Your employee is considered to receive a benefit if you pay for or give something that is personal in nature:

• directly to your employee; or
• to a person who does not deal at arm’s length with the employee (such as the employee’s spouse, child, or sibling).

A benefit is a good or service you give, or arrange for a third party to give, to your employee such as free use of property that you own.

An allowance is a limited amount decided in advance that you pay to your employee on top of salary or wages, to help the employee pay for certain anticipated expenses without having him or her support the expenses. An allowance can be calculated based on distance or time or on some other basis such as motor vehicle allowance using the distance driven or a meal allowance using the type and number of meals per day.

A reimbursement is an amount you pay to your employee to repay actual expenses he or she incurred while carrying out the duties of employment. The employee has to keep proper records to support the expenses and give them to the employer.  These are not taxable.

There are many types of benefits and allowances that you may have to include in an employee’s income. Whether or not they are taxable depends on the type of benefit or allowance and the reason an employee receives it. To determine if the benefit is taxable, the tax department has a useful guide.  Please see Chapters 2 to 4 of the Guide T4130, Employers’ Guide – Taxable Benefits and Allowances (follow the link).

Once you determine that the benefit is taxable, you need to calculate the value of the specific benefit. The value of a benefit is generally its fair market value (FMV). This is the price that can be obtained in an open market between two individuals dealing at arm’s length. The cost to you for the particular property, good, or service may be used if it reflects the FMV of the item or service. You must be able to support the value if you are asked by the tax department.

Add the taxable benefits and allowances to the employee’s income each pay period to determine the total amount that is subject to source deductions. The benefits and allowances may be subject to CPP contributions, EI premiums, and income tax deductions.

Many of our clients already use QuickBooks to account for their business.  QuickBooks has a new product using online cloud services.  This might a great fit for your business or organization if you:

• Want the flexibility to work on the go
• Looking for zero maintenance software
• Comfortable working online
• Have one or more locations

Some of the benefits are:

• Anytime, anywhere access for up to 25 people at the same time
• Automatic updates and upgrades that don’t require any action
• Free support to help with setup or to answer “how-to” questions
• Light inventory capabilities and expenses tracked by job
• iPhone, iPad, Android apps that sync key tasks across all devices
• Bank & credit card transactions automatically downloaded from 16,000+ banks
• Automatic emailing of recurring transactions (invoice/receipts) and reports
• Free access for an accountant or bookkeeper to work on the books at the same time

Seniuk and Company are certified QuickBooks Pro Advisors and can provide help or answer any questions.  Please contact Laura Marcato directly at [email protected] for any enquiries.

How to pay using CRA’s My Payment:

My Payment is an electronic payment service that lets businesses make payments directly to the CRA using their bank access cards. You don’t need to register to use My Payment, and you can make payments to more than one CRA account in a single transaction.

1. Go to My Payment.
2. Make sure you have your 15-digit CRA program account number handy.
3. Follow the instructions on your screen.

How to pay using CRA’s pre-authorized debit:

When you use My Business Account to set up a pre-authorized debit (PAD), you agree to authorize the CRA to withdraw a pre-determined amount from your bank account to pay tax on a specific date or dates. To set up a PAD agreement:

1. Login to My Business Account.
2. On the Welcome page, select “Pre-authorized debit” under Make payments.
3. Select “Create new agreement” and follow the instructions on your screen.

How to pay using online banking:

If you have a business bank account, you can pay your business taxes the same way you pay your phone or hydro bill.

1. Sign in to your financial institution’s online banking service.
2. Under “Add a payee,” look for an option such as:
   Federal – Corporation Tax Payments – TXINS
   Federal – GST/HST Return – GST 34 – (GST34)
   Federal Payroll Deductions – Regular/Quarterly – EMPTX – (PD7A)
   Federal Payroll Deductions – Threshold 1 – EMPTX – (PD7A)
   Federal Payroll Deductions – Threshold 2 – EMPTX – (PD7A)
3. Carefully enter your account number to avoid a misapplied payment.

How to pay in person at a financial institution:

To make a payment at your Canadian financial institution, you need a personalized remittance voucher. Financial institutions will not accept photocopies of remittance vouchers or payment forms. A personalized remittance voucher will be mailed to you after your tax return has been filed. Note: the remittance voucher could take up to a few weeks to come in the mail.

