September 21, 2012 07:43
From the Accounting World
CANADA REVENUE AGENCY 2012 CAMPAIGNS
CRA began a plan of “campaigns” three years ago. A campaign is a program of attack on specific sector of personal and corporate tax. Their approach is to send out a letter to “let you know” what the rules are (as they interpret them). They suggest that if you have been doing something incorrectly, then you have a chance to correct it without a penalty. Getting this letter from CRA can be quite upsetting as it is often worded as though you “are guilty” of doing something incorrectly.
The 2012 Campaigns are as follows:
1. Rental income reporting (including illegal suites, recreational property and personal use property.
2. Payments to non-arm’s length individuals (children, spouses and non-arm’s length individuals and companies.
3. Individuals reporting commission income, including all employed commissions (this targets restaurants (servers), hair dressers, commission based sales persons and all others reporting commission income)
July 26, 2012 17:34
Gregory Buck, CA
Munro & Company, Chartered Accountants
Small businesses get attacked by Canada Revenue Agency quite often so keep the following in mind:
1. Nothing is deductible unless supported by a proper invoice, including the vendor’s HST/GST number. Don’t think a credit card receipt will suffice.
2. Register for your own GST/HST. Even small businesses can benefit.
3. Ensure you have support for all deposits made to your bank account. On audit, CRA will call that deposit “unreported income” if you have inadequate support. So that loan from Dad. Document it and get proof of where it came from. Cash deposits? If no support, then don’t deposit them in your account. Remember, CRA don’t care about your opinion. They care about facts!!
4. Keep good records. There are lots of small computerized record keeping software solutions out. Intuit’s Quicken, Microsoft’s Money or NetSuite are good starters. Quickbooks and Simply Accounting are good for a little larger business.
5. Farming activities can be filed on a cash basis. This is sometimes an advantage. If you elect to use a cash basis you cannot go back to accrual. So evaluate your options before committing. You may want to get advice from a qualified accountant.
6. Payment solutions like PayPal and E-transfer will keep your cash flow current. They are easy to use and immediate.
7. Provide your financial information to your tax professional early. It takes time to plan!!