Taxation

A key objective of our small business clients is to reduce income tax. Income tax is a major expense sometimes taking as much as 50% of the profits.  Our accountants stay up to date with income tax rules and regulations and apply them to benefit our small business clients. We also work with individuals living in, and near, Mississauga, Brampton, Etobicoe, Scarborough, North York, Markham and Toronto. We provide income tax preparation, income tax planning and income tax advice to individuals. Our individual clients include self employed persons, doctors, executives, non residents, retirees, management and non management employees. Our income tax service includes assistance before and after the income tax return is prepared so clients benefit from the best tax service possible.

Tax Filings

  • Corporate and Personal Tax, SR&ED
  • T4 Filings for Payroll
  • GST/HST Returns

Tax Compliance Services

  • Tax compliance services for corporations, individuals, trusts and estates.
  • Preparation of Scientific Research & Experimental Development tax (SR&ED) credit claim forms.
  • Preparation of Income tax election forms for corporations, individuals, trusts and estates.
  • Commodity taxes (PST, GST).

Tax Advisory Services

  • Tax minimization and deferral planning for corporations, individuals, trusts and estates.
  • Corporate and Partnership reorganizations.
  • Review of Shareholder and Partnership agreements.
  • Succession planning for family businesses.
  • Owner-manager and executive remuneration and compensation.
  • Wills, family trusts and estate planning for individuals.
  • Taxation of deceased taxpayers and post-mortem tax planning.
  • Cross-border Canada – United States Planning.
  • Defending and assisting with corporate and individual tax audits, disputes, appeals and settlements.(See below)
  • Voluntary Disclosures and Taxpayer Relief Request.

Canada Revenue Agency Audit Matters & Triggers

Keeping audit-ready books is the most important aspect to avoid getting into serious trouble with CRA. A tax audit is the process of eliminating business deductions to begin with. There are numerous items and conditions that an auditor will commonly look for in order to catch you. Here are the top Tax Traps that are most likely to trip you up, and what you need to do to avoid them:

3 of the Most Common Audit Red FlagsHere are three things CRA is on the lookout for:

1. Are you self-employed? CRA watches self-employed, small business owners more closely. Even though DIY tax software is pretty thorough, if you run your own business you might want to have an accountant look over your finances to make sure everything looks right.

2. Are there two of you claiming the same things? Sometimes couples, especially those who have been recently divorced, claim the items twice. Doing so can trigger an audit.

3. Are your tax claims consistent? This applies to everything, including deductions and charitable donations. Although you may have more to give some years, being too generous could trigger an audit. Likewise, too many deductions may also trigger an audit.

Top 5 Deductions on the Red Flag Watch ListAccording to a Moneyville.ca article, these are the top 5 items that CRA will double check for inaccuracies.

Line 232 – Other deductions – Apparently, many Canadians try to deduct items that should not be deducted, such as funeral costs, legal fees and wedding costs.

Line 315 – Childcare amount – While you can claim a dependent over the age of 18, you can only do so under certain circumstances. CRA watches this line carefully for those who are claiming dependents who aren’t actually dependent.

Line 330 and 331 – Medical expenses – Moneyville says this section can be confusing and suggests that tax filers read CRA’s guide carefully when it comes to medical expenses.

Line 319 – Student loan interest – While you can deduct interest paid for your student loan interest, this doesn’t include a family loan or your line of credit. Only qualified students loans count.

Lines 321 and 322 – Education and textbook amounts – Be sure to claim for the calendar year, not the academic year. Moneyville says, “If the number of months you are claiming doesn’t match the number of months you were a student the red flag will be raised.”

Preparing for an AuditPreparing for an audit is much easier than it sounds. If your taxes are indeed accurate, then you have nothing to worry about – unless you can’t prove that they are. Keep receipts and documentation organized and on-hand. If you can’t prove it, don’t claim it.

Here’s what the auditor will look at:

Income – CRA will compare the amount you reported with your bank statements and deposits. They’ll also look over your sales records, receipts and invoices. It is in your best interest to keep a written record of any money you received as a gift. Without proof, you may find yourself paying tax on them.

Interest and loans – When the auditor comes to visit, they will want to look over all of your loan paperwork, including deposits, bank statements, credit card statements, cancelled cheques and receipts. This is especially important if you own a small business, as you can deduct interest on business-related loans.

Payroll – Regarding payroll, auditors will examine everything, including:

  • Cancelled checks
  • Tax returns
  • Deposits
  • Business records
  • Any records showing provincial, federal and social security withholding
  • Medicare taxes
  • Advance earned-income credit
  • Unemployment compensation
  • Workers’ compensation premiums
  • Salaries and bonuses paid to owners

Expenses and deductions – This section is carefully watched by CRA, especially if the numbers change substantially from year to year. Be sure to keep a log of travel expenses, meal and entertainment expenses and business expenses – and make sure that they’re legitimate.

Other – If an auditor comes to inspect your business, they will likely look into your personal finances as well. Be prepared to show documentation for both.

The auditor will likely compare your lifestyle to the income you presented to determine whether or not the two are compatible. Your Chances of Being Audited
There’s really no way to avoid an audit; unfortunately, it’s not just about red flags. Every year, CRA randomly selects individuals and businesses for audits. The only way to avoid trouble is to make sure you do it right the first time. If you have questions, ask. If necessary, hire a small business accountant. They’re worth every penny in the long run. And keep great records. It’s ok to make a mistake. It happens all the time. The more organized you are, though, the fewer mistakes you’ll make. The fewer mistake you make, the less likely you are to be audited.