Broken Arrow Bookkeeping Services

05/09/2023

I haven't actively been doing personal tax returns but was informed by CRA today if I don't do 10 T1 returns this year I'll lose my EFiler Status.

Sooooo if anyone needs personal taxes done I can do them!

02/22/2023

Tax filing season is finally here, and many new changes have been put into effect for the 2022 tax year that may have an impact on your situation, including new credits and deductions that you may be eligible for!



To make things simple, here's a breakdown of how these changes will affect you, and put together 9 of the most important changes you should know about when filing your return in 2023.



Key Takeaways

Tax brackets and many contribution amounts and limits have been increased to account for rising living costs. Work-from-home tax credit amount remains at $500 this year. There’s a number of new or updated credits and deductions that you may be eligible for.

1. Repaying COVID-19 benefits

If you received COVID-19 benefits from the CRA in 2022, such as the Canada Recovery Benefit (CRB), Canada Sickness Recovery Benefit (CSRB) or Canada Recovery Caregiving Benefit (CRCB) you will receive a T4A slip with the relevant information you need for your tax return. If you received the CRB and your net income after certain adjustments is more than $38,000, then you may have to repay all or part of the benefits you received in 2022. If you have repaid all or parts of COVID-19 benefits in 2022, you can choose which year to claim the tax deduction. You can either claim the deduction in the year you received the benefit, or the year you repaid it.

Plus, any one-time provincial payments to help you through COVID-19 will not be taxable, and you don’t need to report them as income on your 2022 tax return.



2. You can claim up to $500 for work-from-home expenses

Making a return from last year, you can once again claim the work-from-home tax credit. If you’ve been keeping track of your expenses, you can go ahead and claim your calculated total. Otherwise, you can use the flat rate method of $2 for each day worked from home during the pandemic.



3. The Basic Personal Amount (BPA) has been increased

As part of their policy to continue increasing it over time until it reaches $15,000 in 2023, the government increased the Basic Personal Amount for the 2022 tax year to $14,398. This means that every Canadian will get a slight boost to their return this year, and it’s likely you can expect another increase next year as well.



4. Tax brackets have shifted to account for inflation

The government has adjusted tax brackets for 2022 to maintain buying power for Canadians as prices of goods continue to slowly increase.

The new federal tax brackets for 2022 are as follows:

$0 to $50,197 of income (15%)
More than $50,197 to $100,392 (20.5%)
More than $100,392 to $155,625 (26%)
More than $155,625 to $221,708 (29%)
$221,708.01 and higher (33%)

The adjustment upwards means that Canadians on the edge of a tax bracket might find themselves shifted into a lower bracket this year and pay less taxes because of it.



5. The TFSA limit has been increased

The TFSA contribution limit has increased to $6,500 for the year. This means that if you’ve had an account since 2009, were 18 years of age and have been a resident of Canada throughout that period, the cumulative total you can have in your TFSA is now $81,500.



6. New OAS limit amounts

The OAS is designed to provide retirees with a source of income to support their retirement. However, if your income is over certain limit amounts, you might find your OAS amount reduced, and even canceled entirely. For the 2022 tax year, if your taxable income was over $81,761, you would need to repay some of your OAS. Similarly, if your taxable income was over $134,626, you would not have received any OAS payments. Thanks to the CRA’s new Affordability Plan, seniors aged 75 and over received an automatic 10% increase of their Old Age Security pension, as of July 2022.



7. Canada Pension Plan maximum contributions have been increased

The Canada Pension Plan (CPP) and Québec Pension Plan (QPP) have been increased by 2.7%, the maximum pensionable earnings are $64,900, with a basic exemption of $3,500 for 2022. For CPP, the Employee and employer maximum contribution is $3,039.30; for QPP it is $3,315.60. Québecers also have the option to increase their Québec Pension Plan premiums, by making extra contributions, to the enhanced plan. The enhancement of the QPP will provide future retirees with an increase in their pension premiums from 25% to 33.33%. Note that any self-employed individuals must account for both the employer and the employee sides of the contribution. For 2022, their maximum contribution amount for the CPP is $6,078.60 and for the QPP it is $6,999.60.



8. RRSP dollar limit is increased

The RRSP annual dollar limit for tax year 2022 is $29,210. Remember that your RRSP contribution limit is capped at 18% of your earned income in the previous year. This means the dollar limit is the maximum amount you can contribute regardless of your income.