How to pay through mail delivery:

To make a payment through mail delivery, mail your cheque along with the remittance form CRA sent to you to Canada Revenue Agency, Tax Centre, 66 Stapon Road, Winnipeg, MB, R3C 3M2. The front of the cheque should include your business number and a description of the payment i.e. “2015 Corporate income taxes”.

How much time are you spending on sales? If you’re running a new business, you should devote at least 80% of your day to it. If you’re an established business, you should spend at least 30% of your day on the sales process or connecting with customers. While this may seem extreme, sales growth should be the core to any business plan. The founder of IBM, Thomas Watson once remarked, “Nothing happens until somebody sells something.”

These are some things you can do to increase sales:

• Introduce new products or services – You’ll need to research your market to see if there is an appetite for your proposed offering. Consider using some of your existing clients as a test, which can help you manage some of the risks and even help you learn how the product or service can be improved. Pay special attention to marketing and promotion to get the word out on your new offerings.
• Expand to new markets – While targeting new markets can be costly, it can increase your client base. Market research will help you understand the potential new market and help you devise a strategy to tackle it.
• Enhance your existing sales techniques – This could include providing your sales staff with enhanced training, contracting independent sales representatives, using resellers, and implementing an e-business strategy if one does not exist already. The outcomes of these techniques should be tracked and be prepared to shift your strategy if you are not seeing your desired results. Study your intended clients to know how best to reach them, and plan your marketing strategy accordingly.
• Change price, terms or conditions of billing – Review what your competitors are offering and your own profit margins to determine if you can reduce your cost. Without touching your price, sometimes sweetening the deal with favorable terms can sway the buyer your way.
• Monitor the competition – Be aware of what your competitors are doing to help you understand their behaviors, capabilities and limitations. With this knowledge, you will be better prepared to defend your market position, react to changes, and find niche markets.
• Improve community relations – Activities such as sponsoring community events, speaking at engagements, or supporting a local sports team can raise awareness of your business and stimulate market demand.
• Don’t neglect customer – Keep in mind the customer’s perception of your service quality or responsiveness. The positive word of mouth from a happy customer is priceless.

Hiring an accountant for your business is no longer just about finding someone good at number-crunching. A qualified accountant can help businesses make better business decisions based on information drawn from accurate data and informed by broad business knowledge.

So how do you go about finding a great accountant? Here are some tips:

• Determine your business needs: Do you want an accountant to just handle the books and file your taxes, or someone who can give advice, and who will be there as your business grows? A qualified accountant can help deal with buying and selling decisions, tax planning and has the credentials to sign financial statements and do statutory compliance work. Our firm can offer all these types of services and more.
• Get licensed candidates: A professional accountancy designation is important. In Alberta it means a CA (Chartered Accountant) or CPA (Chartered Professional Accountant). These designations mean that your accountant has a degree of education, a certain amount of experience and needs to abide by ethical rules.
• Determine accessibility: Is your accountant available to answer questions throughout the year? A firm like Seniuk and Company is available pretty much round-the-clock for clients. Also due to our smaller firm size, there is a lessor chance of different staff being assigned to your file year to year.
• Ask what they charge for services: Most charge by the hour (Our firm charges between $50 to $250 an hour, depending on their duties). To get an accurate quote, bring a copy of your tax returns and most recent financial statements.
• Talk about technology: Spreadsheets and other accounting paperwork are giving way to computers and digital filing. Paperless accounting saves time and money. Our firm works in a virtually paperless environment and is able to operate in the most up to date business computer systems.

The Canada Revenue Agency (CRA) has created a new mobile app to help you create custom reminders and alerts for key CRA due dates for instalment payments, returns, and remittances. For more information, go to www.cra.gc.ca/mobileapps.

Starting October 19, 2015, the Canada Revenue Agency (CRA) is providing all GST registrants with a new and unique access code on their GST34-2s or GST34-3s.  This same number can be now used every time a GST return is net-filed.

The GST access code can also be changed to one of your choice by going to www.cra.gc.ca/gsthst-accesscode. You can use this access code to file all your future GST34-2s or GST34-3s.

