Archive for the ‘Uncategorized’ Category

A Unique, Yet Memorable CO-OP Work Term at SYC

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As we find ourselves in the midst of a truly landmark tax season, we can’t help but think appreciatively of our co-op students who, due to the threat of COVID-19, were not able to complete their January to April work term at SYC.

Even though our time with them was shorter than normal, we valued their hard work and eagerness to apply what they’ve learned. It was truly a privileged to play such a valuable part in their academic achievements and we wish them the best in their careers!

Before they left, we asked our co-ops to express how they felt about their experience at SYC. Here’s what they had to say:

COVID-19 Support for Canadian Businesses

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Our understanding of the most important provision of the current relief programs is summarized below.  This information is currently as of April 1, 2020 only.


Canadian Emergency Wage Subsidy (CEWS)

On April 1st, 2020 the government provided details on the 12-week wage subsidy. The subsidy is 75% of annual employee salary, up to an annual salary of $58,700 (i.e., up to $847 per week, per eligible employee). Here are some new details:

  • The CEWS subsidy will be available for both large and small employers that have lost at least 30% of revenue due to COVID-19, regardless of the number of employees.
  • The 30% reduction will be determined by comparing the employer’s gross revenue in March, April and May, 2020 to the same month in 2019. Each month that employers experience a 30% reduction in revenue must be applied for separately.

Eligibility would generally be determined by the change in an eligible employer’s monthly revenues, year-over-year, for the calendar month in which the period began.  In determining monthly revenues, the wage subsidy would NOT be considered in revenues.

The Eligible Periods are as follows:

Each month will be a separate application.  It may be possible that a company is not eligible for Period 1, but is eligible for Periods 2 and/or 3.

  • These changes will be retroactive starting from March 15, 2020 to June 6, 2020, and there is no overall limit on the amount of subsidy than an eligible employer may claim.
  • For qualifying employers to receive funds directly from CRA, they must provide CRA the pre-crisis income and the earnings actually paid per employee.
  • Application can be made through the My Business Account CRA portal, and the new links are expected to be available next week. All employers should be certain they have a My Business Account established with the CRA – your accountant CANNOT apply for this relief for you!
  • In the meantime, businesses should ensure they are set up for direct deposit with CRA to expedite the payment process.
  • The subsidy is fully taxable.

10% Temporary Wage Subsidy

Businesses who do not qualify for the CEWS, may still qualify for the previously announced temporary three-month taxable subsidy. This subsidy is available on up to 10% of eligible employee salaries from March 18 to June 20, 2020, with a cap of $1,375 per employee and a cap of $25,000 per employer. The subsidy is fully taxable.

For employers that are eligible for both the CEWS and the 10% Temporary Wage Subsidy for a period, any benefit from the 10% wage subsidy for remuneration paid in a specific period would generally reduce the amount available to be claimed under the CEWS in that same period. In other words, eligible employers can choose to reduce remittances up to 10% of the employee’s salary and then receive the CEWS. However, they cannot be added on top of each other. The benefit is limited to 75%, not 85%.


Credit Available to Small and Medium Size Business (SMEs)

Canada Emergency Business Account

This new account will provide interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover their operating costs during a period where their revenues have been temporarily reduced. To qualify, these organizations will need to demonstrate they paid between $50,000 to $1 million in total payroll in 2019.

Loan Guarantee

Export Development Canada (EDC) is working with financial institutions to issue new operating credit and cash flow term loans of up to $6.25 million to SMEs.

Co-Lending Program

Business Development Bank of Canada (BDC) is working with financial institutions to co-lend term loans to SMEs for their operational cash flow requirements.

Eligible businesses may obtain incremental credit amounts of up to $6.25 million through the program. These programs will roll out in the three weeks after March 27.


Tax Filing and Payment Flexibility

Income Tax Extension

The government is providing the following extensions for tax deadlines.

Employer Health Tax Support for Ontarians

The Ontario government increased the Employer Health Tax exemption for 2020 from $490,000 to $1 million and have introduced a five‑month relief period for Ontario businesses who are unable to file or remit their provincial taxes on time due to the special circumstances caused by the coronavirus (COVID‑19) in Ontario. This is effective March 20, 2020.

Deferral of Sales Tax Remittance and Customs Duty Payments

The government will allow businesses, including self-employed individuals, to defer until June 30, 2020 payments of the Goods and Services Tax / Harmonized Sales Tax (GST/HST), as well as customs duties owing on their imports.