9. Changes to tax credits you need to know

Some credits have been added, changed, reinstated, or expanded for the 2022 tax year.



Below are some of the Federal changes to tax credits:

Air Quality Improvement Tax Credit: Eligible businesses including sole proprietorships, can claim 25% of their qualifying ventilation upgrades to a maximum of $10,000, creating a $2,500 tax credit. Automobile Income Tax Deduction Limits: The changes include an Increase in Capital Cost Allowance (CCA) ceiling limits for zero emission and passenger vehicles, deductible monthly leasing costs also increased by $100, and the per kilometer rate paid by employers to employees who use their personal vehicle for work has increased by 2 cents per km from last year. Home Accessibility Tax Credit (HATC): If you’re 65 or older, are eligible for the disability tax credit, and have remodelled your home for safer access, you can claim up to $20,000 of your related HATC expenses. Labour Mobility Deduction (LMD): This new deduction allows tradespeople, apprentices, and employees working in construction to claim meals and lodging expenses paid to earn income at a temporary work location.

02/21/2023

Did you recently start a side hustle, become your own boss, or are seeking to launch a business idea that is truly yours? If so, you likely fit into the category of being self-employed or a freelancer!



There are many perks to being your own boss which, of course, don’t come without their own set of costs. You may now be facing higher taxes or the additional work of maintaining records. Hence, it’s imperative to be well-versed and proactive in understanding the tax compliance rules established by the Canada Revenue Agency (CRA). It can ensure you are maximizing on deductions and enable you to form a structure to keep track of records (if you are ever audited by the CRA).



Keep Track of Documentation and Save it for Six Years

Receipts are considered the financial dashboard of how much money you spent throughout the year. Ensure that you hold on to all receipts and invoices that are pertinent to income earned from your business—whether it was for providing services or selling products. CRA recommends holding on to paperwork for up to six years. If you lack back-up documentation, CRA has the right to impose interest or penalties, and your claims can be disallowed. Additionally, it is highly recommended that you have separate credit cards and bank accounts for personal and business-related transactions. However, keeping track of all required paperwork can be a hassle and can result in misplacement or accidental discarding.



There is a solution! We recommend using apps like Expensify, Hubdoc, Receipt Bank, and QuickBooks Self-Employed online tracking that will capture, store and organize all your receipts on a single platform for you. You can import receipts or invoices from photos or even forward them from your email. These apps automatically extract line items from each receipt using artificial intelligence and sync with most cloud-based accounting software.



They are convenient and will easily allow you to keep a track of all your documentation, (remember, it’s your proof for every expense deduction claimed on your tax return). Make it a priority to keep your financial records—from your business receipts to your employees’ payment records—organized and in check all year round.



Set Aside a Budget for Income Taxes and Retirement Savings

The moment you start bringing in income, you should create a budget for taxes. Unlike salaried employees, payroll deductions such as Canada Pension Plan (CPP) and income taxes are not withheld at source. Therefore, it is crucial you set aside funds for the employer and employee portion of CPP (9.9%) that you’re required to contribute to by the annual deadline (April 30).



With regard to income taxes, you should set aside funds based on your personal tax bracket. For instance, if your marginal tax rate is 35%, consider setting aside 35% of your earnings and segregating the money into a separate account until you’re ready to make the payment.



As a freelancer or when you’re self-employed, you may not have the privilege to contribute to matching company pension plans. Therefore, consider contributing to an RRSP. An RRSP will help reduce your taxable income in the current year so you may defer paying taxes until the money is withdrawn when you’re in a lower tax bracket.



Keep Track of Your Income Tax Deadlines and Arrange CRA Payments

Whether your business is profitable or not, it is mandatory to provide the business’ income and expense details on your income tax return. As a sole proprietorship, you will need to complete and submit the T2125 form (Statement of Business and Professional Activities) in addition to your general personal income tax return. The deadline for filing your return is June 15 if you’re self-employed. However, you must still pay taxes owing by April 30.



If your taxes owing is more than $3,000 in the current or previous two years, you will be required to pay quarterly installments. There could be interest and penalties incurred by the CRA if you miss meeting your income tax filing and payment deadlines.

In order to avoid being hit by a huge tax bill or missing deadlines, it may be wise to make it a habit of estimating taxes owing based on your income throughout the year and make monthly or quarterly tax payments to CRA by setting them up as an online vendor via online banking.



Business Use of Home Expenses

Many freelance and self-employed individuals operate from offices at home, but not all realize that you can deduct expenses related to your home office. These can include insurance, mortgage interest payments, repairs, utilities, and other home-related expenses.



