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IT’S INCOME TAX TIME IN CALGARY!

It’s Income Tax Time in Calgary Again!

Everyone knows the old saying about death and taxes; with that in mind, guess that time is coming up again very soon (and thank goodness it’s not the first one).

No one likes paying the tax man but it’s a necessary evil to keep our society running properly.  As an accountant and bookkeeper I believe in paying my taxes but I want my clients to pay the least amount of taxes possible and keep that money in their own pockets.

WHAT YOU NEED TO PREPARE YOUR INCOME TAX RETURN IN CALGARY.

Four little words that people look forward to or dread.  If you have a refund coming, you want to do it quickly or, if you owe, you are not as keen to get it done.

To prepare your income tax return correctly, there are a large number of details you need to provide your preparer.

Income Tax Time in Calgary

Income Tax Time in Calgary

Identification and Other Information:

 Name, address, date of birth and Social Insurance Number – the income tax return cannot be completed if this information is missing.

If you are having your spouse’s return completed at the same time, you will need to provide the same information for them.

Your marital status is also required and if this status changed during the year, the date of that change is needed.

Details of Income:

The most common type of income to be reported is your earnings from employment (T4).  These slips and other information slips are to be issued to you by the end of February each year.

Other common information slips that you can receive are T5’s – Interest and Dividends received in the year, various T4A’s – pension incomes, Canada Pension Plan, Old Age Pension, Employment Insurance slips, etc.

Business and rental income is more self-employed revenue.  There are forms within the T1 income tax return to report the detailed revenue and expenses for operations that you operate.  The tax preparer needs to categorize the various expenses that are incurred during the year as well as assets that can be depreciated in the year.

The types of self-employed businesses can include Business income, Professional income, Commission income and Farming and Fishing income.  These are all reported in a similar method with the preparation of an Statement of Income for the year.

There are other types of income that need to be reported, if you receive these types of income, most are reported on various Information Slips.

 Other Deductions:

 One of the most common deductions from income on the tax return are Registered Retirement Savings Plans (RRSP) and Registered Pension Plans (RPP).  An RRSP deduction results when you purchase an RRSP investment during the year or within sixty days after the taxation year.  The RPP deduction comes from investments you make to an employer’s pension plan at work and is recorded on your T4 slip.  When you contribute to a RRSP, you will receive a deduction slip from the company you invested in.

There are other common deductions such as Union Dues, Moving Expenses and employment expenses incurred to earn your income.

Conclusion:

When gathering all the information needed to file your T1 Income Tax return it is best if you can accumulate all the information slips and details that you have.  Some information slips can arrive in the first part of March, so it can be advisable not to file your return too early or you may have to send late arriving slips to the CRA which can delay the processing of your return.

When your tax preparer has all the necessary documentation they can quickly and efficiently prepare your return, resulting in a lower fee.

Petcal Bookkeeping Services
Gary Peterson  B.Comm.
E-mail: gpet@shaw.ca
Web: petcalbookkeepingservices.com

Income Tax time in Calgary

 

 

BENEFITS OF AN RRSP

It’s RRSP Time Again!

HOW CAN AN RRSP SAVE YOU INCOME TAX?

A Registered Retirement Savings Plan (RRSP) is a government regulated investment account with special tax benefits to help maximize your retirement savings.

One of the few income tax deferral deductions available to individuals is the Registered Retirement Savings Plan (RRSP).  The contributions that you make to your RRSP are deductible from your income, within certain limits, for the year.

The contributions you make to your plan, your spouse’s or common-law partner’s plan, are deductible against earned income for the calculation of income taxes payable.  The amount that you can deduct is up 18% of you earned income to a maximum of $25,370 for the 2016 year.  The maximum is based on you prior year’s income.  If you have not contributed to the maximum in prior years, this shortfall can be carried forward and filled in future years.

rrsp

 

The RRSP program started in 1957 to encourage Canadians to save for retirement.  Prior to the establishment of the RRSP program, only individuals belonging to employer-sponsored registered pension plans could deduct pension contributions from their taxable income.

