Blogs

Employment Insurance is not really a tax subject but I thought that I should address something I recently learned.  Everyone assumes (we know what happens when you ass-u-me) that if you have been working and you get let go that you will qualify for benefits.  Well guess what?  There are all sorts of rules and conditions that must be met in order for you to qualify for and collect benefits.  I suggest visiting the Service Canada website or going to an office to get all the information specific to your situation.  That said here are some things that I feel you must be made aw

I am sure that you will agree with me when I tell you that I don’t want to give the CRA (or anyone else) more money than I have to.  I also don’t want to pay someone if I don’t actually owe them.  That said you have to pick your battles.

Every so often I get phone calls or emails (usually around the time I am preparing a tax return) stating that “I need as many write-offs as possible”.  Understandable, but WRONG.  Tax deductions do not change.  The personal tax return has not changed significantly in over a decade (10 years for you youngsters out there).  I would also like to say that I can’t just make stuff up or manufacture deductions.

As regular readers will know I worked for the CRA for many years in all different capacities of audit.  As a result I am able to tell you how you can respond when CRA come and do audits.  Specifically I want to address how to beat a Net Worth Audit.  Before we get too far I want to clarify my last statement.  I am talking about when the CRA make bad choices, inaccurate assumptions, or mistakes.  If you are deliberately cheating or screwing the system and get caught there is nothing I nor anyone else can do to help you.  In my last blog I mention that the CRA will use a net worth approach wh

For those of you who have not heard of this prepare to be amazed, awed, and shocked.  The CRA has the ability to do an audit even if you do not have documents, or if you refuse to provide documents to them.  They will also use this method of audit if they think that you are not reporting all your income.

In an attempt to save myself a ton of grief I am going to endeavor to explain how corporate and personal taxes work and the interaction between the two.  In order to properly explain all of this I will first give you some perspective.

Employees

When you are an employee you don’t get all your money.  Your salary may be $100,000 per year, but the total cash you actually receive is only $80,000.  The difference is sent to the government for payment of taxes.

So we now have a new government in Alberta.  Now what?  Well truth is no one knows.  If you are an NDP supporter you probably think it will be rainbows and lollypops and the province will now be a better place.  If you are NOT a fan of the NDP you will point out that the NDP totally messed up Ontario, Saskatchewan and BC, and that those provinces have still not recovered.  You are also fearful that the Alberta economy which relies on Oil and Gas corporations will be messed over by royalty reviews and higher taxes.

There are two types of dividends that you can receive.  If you invest in publically traded corporations you can receive what are called eligible dividends.  Owners of small business corporations usually receive what are called ineligible dividends (or other than eligible).  Both types of dividends are treated in a similar manner for individual tax purposes, the only difference is the percentages that are applied to gross up the dividend and the percentage that gets applied as a dividend tax credit.  I will be concentrating on ineligible dividends as this is where I get the most questions.

In an attempt to save myself a ton of grief I am going to endeavor to explain how corporate and personal taxes work and the interaction between the two.  In order to properly explain all of this I will first give you some perspective.

Employees

When you are an employee you don’t get all your money.  Your salary may be $100,000 per year, but the total cash you actually receive is only $70,000.  The difference is sent to the government for payment of taxes.

This is a very common problem that I hear way too often.  I would like to preach about the virtues of not overspending, sticking to a realistic budget, and things like that.  However, I want you to read my blogs and learn from them, so I will save this for another time.