International Day of Persons with Disabilities

The holiday season is here, and that means opening your heart to giving. Not only to those close to you, but to those that really appreciate a helping hand.  We should make a habit of giving throughout the entire year and not just at Christmas.

This Dec 3, 2011 is the International Day of Persons with Disabilities. This is an international observance promoted by the United Nations since 1992. We encourage you to participate in this day, at a local level, and think about giving back to those in need.

Check out this link for how to celebrate in Calgary. http://www.calgaryidpd.ca/

From an accounting perspective, I will discuss a few tax breaks that are available to persons with disabilities. People who qualify can take advantage of the credits available.

Disability tax credit

A disability tax credit can be claimed if you have a severe and prolonged mental or physical impairment which restricts your ability to perform the basic activities of daily living, such as: speaking, hearing, walking, feeding, dressing, and performing the mental functions necessary for everyday life.

If the disability qualifies, it must be certified by a doctor, who will then complete this form: T2201

For 2011 the federal disability credit is $7,341.  This amount can also be transferred from the dependent to the caregiver.

Amount for infirm dependent

An individual may claim an amount for dependants age 18 or older, provided they are dependent on the individual because of a mental or physical disability.

Dependant

A dependant is defined as a person who at any time in the year is dependent on an individual for support. This includes the individual's or the individual's spouse's or common-law partner's

• child or grandchild; or

• parent, grandparent, brother, sister, uncle, aunt, niece, or nephew (if this person is resident in Canada at any time in the year).

For 2011, the federal credit is $4,282

Registered disability savings plans (RDSPs).

Family members, and other authorized contributors are entitled to establish registered disability savings plans (RDSPs) if they are related to individuals with a prolonged and severe physical or mental impairment.

RDSPs are designed to help parents and others save and provide for the long-term financial security of a disabled beneficiary.

The tax treatment of RDSPs is very similar to that of Registered Education Savings Plans. The contributions to the plan are not tax deductible, investment income accrues on a tax-deferred basis, and withdrawals from the plan are taxable to the beneficiary to a certain extent.

Disability support deductions

Eligible disability supports expenses may be claimed as a deduction if the following conditions are met:

• the expenses were incurred to enable the individual to:

– be employed,

– carry on a business (either alone or as an active partner),

– carry on research or similar work (for which the individual received a grant), or

– attend a designated educational institution or secondary school where the individual is enrolled in an educational program

Example of such payments include: note-taking services, voice-recognition software, tutoring services, talking textbooks, job coaching services, reading services, full- or part-time attendant care services provided in Canada

The disability support deduction is available only to individuals with disabilities; it is not available to people who support them.

Other tax credits include amount for eligible dependents, child care expense deductions, amount for children, medical expense credits, and caregiver amounts. 

Check out this not for profit organization that works with people with disabilities for social activities and lots of fun.  http://www.betweenfriends.ab.ca/

The following is a link to the Government of Canada’s resource for people with disabilities. http://www.pwd-online.ca/pwdhome.jsp?lang=en

If you or somebody you know qualifies for these tax deductions and credits please ensure you are using them.

Have a great day.

2011 Personal tax rates

It is getting cold outside, winter is on our doorstep. Long gone are those dog days of summer and nice fall evenings.  Now we can look forward to warm hot chocolate by the fire, weekends at the ski hills, toboggan runs, Christmas carols and skating.

2011 is winding down, time to ensure all is in order for both your corporate and personal financial matters.

This is the link to the 2011 personal tax rates here in Canada and by province.
http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html

We look forward to assisting you in any way we can.

Enjoy the start to the winter.

Remember

Remembrance day is this week. A time to reflect and appreciate all the sacrifices that those who serve our country made and continue to make; to allow us to live free in this great nation. Take some time on Friday and remember. Here is a link to some of the ceremonies in Calgary on Friday November 11, 2011.

http://mryyc.com/2011/11/calgary-2011-remembrance-day-events/

On the cover of the...Spotlight

It has been an eventful week at Henderson Campeau. 
The partners of the firm have the honor of gracing the cover of the most recent issue of Spotlight magazine.  The magazine highlights Alberta CAs.
It was fun to take part in the interview and photo shoot.  It was also great to highlight our approach to life and business.

Take a look.  For a pdf version visit our website under the NEWS tab.  www.hendersoncampeau.com

Project Calgary

The fall in Calgary has been very lovely.  Yet another great thing about living in Calgary.

The following is a link to the Calgary Herald's ongoing story about Calgary.  "Project Calgary".  We encourage you to check it out and get involved.  It is all about taking a good look at the city and discussing way to keep making the city a better place to live. 

Check it out.
http://www.calgaryherald.com/news/neighbours/index.html

Enjoy your city.

All the leaves are brown. (Thinking of a Salary or a Dividend?)

The leaves are brown but the sky is definitely not gray.  What a gorgeous September.  The month of July, August and September have been eventful for the firm.  Both partners enjoyed some relaxing vacation  time in Calgary and abroad.

With the last three months of the year upon us the office is busy.  We have all hands on deck and look forward to tackling another busy season. Of course, we’ll also be taking some time to enjoy Calgary’s beautiful fall weather.  

This week, we would like to discuss a significant accounting and tax issue we often encounter with both start up and established businesses: how to compensate the business owner.

Once a business is incorporated, it is established as a legal entity know as a corporation.  The corporation is now a separate entity from the business owner.  As a result, business owners cannot simply withdraw cash from the company without tax consequences.  Corporations will need a formalized structures in place to pay the business owner. This structure is important because it will have cash management and tax implications. The two most common methods of remuneration are salary or dividend.

The following considerations should be examined when putting formalized payment structures into place.  We strongly advise discussing  the following with a qualified accountant to determine what option best suits your business model.

v  Salaries are considered to be active income.  Dividends are investment income.  RRSP contribution room is calculated on active income.  With active income (salary) the taxpayer’s RRSP room increases.  If your only source of income is dividends, the taxpayer cannot build RRSP room nor benefit from certain tax deductions, such as child care expenses.

v  Salaries are considered operating expenses for the corporation.  They are fully deductible in the corporation.  The salaries are then taxed normally through the personal tax payer.  Dividends are not an expense for the corporation.  The dividends are taxed as investment income through the personal tax payer.   There is a tax credit available on the dividends.

v   Salaries require additional administration.  Each month deductions have to be calculated and remitted to the CRA.

v  With a salary, taxes are deducted from each pay cheque. As dividends are usually lump sum withdraws, the taxpayer must pay the applicable taxes when they file their personal tax return.

v  CPP is not payable on dividends.

v  Depending on the corporate structure, dividends can be strategically claimed to defer personal taxes and declare income to different shareholders.

v  Salaries must be paid to employees of the company and dividends paid to shareholders.  If you are not an employee or not a shareholder, the choice has already been made.

As you can see, there are tax consequences and other factors to consider when determining remuneration from your company.  The decision all depends on specific circumstances for each business and owner.

Summer Summer time

Hope everyone is having a fabulous summer.

We enjoyed a busy Stampede, Will did some vacationing in BC and Paul got married in Bermuda. We have been having fun in Calgary as well. 

Below is a link to an article about small business in Canada and the entrepreneurial spirit. 
Small business owners feeling very happy

Have a great week and weekend