quadrantadmin, Author at Quadrant

Nearly 75% of entrepreneurs will exit their businesses in 10 years. Who will fill their shoes?

Business owners who own and run successful businesses do so because they have put in the time, energy, as well as finances to make it successful. Business owners looking to retire by handing over their business to a family member may find themselves paying more taxes than just selling to a non-family member. If the government wants to keep Canadians working and succeeding, the laws need to be changed. Business owners should also take a long-term approach and plan way ahead of time about how they will turn over their companies to minimize issues when the time comes.

“Nearly three quarters of small business owners in Canada will be faced with this challenge in the next 10 years, leading to a transfer of business assets potentially worth more than $1.5 trillion.”

Paying income taxes is bad enough. Canada’s brutally complicated system makes it worse

A detailed examination of Canada’s system is long overdue. The Canadian tax system is complex and has become more so over the years. The original document was 4,000 words, and is now 1.1 million words. The tax guide includes complex tax codes and is further complicated by an increased number of tax credits and exceptions. This makes tax preparation more expensive for individuals and more costly for the government. Many other countries have made laws to simplify their tax laws. Canada is long overdue for a similar simplification. Reduction of tax credits could be balanced by lowering the tax rates. That way, it’s easier for taxpayers and the government, without any loss in revenue or increase in taxes.

Key Takeaways:

Canadas Income Tax System has not changed for the better over the last 25 years.
The high number of personal tax credits adds complexity and the number of credits has increased by 26 percent between 1991 and 2015.
The Income Tax Act’s length, inaccessible language, and numerous exceptions increase the cost of compliance for taxpayers, which amounted to an average of $501 per household in 2012.

“While Canada has made no major revisions of its Income Tax Act since the 1960s, other countries have implemented measures to reduce the size and complexity of their tax codes over the past 25 years.”

Tax benefits of being your own boss

One of the perks of being your own boss is a later tax filing deadline. Canadians employed by someone else needed to file their taxes by April 30th with the Canada Revenue Agency (CRA), but self-employed individuals have until June 17 to file their returns. Currently, one in 10 Canadians is self-employed, but it is estimated that this will grow to 45 percent of people in the workforce within the next decade. Keep in mind that when you file, self-employed individuals also get tax breaks. For instance, if you regularly conduct business from home, then you can claim a portion of your home’s expenses like utilities, repairs, insurance, mortgage interest and property taxes. It may also be possible to deduct other expenses as well like a vehicle provided you meet the requirements.

“One advantage to being your own boss is a later tax filing deadline.”

1.6 million Canadian banking records shared with IRS

Since an information sharing agreement was made with the U.S. in 2014, 600,000 Canadian bank accounts in 2016 and again in 2017 was shared, which is up from 300,000 records in 2015. In this reciprocal agreement, the CRA shares account information for account holders from the U.S., and the IRS sends information on Canadians, who have U.S. bank accounts. This information sharing can result in Canadians being taxed more based on U.S. repatriation tax law put into effect in 2017. Many have argued against this information sharing, including court cases, but so far appeals have not resulted in a change to the agreement.

“The Canadian government has shared more than 1.6 million Canadian banking records with the U.S. Internal Revenue Service since the start of a controversial information-sharing agreement in 2014.”

USMCA’s new duty allowances a heads up for Canadian e-tailers

The new North America trade deals present a challenge (and an opportunity) for Canadian retailers. The recent changes have increased the minimum transaction necessary to pay online duties and sales taxes on imports (“de minimis” rules), which makes online purchases at U.S. sites more attractive to Canadian shoppers. These changes should also serve as a wake-up call to Canadian businesses. Those who are not doing so already can take measures such as retooling websites, upgrading technology, and championing local credentials to consumers who want to buy Canadian.

Key Takeaways:

The US/Mexico/Canada agreement can result in increased profitability for Canadian Retail businesses if they up their game.
Canadians prefer to buy Canadian, so retailers need to make it as easy as possible for them to do so by utilizing new technology and trends, such as mobile commerce.
Brick and mortar stores should provide an enhanced experience to lure customers in and to buy.