For this category of deduction, you have to determine what portion of your home is dedicated to running your business.



Motor Vehicle Claims

Personal motor vehicle use for earning business income can be claimed as a portion of business expenses. You can calculate the percentage used for business trips and apply it to your overall car expenses. In practice, you must keep a logbook to track the total kilometres driven plus business kilometres driven during the year.



As per CRA, travel between a regular workplace and home is not considered business-related because most workers are normally required to work away from your principal place of residence or in different places.

GST/HST registration

You are required to register for a GST/HST number once your gross income reaches $30,000 in a 12-month period. Once this is achieved, you will need to start charging and collecting GST/HST from your clients and customers, depending on which province the business or person you’re charging has their tax base.

It is your responsibility to register voluntarily. The government will not send you a notice or warning to register for a GST/HST number.

Consider Incorporating Your Business

From a tax point of view, incorporating your business can be beneficial, especially if your business has reached a steady profitable level, meaning that you have enough of income to offset the costs and are able to set aside a portion of your business earnings in the corporation. The purpose of this is to be able to benefit from corporate tax deferral strategies.



Your corporate profits will be taxed at a much lower rate in comparison to personal income, unless and until you decide to pay yourself a bonus or dividend.

Determining how to structure your company is an important decision that may have a significant impact on your business going forward. Hence I recommend setting up an appointment before you decide to incorporate to ensure that you have taken into account all of your considerations before deciding whether or not to incorporate.

02/17/2023

Tax Tip: Deductions for Commissioned Salespeople

Did you know that employed commissioned salespeople can write off more tax deductions than other employees? In fact, expense deductible differs only slightly from that of the self employed. Yet, to get past a tax auditor, there are special nuances: employers must be prepared to verify the, out-of-pocket costs were required and there are some specific restrictions. Details follow.

The Employer’s Role.
In order for a commissioned employee to deduct expenses incurred out of pocket for the purpose of earning the income, employers must declare on form T2200 the commissioned employee was:

Employed in the year to sell goods or property or negotiate contracts for the employer; The employment contract requires the employee to pay for their own expenses; The employee is ordinarily required to carry on the duties away from the employer’s place of business; and, The commissioned employee is remunerated in whole or part by commissions or similar amounts fixed by reference to the volume of sales made or contracts negotiated.

What’s Deductible?
Employment expenses are deducted on Form T777, Statement of Employment Expenses, and include accounting and legal expenses, sales and promotion expenses, office supplies, travel, home workspace costs and auto expenses.

Another useful deduction is the ability to hire an assistant, who can be an employee of the commissioned salesperson, as long as that person’s services are required for the purpose of earning the commissioned employment income. This can be a spouse, providing for an income splitting opportunity. Similar to rules for the self-employed, the salary paid to the assistant must be reasonable for the duties performed, there must be a written employment agreement, and that statutory deductions, including for the Canada Pension Plan and Employment Insurance must be remitted.

What’s Not Deductible.
The commissioned employee must actually earn commissions from employment in order to deduct certain expenses, such as sales and promotional expenses. In addition, home workspace costs cannot create or increase an employment loss.

However, commissioned salespeople may claim interest and capital cost allowance on vehicles or other travel costs in excess of commissions earned according to specific rules.

Tax Tip.
Many commissioned employees forget to claim the GST/HST rebate, especially if they are preparing their own tax return. The employer must be a GST/HST registrant in order for the employee to make this claim. If you missed it, you only have 4 calendar years in which to recover the rights to receive it; that’s different from the normal 10 year adjustment period. Rebates must be reported as income in the tax year received; unless they are claimed for a depreciable asset, in which case they will affect the depreciate cost of the vehicle.

02/03/2023

Tax Season 2023 - Get Those Auto Logs Ready!

Taxpayers who claim auto expenses, commonly commission sales people, the self-employed and employees who wish to reduce their annual auto standby charge on their employer-provided vehicle, will know that keeping an auto log is mandatory to succeed in a CRA review of their tax filing. But after a “pandemic holiday” on keeping strict records, tax filers will have to create a new base year log to meet audit requirements.

CRA’s temporary COVID-19 measures considered that an employee who used an auto more than 50% of the time for business/employment purposes in 2019 will have done the same in 2020 and 2021.

