to donating check out the List of charities to verify that the organization is qualified to give you an official donation receipt.

b. Do not donate to an organization that pressures you to give immediately or if you aware of any signs of fraud.

c. Ensure that your online donations are secure.

d. Write cheques to the charity and not the individual.

e. Beware of donation schemes that promise a tax receipt for more than you donated.

10. What are some warning signs that a charitable organization might be engaged in fraud?

a. The charity calls to thank you for a donation that you have not made.

b. Organizations that use names similar to popular charitable organizations.

c. Canvassers who do not disclose details about the organization they serve.

d. Requests from the organization to send cash or money orders instead of cheques or credit card. Cash could not be traced and cannot be canceled.

e. Overly friendly canvassers that ask you personal questions.

f. Organizations that use free email addresses like Gmail or Hotmail to enable people that are part of the organization to conceal their identity.

g. Strange call display numbers such as 123-456-789 or 888-888-889 which might mean that the caller is trying to hide their phone number.

If you suspect an organization is engaged in fraud, report the suspected fraud to the Canadian Anti-Fraud Centre at 1-888-495-8501.

An infographic about top five tips to donating wisely

An infographic about the top five tips to donating wisely.


If you require additional consultation or want to learn more about our professional accounting services, please do not hesitate to contact S & P Accounting Services.

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.

This post was written by Biz Source, a content creation company and is for illustration purposes only. For professional advice, please contact S & P Accounting Services.

Why small business owners should have a business bank account

Are you still using your personal checking account to manage your business finances? Regardless of whether you own a home-based business or are building a multi-million dollar enterprise, there are several benefits to differentiating between your personal and business finances. In this article, we will discuss the following: The numerous reasons you should have a business bank account and how to open up a business bank account.

The reasons you should have a business account

Having a business account will ensure that you keep your business funds separate from your personal funds.

Here are some of the worthwhile reasons:

1. Having a business bank account gives your new business credibility and professionalism. This is particularly important if you have customers that pay with cheques. It definitely looks more professional when you ask your clients to write a cheque to  “XYZ Enterprise” as opposed to  “Bob Smith.” It also looks more business-like and credible when you use separate business cheques and a separate business credit card to pay suppliers and other companies for their services.

2. Having a business bank account is advantageous for tax purposes. Maintaining a separate business bank account will help you keep track of all your business-related transactions and will make it easier to pay your taxes when tax season rolls around. It will also provide you with a clear trail of your business revenue and expenses in case the CRA decides to audit you.

3. Although having a separate business bank account is advisable for businesses that are sole proprietorships or partnerships, it is especially recommended for corporations (more about these business structures later in this article).  A corporation refers to a business that is a separate and distinct entity from its owners and as such the personal assets of the owners are sheltered from potential liability.  However,  sometimes courts will hold the corporation’s owners, members, and shareholders personally liable for business debts. When this occurs, it’s called “piercing the corporate veil.” For instance, if the corporation has been utilized as an instrument of fraud and improper conduct, or was incorporated for no valid business purposes, then the court may deem the shareholders personally liable. One of the criteria which may be used to decide whether the court should “pierce the corporate veil” is the degree of separation between the financial activities of the business and those of the owners of the business. As such, it is vital that an incorporated company have a separate business bank account.

4. The most obvious reason to have a business bank account is that you will be able to keep track of your cash flow and to see if your business is profiting.  A business checking account ensures that all your business transactions are separate from your personal financial transactions. This helps you monitor your business’s profitability.  If you were to combine your personal financial transactions with your business financial transactions into one account, you might have a difficulty determining your profit margin because to determine your profitability, you must remember which expenses were personal and omit them.

How to open up a business bank account

There are three main steps to opening a business bank account: 1. choose a business structure, 2. decide on who will be the primary business representatives and 3. provide the bank with several critical documents.

1. Choose a business structure

Prior to setting up a business account, it is imperative to decide which type of business structure you will be running. Is it a sole proprietorship? partnership? or corporation?

In a nutshell, here are the differences between the three business structures:

  1. A sole-proprietorship refers to a business in which you are the sole owner and fully responsible for all debts and responsibilities related to your business. One of the advantages of this business structure is that all profits go directly to you. However, one of the disadvantages is that you are subject to unlimited liability which means that a creditor can make claims against your personal assets to pay off your business debts.
  2. A partnership refers to a business in which you and another individual or multiple individuals have a legal relationship to operate a business as co-owners. In a partnership, you and your business partner(s) combine your financial resources into the business. You and your partner(s) share the management, profits, and assets of the business as outlined by the legal agreement you have formulated. One of the benefits of this business structure is that there is a tax advantage. For instance, if income from the partnership is low or loses money, you and your partner(s) include your shares of the partnership in your individual tax returns. One of the disadvantages is that there is no legal difference between you and your business so similar to owning a sole-proprietorship,  you have unlimited liability.
  3. A corporation refers to a business entity that is separate from its owners. The majority of corporations have shareholders, and the shares are held only by a few individuals, or they may be available for sale to the public (publicly held). One advantage of this business structure is that as a shareholder of a corporation, you will not be personally liable for the debts, obligations or acts of the corporation.  One of the disadvantages of owning a corporation is that it is more expensive and time-consuming to set up than other business forms. We advise that you seek legal advice if you plan on incorporating.

