Morneau's tax changes are so complex and unfair, they'll turn accountants bald—and rich
- Written by Financial Post
- Hits: 1848
The philosophy behind the proposals is to “level the playing field” and the example given in the summary overview is an individual living in Ontario and earning a salary of $220,000 versus his neighbour who earns the same amount through a private corporation and is able to reduce taxes through income sprinkling.
What is omitted is the couple, each spouse earning $110,000, which pays less in tax than their neighbours where one spouse earns $220,000 and the other spouse has no income. The issue is, of course, progressive tax rates which mean that the more you earn, the higher the rate of tax paid, not just the amount paid. In the U.S., couples file joint returns so there is no need for income splitting, unlike Canada.
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WHAT TO LOOK OUT FOR WHEN DOING YOUR OWN BOOKKEEPING
- Written by Small Business BC
- Hits: 2164
Many small businesses do their own bookkeeping. And why not? Initially, when your business is small, the bookkeeping is quite simple.
But what are the things you should look out for when you’re managing your own books?
Ensure Your Bank Accounts and Credit Cards Are Reconciled
This may seem foundational, but in my experience, this critical step is often ignored. It’s one of those important, but not urgent tasks that always seems to fall to the bottom of the to-do list. The purpose of a bank reconciliation is to ensure that all of the transactions on the bank statements are captured. This is a critical step to ensure accuracy of these bank accounts and credit cards.
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What’s New In QBO: August 2017
- Written by Intuit
- Hits: 2196
Whether you choose to crank up the A/C or pitch a tent in the frozen food aisle of your local supermarket (hey, we’re not judging), August is a month where keeping cool is key. Grab a spot in the shade and check out this quick recap of the latest enhancements and updates in QuickBooks Online.
Pay bills electronically within QuickBooks Online
Powered by Bill.com, the new Bill Pay feature allows users to pay bills electronically directly within QuickBooks Online. Pay vendors and contractors via ACH or paper check without ever leaving QuickBooks, and upload invoices into QuickBooks Online to convert them into a bill or vendor credit. Your accounting is done for you—bill payments are automatically recorded and linked to bills.
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The good, bad and downright offensive in Morneau’s tax-reform proposals
- Written by Financial Post
- Hits: 1903
So you finally agreed to meet the tax accountant that everyone has been talking about. “He reduced my tax bill by thousands of dollars,” your neighbour says. “And it’s all perfectly legal.”
You live in the province of Quebec, and are married with two children, ages 19 and 22, both attending university. You are self-employed and earn $150,000 a year. Your husband works for a larger company, and has an annual salary of $50,000. Last year, you and your husband paid combined federal-provincial taxes of about $66,400, including Quebec Pension Plan and health-care levies.
You sit down with the tax adviser. “The amount of tax that you’re paying is ridiculous,” he says. Then he shows you … “The Plan.”
First, you set up a private corporation (Taxco). From now on, Taxco — not you — will carry on your business. Taxco will have four classes of shares: A, B, C and D. You will get one class A share, and your husband one class B. Each child gets one share as well, one gets a class C and the other gets a class D. Now here’s the trick. The directors can declare dividends on any single class of shares, to the exclusion of the other three classes. In other words, each share is entitled to discretionary dividends in whatever amounts you choose.
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Four new strategies you can use this year to get ahead of Ottawa's proposed tax changes
- Written by Financial Post
- Hits: 2066
The Justin Trudeau government in July announced a number of tax changes that will have a big impact on business owners, sparking a lot of anger and frustration about the changes among advisers, but not a lot of practical strategies yet.
It is still early days, and not every plan announced or hinted at will be fully rolled out. But if we assume that they are, then here are some ideas on how to handle them.
To start, let’s review the changes on a high level:
1. Business owners who “sprinkle” dividends to family members in order to draw funds out of a corporation at a low tax rate — may no longer be able to do so. This will also likely eliminate the ability of multiple adult family members to take advantage of the lifetime capital gains exemption on a business sale. This usually took place if various family members owned shares of a holding company or the shares were held in a Family Trust.
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