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

Marlene L. Grant Professional Corporation, Februray 2010

CORPORATE TAXATION: WHAT YOU NEED TO KNOW

Presented by Marlene L. Grant, CGA Marlene L. Grant Professional Corporation February 16th & 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:

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Incorporate to Generate Tax Savings & Limit liability;

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Remuneration Strategy & Family Members.

 Income splitting through shares to family members;

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Creditor Proofing;

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Investing excess after tax cash in Corporation;

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Incorporation costs;

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Increase tax and other filing obligations;

Marlene L. Grant Professional Corporation, Februray 2010

TAX AND OTHER FILING OBLIGATIONS

 Corporate Tax Returns:

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Returns are due six months after the fiscal year-end;

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Taxes due are payable three months after the fiscal year-end:

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Tax Instalment Payments required if taxes payable >$3,000.

 Goods & Services Tax (GST)

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Registrants charge 5% GST or 13% HST;

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Register for (GST/HST) if revenues are more than $30,000;

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Have 29 days to register for GST once over the $30,000;

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Register online, telephone, fax and mail and CRA will open up the GST account;

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CRA will assign the reporting periods and method;

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Due dates for the returns depend on the reporting periods assign;

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Annual filer for taxable revenues <$1,500,000;

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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):

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Register with the Province of Ontario;

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Depending on the services you provide;

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Returns are due by the 23rd of the month following, monthly, quarterly and bi- annual reporting.

 Workers Safety and Insurance Board (WSIB):

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As soon as the first employees is hire you may have to register;

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Should call them to ensure you are in compliance, very few companies are exempt;

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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)

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If payroll is >$600,000 will have to register;

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Monthly payments are required;

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Annual return due by March 15th.

 Payroll

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Funds withdrawn by owners from the company will be taxed in their hands;

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Setting up payroll minimize the owners tax liability.

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Canada Pension Plan (CPP), Employment Insurance (EI) & Income taxes should deducted from all payroll amounts;

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Source deductions are due the 15th of the month following the payroll or if quarterly they are due the 15th of the month following the end of the quarter;

 T-Slips to be issued:

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T4 – Payroll to employees and owners;

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T4A – For amounts > $500.00 paid to individuals for services rendered;

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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;

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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

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Accounting and legal fees

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Advertising expenses

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Bad debts

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Business tax, fees, licenses and dues

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Business start-up costs

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Capital Cost Allowance

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Home office expenses

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Insurance expenses

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Interest & bank charges

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Meals & entertainment

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Motor vehicle expenses

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Office expenses

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Professional fees

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Salaries, wages & benefits

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Travel

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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:

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$40,726 or less taxed at 15%

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$40,726 to $81,452 taxed at 22%

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$81,452 to $126,264 taxed at 26%

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Over $126,264 taxed at 29%



Provincial Tax on taxable income:

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$36,848 or less taxed at 6.05%

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$36,850 to $73,698 taxed at 9.15%

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Over $73,698 taxed at 11.16%



Highest marginal tax rate is

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46.41% on other income

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23.20% on capital gains

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23.06% on taxable dividends from large corporations

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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 16th & 17th, 2010 THANK YOU Any Questions?