When does an individual need to keep track of their automobile expenses? Generally, a person should be keeping a detailed record of all expenses incurred and the amount of kilometers driven in a log book if they are claiming them as a business deductible. The individual must show that the expenses were incurred for the purpose of earning business income and were reasonable. Note that travelling from home to your workplace is not considered to be business related. Here are a few examples that the tax department considers to be business travel:

• Travelling from your home to a client’s place then back home
• Travelling from your home to a client’s place then back to work
• Travelling from your workplace to a client’s place then home

Generally, eligible deductible automobile costs include the following: gasoline, repairs and maintenance, oil changes, car washes, insurance, licenses, registration fees, parking charges. Lease payments and interest expenses for purchased vehicles are subject to special rules. If a person uses their automobile for both personal and business use, they must allocate their total expenses between the two. The allocation is usually done on a pro-rated based on kilometers travelled. However, if an individual receives an automobile allowance from their employer that is considered to be reasonable they cannot deduct any automobile expenses. The tax department considers an allowance reasonable if it does not exceed the following:

• 55¢/km for the first 5,000 km driven
• 49¢/km after that

In the Northwest Territories, Yukon, and Nunavut, there is an additional 4¢/km.

How long are you legally required to keep your tax records? Generally, record retention requirements are outlined in the Income Tax Act as follows:

• Records must be kept for a minimum of 6 years from the end of the latest year to which they relate to.
• If in electronic format, they must be kept in a electronically readable format (accessible and usable copy)

In some situations, you must retain your records for different periods of time. Below is a list of these situations, as well as the retention periods that apply to them:

• Records concerning long-term acquisitions and disposal of properties, the share registry, other historical information that would have an effect on sale, liquidation or wind-up of the business – must be kept indefinitely
• If income tax returns are filed late – records must be kept for 6 years after the date the return was filed
• If you filed an objection or appeal, all necessary records until the latest of the dates: – the date the objection or appeal was resolved – the date for filing any further appeal has passed or – the 6 year record keeping period has passed
• When a non-incorporated business or other organization ends – records must be kept for 6 years from the end of the tax year the business ended
• When a corporation is dissolved, it must keep the following records for 2 years after the date of its dissolution: – all records and supporting documentation – all other records that corporations have to keep
• When corporations amalgamate or merge to create a new corporation, the new corporation must keep business records of each of the amalgamated or merged corporations for 6 years from the end of the taxation year to which they relate
• If you are a legal representative of a deceased taxpayer or trust, you can destroy the records after receiving clearance certificates to distribute the property under your control

Note: A person is not relieved of an of the record keeping, readability, retention, and access responsibilities because he or she contracts out the record keeping function to a third party such as a bookkeeper, accountant, service provider, or such other arrangements.

Small businesses are particularly susceptible to fraud for a number of reasons:

1. The owner-manager is typically very busy, out promoting the business and working to create revenue, yet not comfortable with the reporting requirements internally and therefore not aware of how receivables and payables are being managed.
2. The size of the organization restricts the ability to install the necessary internal controls designed to prevent and detect fraud.
3. The owner is trusting.

Why do employees commit fraud and how to mitigate the factors:

1. Financial pressure – a need to generate additional funds either to support a habit (shopping, gambling or drugs, for example) or support an image (breadwinner). Be aware of red flags that may indicate financial pressure. These indicators can include:

• suddenly purchasing more material items,
• suddenly carrying large amounts of cash,
• frequent calls from creditors,
• irritable or moody behaviour,
• unnecessary overtime,
• arriving for work early and staying late,
• the mention of medical problems,
• signs of drug or gambling addictions, and
• dissatisfaction at work.

2. Rationalization – the belief that the company or owner ‘owes’ the employee or that the company has so much, it won’t even notice, or that others do similar things so it’s ok to join in. This can be mitigated by:

• Promoting a strong sense of ethical behaviour within the business. Doing so will reduce the ability of the employee to rationalize the misappropriation.
• This is a simple as a consistent performance management process whereby employees’ work is reviewed and assessed regularly. It can also be a more complex system whereby employees sign a corporate code of ethics annually acknowledging the expectations.
• Keep in mind, however, that no matter how strong the corporate governance is, an employee can still rationalize the theft by tying the act to ‘saving a loved one’ or ‘just borrowing the funds’, thereby avoiding the guilt associated with harm to the corporation.

3. Opportunity – the ability (knowledge and or access) to commit the fraud is present due to the experience level of the employee, the lack of internal business experience of the owner / manager, complacent management or weak internal controls. This can be mitigated by:

• Implementing a system of internal controls that help to both prevent fraud from occurring in the first place and detect fraud after it has taken place is a key step to undertake for all small business owners.
• This element is the one the owner has the most control over and yet developing a system of processes, procedures and controls that deter employees from committing fraud is usually overlooked due to a lack of understanding by the owner-manager.

*Removing even one of these factors can significantly thwart or mitigate losses.*