2019 Federal Budget Summary

Premium Personal Tax Services in Calgary!

Versatile Accounting has obtained a 15 page PDF document from The CPA which highlights all the main points of the 2019 federal budget. This PDF document goes through the following.

INTRODUCTION

PERSONAL INCOME TAX MEASURES

Canada Training Benefit

  • Canada Training Credit
    • Eligible Tuition and Other Fees
  • EI Training Support Benefit

Making Canada Student Loans More Affordable

  • Lower Interest Rates
  • New Interest-Free Grace Period

Improving the Economic Security of Low-Income Seniors

Introducing the First-Time Home Buyer Incentive

Modernizing the Home Buyers’ Plan

  • Withdrawal Limit
  • Breakdown of a Marriage or Common-Law Partnership

Change in Use Rules for Multi-Unit Residential Properties

Permitting Additional Types of Annuities under Registered Plans

  • Advanced Life Deferred Annuities
    • Qualifying plans
    • Limits
    • Tax treatment on death
  • Variable Payment Life Annuities
    • Annuities fund
    • Tax treatment on death

Employee Stock Options

Electronic Delivery of Requirements for Information

Tax Measures for Kinship Care Providers

  • Canada Workers Benefit
  • Tax Treatment of Financial Assistance Payments

Improvements to the Registered Disability Savings Plan

Donations of Cultural Property

Medical Expense Tax Credit

Contributions to a Specified Multi-Employer Plan for Older Members

Pensionable Service under an Individual Pension Plan

Mutual Funds: Allocation to Redeemers Methodology

  • Deferral
  • Character Conversion

Carrying on Business in a Tax-Free Savings Account

Making Zero-Emission Vehicles More Affordable

Personal Income Tax Credit for Digital Subscriptions

BUSINESS INCOME TAX MEASURES

Support for Canadian Journalism

  • Qualified Canadian Journalism Organizations
  • Qualified Donee Status
  • Refundable Labour Tax Credit

Business Investment in Zero-Emission Vehicles

  • Application and Phase-Out

Inter generational Business Transfers

Small Business Deduction – Farming and Fishing

Scientific Research and Experimental Development Program

Canadian-Belgian Co-productions – Canadian Film or Video Production Tax Credit

Character Conversion Transactions

Canada Training Credit

INTERNATIONAL TAXATION

Transfer Pricing Measures

  • Order of Application of the Transfer Pricing Rules
  • Applicable Reassessment Period

Foreign Affiliate Dumping

Cross-Border Share Lending Arrangements

  • Canadian Shares
  • Foreign Shares

SALES AND EXCISE TAX MEASURES

GST/HST Health Measures

  • Human Ova and In vitro Embryos
  • Foot Care Devices Supplied on the Order of a Podiatrist or Chiropodist
  • Multidisciplinary Health Care Services

Cannabis Taxation

  • New Classes of Cannabis Products

NOTICE TO USERS

The reproduction of the contents of this Federal budget summary is authorized without restriction.

As a Calgary accounting firm, we want to bring awareness and knowledge to our clients. So, go ahead and download this document to read at your leisure.

Click Here To Download PDF

Starting Business Right Checklist

Starting a business can be an exciting undertaking. After all, the entrepreneurial spirit is very much alive and well in Calgary.

Many businesses have promising beginnings. However, according to one source, 30% of them will not make it beyond 5 years. There is something wrong with this picture. Contact a small business consultant in Calgary to help you start your business right.

Businesses can fail for several reasons,but many experts agree that it all boils down to lack of planning which can manifest itself in several areas. So we will examine a few critical areas to help you start your small business right.

3 Simple Yet Effective Steps to Start Your Small Business Right!

Step 1: Business Plan

Would-be entrepreneurs often dive into business with no direction or vision. They think only about the money they could make. But you cannot get to the money without a path to it. You can ask any qualified accountant in Canada; a thoughtfully drafted business plan is the way to get you there. You will be outlining how the business will run and who will be running it. You will also decide who will be handling your payroll, yourself or will you be hiring a payroll agency.

A business plan will increase your chances of success. If you don’t think you can do it yourself, get help. There are plenty of experienced companies that can assist you.

If you ever need financing down the road, you will need a business plan to show your banker. He or she will decide if it’s worth the risk to loan you the money.They will consider the business plan as a whole, but they will be paying particular attention to the next item.

Step 2: Market Research

If you plan to sell any product or service, remember one thing: without market research, you’d only be gambling at best. You need to know if there is a market for your product or service. Better yet, market research tells you and potential investors what buyers are hungry for in your marketplace.