If you’d like to read some of the advantages and disadvantages of having a sole-praetorship, partnership, and corporation, check out this article from Canada Business Network.

2.  Decide who will be your primary business representatives

Next, after you decide on a business structure, determine who will be the primary representative for your business. In other words, who will have the authority to sign on contracts, cheques as well as perform certain functions such as withdrawals, transfers, and payments on behalf of the company?

3.   Provide the bank with several critical documents

Typically, banks require that all owners and signing officers provide two pieces of approved personal identification.

Also, depending on your business’ legal structure, you will be required to provide additional documents to the business bank specialist. For instance, for each of the following business structures, you will need to provide the following documents:

Sole Proprietorship

– Certificate of Registration of Business Name

Partnership

– Certificate of Registration of Partnership. Partnership Agreement (if available)

Corporation

– Articles of Incorporation. Certificate of Registration of Business Name (if available).

-Most current filing with your incorporating jurisdiction listing your directors

-Trade Name Registration (if applicable)

An important note:  Please contact the bank that will be managing your business bank account to determine if you require additional documentation and what their exact procedures are for opening a business account.


If you require additional consultation or want to learn more about our professional accounting services, please do not hesitate to contact S & P Accounting Services.

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.

This post was written by Biz Source, a content creation company and is for illustration purposes only. For professional advice, please contact S & P Accounting Services.

Are you looking for a tax accountant in Toronto to help you with your tax return?

You may be eligible for free tax services

If you are looking for a tax accountant in the Toronto or North York area, yet have a simple tax situation and modest income, you may be eligible for free tax services.

In fact, there are many community organizations throughout Canada that have volunteers completing tax returns for eligible individuals. These tax clinics are made feasible through the Community Volunteer Income Tax Program (CVITP).

You might qualify for theses services if you have a modest income and a simple tax situation.

1. What is a modest income?

Modest income means that your family income is less than the amount shown in the chart below. Verify with the community organization in your vicinity to see if you are eligible as some organizations have different eligibility requirements. 

Family size Total family income
One person $30,000
One person with one dependant $35,000 (add $2,500 for each additional dependant)
Couple $40,000 (add $2,500 for each dependant)

2. Do you have a simple tax situation?

In general, your tax situation is simple if you have no income or if your income comes from these sources:

  • employment
  • pension
  • benefits such as CPP, disability, CCB, EI, social assistance
  • RRSP
  • support payments
  • scholarships, fellowships, bursaries or grants
  • interest (under $1,000)

Your tax situation is not simple if you:

  • are self-employed or have employment expenses
  • have business or rental income and expenses
  • have capital gains or losses
  • file for bankruptcy
  • are completing a tax return for a deceased person

In such circumstances, you may wish to seek advice and assistance from a tax accountant.

3. When are these free tax services offered?

Volunteer tax preparation clinics are generally offered each year between February and April but many are operating all year at various locations across Canada.

4. Where are the tax preparation clinics located?

Here is a list of free tax preparation clinics in:

5. What to bring to the tax preparation clinic?

 In order for volunteers to complete your income tax and benefit return for you, make sure to bring your:

  • Tax information slips
  • Receipts
  • Social Insurance Number
  • Identification

Volunteers need the above items to prepare your income tax and benefit return.

7. How do you get your slips?

You can visit Service Canada‘s secure site to get access to your current year and prior year old age security (OAS), employment insurance (EI) and Canada pension plan (CPP) tax slips electronically. 

For more information, see Information slips – T4 and other slips.

8. What if I require assistance with my taxes and don’t qualify for assistance from one of the free tax clinics?

If you require assistance with your taxes and are not eligible for assistance from one of the free tax clinics, you may contact S & P Accounting Services. We are a full-service accounting firm handling taxation, bookkeeping, payroll and accounting. We happily serve clients in North York, Toronto, Vaughan, Mississauga, Richmond Hill and other cities situated in the GTA. If you require consultation or a have any accounting inquiries, 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

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.

This post was written by Biz Source, a content creation company and is for illustration purposes only. For professional advice, please contact S & P Accounting Services.

 

 

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