 

Any income earned in the account (including interest, dividends, capital gains etc.) remains untaxed until it is withdrawn by the owner.

RRSP

In addition to reducing your taxable income, you can also contribute to you spouses RSP.  As I mentioned, the RRSP contributions become taxable when they are withdrawn, and by moving this income to your spouse, (often in a lower tax bracket) you can effectively split the income between the two of you.  If the withdrawal is made within three years of contribution, the income has to be reported by the contributing spouse.

Numerous types of investments can be held within the RRSP tax free, including interest, dividends, capital gains, GICs, mutual funds, bonds etc.  The money held in the fund can be used, without incurring income tax, for programs that can help you buy your first home or pay for further education.

Contributions to you RRSP can be made up until December 31 of the year you turn 71.  After 71, if you continue to have earned income, you can contribute to a spousal RRSP up until December 31 of the year your spouse or common-law partner turns 71.

When you turn 71, the government requires that the RRSP be converted to one or more retirement income sources by December 31.  An annual minimum payment (AMP) must be taken each year starting in the after the plan is opened.  The AMP is considered taxable income.  The tax saving aspect results from the fact that you contributed the RRSP contributions during years when you were in a much higher tax bracket and are now withdrawing the funds after retirement at a much lower rate.

Petcal Bookkeeping Services
Gary Peterson  B.Comm.
E-mail: gpet@shaw.ca
Web: petcalbookkeepingservices.com

RRSP

How can a Calgary bookkeeper/accountant be of service to your business?

Concentrate on Your Business and Leave the Bookkeeping to Me!

HOW CAN A  CALGARY BOOKKEEPER/ACCOUNTANT BE OF SERVICE TO YOUR BUSINESS?

In this busy world on operating our own businesses, many times having current and accurate financial information is the first casualty in this process.  I think most every business person knows that current and reliable business information is of primary importance.  On a regular basis, having a Bookkeeper/Accountant can provide you with financial information on where you are, how far you have come and help plan a direction for the company’s future.

Calgary bookkeeper/accountant

Calgary bookkeeper/accountant

Making better business decisions often hinge on upon knowing what your financial position is and will it support the directions you have in mind.  Having a Bookkeeper/Accountant available provides you with someone you can bounce ideas off about your company’s future direction.  The Bookkeeper/Accountant will have experience with the various reporting forms that need to be filed on a regular basis.  These can include payroll preparations and remittances, GST remittances, bank reconciliations, asset analysis and control and many other day-to-day functions.

Stress can be a significant factor in the running of a business.  Worrying about keeping up with the paperwork and maintaining an accurate set of records can put unnecessary stress on you.  It is much more satisfying and enjoyable to be doing the things that you are good at and bringing additional income to the business rather than taking away your productive time or spare time to slog through the bookkeeping tasks.  It is usually more cost effective to spend your time earning income in comparison to the cost of a bookkeeper.

Putting your information into your accounting software and understanding your sales cycle can prove to be time consuming and take time away from other aspects of running your business.  This will be easy for a professional bookkeeper, but not always so simple for a business owner.  There is a difference between a bookkeeper and an accountant, even though the terms are often used interchangeably.  A bookkeeper is someone who enters the business data on a daily basis.  They enter the accounting information into the businesses software, issue invoices, write cheques and file all the receipts away securely.  An accountant works with this bookkeeping data to analyse and report the results of the business operations.  These will include, among other reports, financial statement, income tax returns, various other government filings and review of this information with the business owner.

Year-end financial reporting together to complete the bookkeeping and accounting functions are very necessary to the successful operation of a business.  The bookkeeping has gathered all the data from the year and the accounting function compiles the financial statements and income tax returns, along with other related reportings.  The more reliable and accurate the year to date bookkeeping is, the easier it is to prepare the year-end financial statements.  This also means that the cost for the year end will be less.

 

Petcal Bookkeeping Services
Gary Peterson  B.Comm.
E-mail: gpet@shaw.ca
Web: petcalbookkeepingservices.com

Calgary bookkeeper/accountant