Note: The auto standby charge and operating expense benefit may also give rise to Goods and Services Tax/Harmonized Sales Tax (GST/HST) obligations. That is, employers will need to remit GST/HST for the auto benefits that are taxable benefits to the employee. These GST/HST rules remain unchanged during the pandemic and of course will continue for the 2022 and future years.

For 2022 the rules are identical to those before the pandemic. So, the implication is that a log is required if the personal use of the employer-provided vehicle varies more than 10% from the previous base year - 2019.

If the employee continues to work from home, or did so for a large portion of the year, one can expect that the personal use would be similar in most cases. Where the employee returned to working from the office in 2022, personal use would likely be significantly different from the 2019 base year and an auto log would be needed to claim the standby charge reduction.

After re-establishing your base year driving for one year, use a three-month sample logbook in subsequent years to estimate full year driving trends. As long as the usage is with the same range (plus or minus 10%) of base year driving, CRA will accept the 3-month log. Businesses must show the use of the vehicle in the base year is still representative of its normal use.

The business use of the vehicle years after the base year will be calculated as follows, as per CRA:

(Sample year period % ÷ Base year period %) × Base year annual % = Calculated annual business use

What should be in the auto log? All of the following for each business/employment related trip: the date, destination, purpose, number of kilometres to and from the location.

Most books and records must only be kept 6 years from the end of the tax year to which they relate. But in the case of auto logs, the base year record must be kept for a period of six years from the end of the last tax year it was used to establish business use.

Bottom Line: Auto Logs are a necessary part of any auto expense write-off – be it on the T777 Employment Expenses Statement, the T2125 Statement of Business or Professional Activities. Be sure to be proactive and review the rules for keeping them in this transition year and before T4 slips are finalized for 2022 .


Also, in order to prevent rushing and stress, please have your receipts, bank statements and invoices ready, organized per month and drop them off. Even though, you don't have to file your business return till June 15th, if you have to pay, it must be done by April 30th, hence, you would want to know that in advanced. You can offset the amount owing with a RRSP contribution.
Why pay the government if you can pay yourself?

06/02/2022

Good Morning Everyone!

Sorry I have been inactive on this page as of late but I am back looking for a few clients for regular bookkeeping or if you are a self employed person or still need to file your personal taxes I can also do that!

Self Employed Individuals and those with Farm Income have until June 15 to file your personal taxes!

09/30/2020

Trying to organize and store receipts can be tedious. Especially when you need to keep them for 7 years in case of a CRA audit.
Bankers boxes and file boxes take up a considerable amount of space, enter one of my go to's ...... a 3 ring binder. Paired with month dividers and an envelope for each month its easy to organize and even easier to store.

09/25/2020

With most accounting software platforms moving to a "cloud based system" this enables remote work to be easier while keeping information up to date.
I predominantly use Quickbooks Online as I have the capability to use it over multiple devices and computers. It also has a mileage tracker and receipt snap option (you can take a picture of your receipt say what its for and it will match in the bank feed in a nutshell)
But other great options include Freshbooks, Wave and Sage One.

08/21/2020

The Canadian Government has announced a 4 week extension to CERB recipients as well as some other proposals.

If your interested here is the link to tbe latest update.

Since the beginning of the COVID-19 pandemic, the Government of Canada has put Canadians first, providing the support they need to continue to make ends meet while staying safe and healthy. As we gradually and safely restart our economy, the government is continuing to support Canadians through the....

08/19/2020

If your like my one client and your truck is your mobile office, organization and being prepared is key to managing and keeping your receipts.
I have him use an expanding poly file folder, where you can sort by month or by expense and then its brought to me on a quarterly or monthly basis. Whichever works easiest for him.

08/15/2020

Welcome to my page!

So I could promote the fact that I am looking for new clients as well as promote my little bookeeping business I have created a business page.

I am a certified bookkeeper, I graduated from Red Deer College and their Bookkeeping program in 2016. Since then I have independently contracted doing corporate and not for profit books on the side of working my standard 9-5 job.
During that time I worked at an accounting office as a full cycle bookkeeper and personal tax preparer gaining valuable knowledge and experience and have moved over to an Accounts Receivable/Accounting Assitant position with a small Oil & Gas Company.
I have completed training and am certified as a Canadian Personal Tax Preparer and have also enrolled with the Olds College Continuing Education program for an Agricultural Accounting course (who knows maybe I'll complete my Ag Finance Certificate time will tell) to gain a working knowledge of Ag Industry specific software.

Any questions send me an email or message and I'll be more than happy to chat!