“The truth is, Canadian retailers should worry less — and seize the moment to take advantage of change. The de minimis changes can offer new opportunities, particularly for small- and medium-size retailers in Canada.”

How CRA treats you depends on where you live, auditor reports

Although the taxpayer bill of rights guarantees equal treatment of all taxpayers, a new report has shown that is not how the CRA actually functions. Different cases take longer to be resolved, depending on where the taxpayer lives. Certain agents are also ore lenient in waving fees and penalties, while other agents refuse to waive fees even when the CRA is in the wrong. The CRA has vowed to address and fix these inconsistencies within the organization.

“When taxpayers file new information that could change their tax bills in one region, getting an answer takes about three months. In another, it’s more like nine. And CRA can’t really explain why.”

Scammer calls off duty cop and gets a response he never expected

Phone scammers have been preying on people for years and a common scheme (especially this time of year) is to pose as CRA agents to attempt to extract money or personal information from their victims. An off-duty cop decided to give the scammer a piece of his own medicine after receiving a scam call. After several threats of police action made by the scammer, the cop faked a shot gun sound threatening anyone who came for him. The scammer quickly hung up knowing they weren’t getting money from him any time. If you get a call from anyone who asks for money, phone the police to verify that it’s legitimate. In almost all cases, it’s a scam.

“What this scammer doesn’t realize is that he left a message at the home of “Dave”, a police officer, who actually received many complaints about this scam and spends a good part of his week at work warning people about similar ploys. Dave decided to return the call and have a little fun with the pretend officer at the other end. “

Personal Investor: Time for a post-deadline RRSP tax strategy – BNNBloomberg

Canadians often contribute to their RRSP specifically for the purpose of reducing their income to receive a tax refund. However, it’s important to look at the bigger picture to determine whether those contributions would be better placed in a TFSA rather than an RRSP from a retirement tax perspective. Investing too much in an RRSP can cause a greater amount of funds to be paid in taxes depending on if you’re in a higher tax bracket when you retire and may include a reduction in benefits. Diverting some of your funds to a non-taxed TFSA can help you avoid paying too much of your hard-earned retirement income to taxes.

Key Takeaways:

One of the problems of striking the right balance is not knowing how much investments will grow inside an RRSP.
Canadians now have the advantage of diverting some of their retirement savings from an RRSP to a TFSA, where withdrawals are never taxed.
Working with a professional can help you determine the mix of RRSP and TFSA contributions based on your situation.

“As odd as it may seem, there’s a real risk you could be contributing too much. Many senior Canadians regret packing their RRSPs through the years as they face higher tax brackets when they withdraw their money and, in some cases, forced minimum withdrawals that result in Old Age Security clawbacks.”

More than 40 Albertans went broke every day for the past year on record

Bankruptcy and consumer proposals lead to 14,696 consumer insolvency cases in Alberta for last 12 months ending in January. That’s a a ten percent increase from the previous year. Job loss or business failure as well as improper use of credit and budgeting have lead more and more people into a debt spiral. A surprising trend has been an increase in the senior population due to increased cost of living as well as helping family members financially. The rate has also gone up in more populated areas.

“While some Albertans are insolvent due to job losses or business failures, others have simply gotten themselves too deep in debt, says a licensed insolvency trustee in Calgary.”

How to build your small business credit score — and keep it high

If your small business needs a line of credit, it’s important to have a high credit score. There are ways to build your score to make your business more attractive and get the money you need. First, maintain a good personal credit, but keep it separate from your business credit. Second, make sure you are paying who you need to pay and maintain your cash flow. Third, check your score to you know where it currently sits and then find out what you have to do to increase your score if needed.

“How can small business owners increase their ability to get credit and finance their business during the difficult early years? Credit experts offer some tips.”