What's New with the CRA

The Canadian Revenue Agency (CRA) has created a new website called "What's New." This website contains helpful hints and links to up to date information that the CRA has found interesting, helpful or just plan informative. "What's New" may have just the answers you, as either a business owner or as a someone in need of personal financial or tax counseling, are looking for. Please check this site out!

http://www.cra-arc.gc.ca/whtsnw/menu-eng.html

Tax Tips

Top 10 Ways To Reduce Your Tax Bill

Did you know . . .?

There are a number of ways to reduce the amount of tax you owe and keep more money in your pocket at tax time. The Canada Revenue Agency (CRA) can help you learn more about the various credits and deductions you may be entitled to and that can save you money when you file your 2010 Income Tax and Benefit Return.

1. Any income you earn in a registered retirement savings play (RRSP) is usually exempt from tax as long as the funds remain in the plan. RRSPs - you save for your retirement and get a break at tax time too!

2. As long as you stay within your contribution room limit you will not pay tax on any income you can earn from investments in your tax free savings account. Tax Free Savings Account - you add to your savings without being taxed!

3. Does someone in your family regularly take the bus, train, subway, or ferry to work? You may be able to get a non-refundable tax credit for the cost of the transit passes by claiming the public transit amount. Public Transit Amount - save on gas and get a tax credit from public transit!

4. Have you retired and now receive a pension? You can split up to 50% of eligible pension income with your spouse or common-law partner to reduce the overall taxes you pay.  See the link below on Pension Splitting for more details on how to save this way!

5. Do you work in the trades? Tradespeople can deduct part of the cost of eligible tools purchased throughout the year. Tradespeople save on tools!

6. Did you buy your first home in 2010? Check out the link to the home buyers' amount to see if you qualify for tax credits!

7. Are you a single parent receiving the Universal Child Care Benefit (UCCB)? The Government of Canada released new UCCB measures in the 2010 Budget that may apply to you. Make sure to check that out in the link below!

For People Who Are Self-Employed:

1. Did you purchase a computer for your business after January 27,2009 but before February 2011? If so, you may be eligible for a 100% computer capital cost allowance. Claim your new business computer on your taxes!

2. Did your business employ an apprentice? A salary paid to an employee registered in a prescribed trade in the first two years of his or her apprenticeship contract qualifies for a non-refundable tax credit for the employer. Hiring apprentices is good for both your business and your tax credits!

3. Did your business (which is not a primarily child care service) create licensed child care spaces for the children of your employees? If so, you may be eligible for the investment tax credit for child care spaces for each new child care space you created. Providing child care for your employees provides tax breaks for your business!

Important information links:

RRSPs: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/rrsps-eng.html

Tax Free Savings account: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/menu-eng.html

Public Transit Credits: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns360-390/364/menu-eng.html

Pension Splitting: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/pnsn-splt/menu-eng.html

Tradesperson Tool Credits: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/229/trds/menu-eng.html

Home Buyers Credit: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns360-390/369/menu-eng.html

Universal Child Care Benefit: http://www.cra-arc.gc.ca/gncy/bdgt/2010/uccb-eng.html

Business Computer Rebate: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/rntl/cca-dpa/clsss-eng.html#class52

Tax Credits for Child Care Spaces: http://www.cra-arc.gc.ca/E/pub/tg/t4012/t4012-09-e.html#ITCCCS

HST Management

As you all know, the new HST rate is more than double the GST rate we have previously collected, which means amounts normally due at filing time will be more than double what was typically owed. This could create major cash flow problems for you if you do not have an HST plan.

Here are some suggestions to manage your HST:

Have an HST bank account linked to your regular bank account and transfer the HST collected monthly or weekly, and keep funds UNTOUCHED until your HST is due.

1. For quarterly filers change your reporting period to monthly. Please be aware that we can only change the HST reporting period at your year end so you may still need a plan for the rest of your fiscal year.
2. For annual filers, send installments quarterly. This way, some of your HST is already paid when filing.

Feel free to contact us if you have any questions or need help with this.

How HST Will Affect Your Business

Although we have all heard of HST, some of us may not know exactly how it works. HST is imposed under the Excise Tax Act (ETA), a federal legislation, and is administered through the Canada Revenue Agency (CRA). The Harmonized Sales Tax is a combined 12 percent; 7 percent replaces our current Provincial Sales Tax (PST) while the other 5 percent federal, replacing the current Goods and Services Tax (GST). The Hotel Room Tax, HRT, will also be abolished, as HST will apply to short term accommodation. However, the additional 2 percent (DMO) HRT applied to specific communities, including Golden, will remain.

Most service based businesses that are not required to charge PST will be required to charge the full 12 percent of HST. However, there are some items which are exempt from the 7 percent provincial part of the HST, meaning the tax would drop to 5 percent. Merchants of exempt items provide Point of Sale rebates. The items included in this rebate are: books, children's clothing and footwear, children's car seats or booster seats, children's diapers, feminine hygiene products and motor fuels such as gas and diesel. It is important to note that these Point of Sale rebates will not affect your eligibility to claim Input Tax Credits on your business inputs.

It is important for business owners to know the advantages HST provides. Although there will be a few inconvenieces, such as upgrading and changing your systems, most will remain the same. For example, if your business is already registered for GST, you will not have to apply for a new number. Your HST number will be the same as your GST number and you will file on the same days as your GST was filed. Like GST, HST is a Value Added Tax, meaning business owners can claim the full 12 percent of taxes paid when purchasing items for the business. However, this only applies to purchases made in BC. Items purchased in Alberta only have 5 percent tax on them, meaning only that 5 percent can be claimed.

Further information on HST can be found at:

• http://hst.blog.gov.bc.ca/
• http://hst.blog.gov.bc.ca/faqs/hst-basics/
• http://sbinfocanada.about.com/od/gsthst/a/bchst.htm

It’s a numbers game: a Kootenay Woman magazine article

"A local bookkeeper is dedicated to keeping locals in business.

"Isabelle Simard, owner and operator of Numbers & Letters Business Solutions, has been helping other business owners 'keep' their books for almost 15 years. Her company provides organizations and businesses with bookkeeping, payroll services, tax services, training and advice through accurate, efficient, skilled, trustworthy and accessible services."

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