CORPORATE TAXATION: WHAT YOU NEED TO KNOW Presented by Marlene L. - PowerPoint PPT Presentation

CORPORATE TAXATION: WHAT YOU NEED TO KNOW Presented by Marlene L. Grant, CGA Marlene L. Grant Professional Corporation February 16 th & 17th, 2010 Marlene L. Grant Professional Corporation, Februray 2010

BRIEF HISTORY ABOUT MYSELF  I am the owner of a small accounting practice.  Graduated from Algonquin in 1992 and obtained my Certified General Accounting designation in 2002.  Over 15 years accounting and taxation experience in the Ottawa area in public accounting as an auditor and controllership positions within the private sector.  Work extensively with owner-managed businesses, not-for profit organizations and professionals.  Providing accounting, assurance, taxation, business startup assistance and software services to clients.  2009 Nepean Chamber of Commerce award nominee . Marlene L. Grant Professional Corporation, Februray 2010

CORPORATION TAXATION  Corporations are separate legal entities.  Required to Incorporate and register for a Business Number (BN)  Advantages & Disadvantage of Incorporating: Incorporate to Generate Tax Savings & Limit liability; – Remuneration Strategy & Family Members. –  Income splitting through shares to family members; Creditor Proofing; – Investing excess after tax cash in Corporation; – Incorporation costs; – Increase tax and other filing obligations; – Marlene L. Grant Professional Corporation, Februray 2010

TAX AND OTHER FILING OBLIGATIONS  Corporate Tax Returns: Returns are due six months after the fiscal year-end; – Taxes due are payable three months after the fiscal year-end: – Tax Instalment Payments required if taxes payable >$3,000. –  Goods & Services Tax (GST) Registrants charge 5% GST or 13% HST; – Register for (GST/HST) if revenues are more than $30,000; – Have 29 days to register for GST once over the $30,000; – Register online, telephone, fax and mail and CRA will open up the GST account; – CRA will assign the reporting periods and method; – Due dates for the returns depend on the reporting periods assign; – Annual filer for taxable revenues <$1,500,000; – Instalment payments required if taxes due >$3,000.00. – Marlene L. Grant Professional Corporation, Februray 2010

TAX AND OTHER FILING OBLIGATIONS (continued)  Provincial Sales Tax (PST): Register with the Province of Ontario; – Depending on the services you provide; – Returns are due by the 23 rd of the month following, monthly, quarterly and bi- – annual reporting.  Workers Safety and Insurance Board (WSIB): As soon as the first employees is hire you may have to register; – Should call them to ensure you are in compliance, very few companies are – exempt; Returns are due on a quarterly basis and premiums due one month following – the end of the quarter. Marlene L. Grant Professional Corporation, Februray 2010

TAX AND OTHER FILING OBLIGATIONS (continued)  Employer Health Tax (EHT) If payroll is >$600,000 will have to register; – Monthly payments are required; – Annual return due by March 15 th. –  Payroll Funds withdrawn by owners from the company will be taxed in their hands; – Setting up payroll minimize the owners tax liability. – Canada Pension Plan (CPP), Employment Insurance (EI) & Income taxes should – deducted from all payroll amounts; Source deductions are due the 15 th of the month following the payroll or if quarterly they – are due the 15 th of the month following the end of the quarter;  T-Slips to be issued: T4 – Payroll to employees and owners; – T4A – For amounts > $500.00 paid to individuals for services rendered; – T5 – Dividends issued to owners; –  More Severe Penalties for Late Filing & Late Remitting. Marlene L. Grant Professional Corporation, Februray 2010

MAINTAINING BOOKS & RECORDS CRA Requires that books and records are properly maintained:  To determine if the business is in compliance with the Income Tax Act;  Should be in an appropriate form to enable verification;  Must be supported by source documents – paper or electronic;  Each transaction should be clear and legible;  Must be maintained in English or French or another form authorized by CRA;  Have to be retained for six years after the tax year they relate to;  One way to ensure proper books is to hire a competent bookkeeper;  If you choose to do your own bookkeeping make sure to get properly trained before starting;  In order to properly maintain your books and records you will need to understand accounting and bookkeeping;  Can maintain your books using QuickBooks or Simply Accounting. Marlene L. Grant Professional Corporation, Februray 2010

ELIGIBLE EXPENSES Types of operating expenses Accounting and legal fees – Advertising expenses – Bad debts – Business tax, fees, licenses and dues – Business start-up costs – Capital Cost Allowance – Home office expenses – Insurance expenses – Interest & bank charges – Meals & entertainment – Motor vehicle expenses – Office expenses – Professional fees – Salaries, wages & benefits – Travel – Telephone & utilities – Marlene L. Grant Professional Corporation, Februray 2010

PERSONAL TAXATION  Spousal Pension Income Splitting.  Tax-Free Savings Account (TFSA)  RRSP & RESP Contributions.  Child Fitness Tax Credit.  Medical Expense Tax Credit.  Federal and Provincial Tax Rates  Tax Instalment Payments.  Working Income Tax Benefit.  Age Credit & Home Renovation Tax Credit  Home Buyers Plan & First-Time Home Buyers Tax Credit Marlene L. Grant Professional Corporation, Februray 2010

PERSONAL TAX RATES  Basic personal amount Federal $10,320 & Provincial $8,881 Maximum CPP of $2,118.60  Pension income amount $2,000.00  Federal Tax on taxable income:  $40,726 or less taxed at 15% – $40,726 to $81,452 taxed at 22% – $81,452 to $126,264 taxed at 26% – Over $126,264 taxed at 29% – Provincial Tax on taxable income:  $36,848 or less taxed at 6.05% – $36,850 to $73,698 taxed at 9.15% – Over $73,698 taxed at 11.16% – Highest marginal tax rate is  46.41% on other income – 23.20% on capital gains – 23.06% on taxable dividends from large corporations – 31.34% on taxable dividends from small corporations – Marlene L. Grant Professional Corporation, Februray 2010

TOP TEN WAYS A CGA CAN HELP YOU  Sound Business Advice.  Business Start up.  Accounting Services.  Controllership Services.  Software Installation and training.  Systems Implementation.  Estate Planning.  Financial Planning.  Succession Planning.  Tax Planning and Preparation. Marlene L. Grant Professional Corporation, Februray 2010

BUSINESS & PERSONAL TAXATION: WHAT YOU NEED TO KNOW Presented by Marlene L. Grant, CGA Marlene L. Grant Professional Corporation February 16 th & 17th, 2010 THANK YOU Any Questions? Marlene L. Grant Professional Corporation, Februray 2010