So do you want to gamble your resources, or put them to good use? Your accountant can be a must-have advisor here. They can help you determine the financial impact of any of your business decisions.

Step 3: Financial Planning

Most people who enter business know little or nothing about accounting, tax planning or financial management in general. It would seem natural to consult an accountant in Calgary. However, this step is mostly avoided – often with disastrous consequences.

When it comes to tax compliance, it becomes a chore, wading through endless pages of tax laws, which change every year.  A tax consultant should be one of your most trusted professionals. You should plan to have one for your business.

It’s not enough to know how much money you need personally to live; you also need to know how much money you need for your business to run. You need to bring in enough money to cover all of your operating expenses, including paying anyone who helps you get it all done. For that, you may have to hire an individual or company to handle payroll.

Here again is where Calgary-based tax accountants can be a great help. Getting accounting help is common sense and sound financial planning.

Summary

As we mentioned, starting a business in Calgary can be an exciting undertaking. To ensure your chances of success, however, don’t dive in without planning first. You will need a business plan, marketing research and some solid financial planning. Take care of these things, and you will have a great foundation to start your business right.

Salary or Dividend – Taking Money Out of Your Business

In Canada, incorporated business owners have few options in how they pay themselves from the business. The two main choices we will cover here are salary or dividends.

In reality, there may be no right or wrong answer here. It comes down to personal preference to a large extent, but also in regards to the tax advantage, one is seeking. We will examine the pros and cons of either taking a salary or receiving it in dividends.

Taking a Salary

Here are the pros and cons of paying yourself from the business through a salary.

Pros

Receive a personal income:

Paying yourself a salary means you will be getting a regular paycheck which most people prefer over getting random dividend checks.  Talk to Versatile Accounting for payroll services, this will help you to focus on business, and we will take care of all your payroll services.

Canadian Pension Plan:
You will have the opportunity to prepare for your retirement from your paycheck. Deductions will be made from your salary and contributed toward the pension plan.

Tax Deductible:
Your business salary is 100% deductible business expense for your corporation. But always be sure to consult with your accountant to address any concerns about deductions.

Income Splitting:
You can also split your income by paying salaries to family members who also work in the business which allows you to keep your income from drifting into a higher tax bracket.

RRSP Contribution:
A salary allows you to be eligible for RRSP contributions. By participating in RRSP contributions, you can lower your taxes which will enable you to grow your RRSP investment for years to come and aid you in your retirement. Upon retirement, you may pay lesser income taxes as you most likely will be in a lower income bracket. Talk to us if you wish to contribute to RRSP as there are some restrictions with RRSP contributions.

Cons

Higher Personal Income Tax:
Though 100% tax-deductible, a salary income is taxed at a higher rate than a dividend income. If you want to see what impact it will have on your tax bill, Versatile Accounting can guide you in advance with some personal tax planning to save your taxes.

Paying Twice For Pension:
You will have to pay into the Canadian Pension Plan both as an employer and as an employee. By doing so, it may cost you more at first, but if you’re serious about getting your pension, it may be more of a pro than a con.

Must Do Payroll:
Any business salary paid must be done so through a payroll system. You will have to set up a payroll account with the CRA and file the necessary paperwork.

Business Loss Tax Issues:
Getting a business salary prevents you from carrying business losses in the years to come, something you can do if paid by dividends.

Dividends

Here are the pros and cons of paying yourself from the business in dividends.

Pros

Lower Tax Rate:
Unlike a business salary, dividends get taxed at a lower rate, which allows you to pay less in personal tax.

Claim Anytime:
You may declare dividends whenever you want, which could be an advantage for your business.

No Pension Contributions Required:
You do not have to pay into the Canadian Pension Plan (CPP), which can save you money. Talk to us if you still wish to contribute to the pension plan.

Simplified Payment:
You do not need payroll processing companies here. To pay yourself dividends, write yourself a company check. Then, at year’s end, update the minutes, and draft a resolution.

Cons

RRSP Contributions:
A dividend income is not eligible for an RRSP contribution, but you can still take advantage of TFSA.

Some Deductions Not Allowed:
For example dividend income does not qualify as an earned income to claim child care expenses.

Random Withdrawals:
Dividend has flexibility in withdrawing money from a corporation. However, if you do not track your withdrawals, it will result in a higher personal tax bill for you in following April. Make sure you track your withdrawals and talk to your qualified accountant to avoid in advance for a high personal tax bill.

Summary

There are definite disadvantages as there are distinct advantages to either option. So weight the options carefully when choosing between taking a salary or dividends.  We strongly encourage you to discuss your remuneration with a designated accountant. Versatile Accounting can help you with this, contact us today.