  • HST Monthly Filers – the deferral will apply to GST/HST remittances for the February, March and April 2020 reporting periods.
  • HST Quarterly Filers – the January 1, 2020 through March 31, 2020 reporting period.
  • HST Annual Filers – the amounts collected and owing for their previous fiscal year and instalments of GST/HST in respect of the filer’s current fiscal year.
  • GST and Customs Duty Payments – deferral will include amounts owing for March, April and May. These amounts were normally due to be submitted to the Canada Revenue Agency and the Canada Border Services Agency as early as the end of this month.

All HST returns must continue to be filed on time.

If you have any questions regarding any of the above information, please feel free to contact us.

Corona Virus – Because We Care, We’ll Prepare

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On Wedesday, March 11, the World Health Organization declared Coronavirus a Pandemic. Scarrow Yurman & Co. wants to ensure our clients that, while not panicking, we are taking this virus very seriously and are already practicing sanitation procedures and establishing protocols to ensure we can function given any scenario.

Ramping Up Sanitation Protocols

  • As an office, we’ve reviewed the importance of handwashing as well as coughing and sneezing etiquette.
  • We’ve established interoffice hygiene protocols such as disinfecting frequently touched objects and surfaces (i.e. boardroom tables, kitchen counters, taps, doorknobs, etc.).
  • We’ve stocked up on disinfectant wipes and tissues, alcohol-based hand sanitizer, paper towels and hand soap.

Limiting Contact Exposure

  • Because we care about everyone’s health, we are limiting personal contact with a “no handshake” policy in favour of a friendly smile and wave. You know we love you!
  • We’re not sharing phones, pens, each computer mouse or keyboard unless they are sanitized first, especially for shared workstations.
  • We’re encouraging virtual meetings whenever possible.
  • We have determined a quarantine policy for employees returning from travelling to affected areas.
  • Our staff will stay home when sick AND until ALL symptoms are gone.
  • We’ve relaxed sick day policies to support those who may need to be quarantined when ill.

Working During a Crisis

  • We all have the capacity to work remotely from home if there should be restrictions placed on workplaces or if we happen to be quarantined.
  • In the event that Canada Post, Couriers or our clients are not in a position to bring client information to our office, our clients can use ShareFile (our secure file sharing cloud software) to ensure we receive their information.
  • Our mission is to be in the best position to complete our work and file our client’s personal or corporate tax returns on time.

Indeed, EVERYONE has a role to play to protect the health and safety of Canadians.  Being informed and preparing ahead is key for businesses to ride the wave of the corona virus as successfully as possible. Be safe everyone!

Tax Season – Overcome Stress by Being Perpared!

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Yes, it’s tax season – AGAIN. Navigating the sea of life’s daily stresses can be challenging enough. What can help us cope with the added challenge of tax season? Being prepared! Here are some tips to help you get organized so you can keep a step ahead of stress.

Mark deadlines in your calendar

For individuals, the deadline is Thursday, April 30, 2020. Sole proprietors have until June 15, 2020 but, regardless of the deadline, taxes owed should be paid to CRA by April 30, 2020.  

Communicate with your accountant

Even if you think you know what documents your accountant needs to file your return, it’s worth a conversation to ensure you have not forgot something important.

For example:

  • It is vital that you disclose all sources of income. One tricky disclosure form is a T1135. If you had any foreign assets costing more than Cdn$100,000 dollars, you are required to disclose this.  Ask your investment advisor or financial institution for a T1135 report and avoid unnecessary fines.
  • If you were only partially reimbursed for dental and other claims, be sure to provide a summary from your insurance provider so your accountant can add the unclaimed portion as a medical expense. (Travel insurance can be claimed as a medical expense.)
  • Forward any donation receipts that you forgot to claim in the past 5 years. You may still be able to claim them.

Follow up on missing tax slips or receipts

  • T4 and T5 slips should be received by the first few days of March. You should expect to receive T3 slips by the end of March. If you haven’t received these slips by these times, contact your employer or financial institution asap.
  • Donation Receipts that you have not yet received for 2019 should be requested by contacting the registered charity.
  • Medical Receipts can easily be missed. There’s no need to collect all those pesky little prescription receipts. Just ask your pharmacy to provide you with a summary of all the prescriptions you paid for 2019 – it’s usually free of charge. This assures you don’t miss any!

Ensure students in a post-secondary institution file their taxes

Post-Secondary institutions issue T2202A slips that can be used against current or future taxes. Best of all, these credits are transferrable to parents at a maximum of $5,000! Students may also be eligible for additional credits such as the ON-BEN and GST/HST Credits which could mean more money in their pocket throughout the year.

Get your refund faster with direct deposit

Direct deposit ensures your refund is directly deposited into your personal bank account. All CRA needs is your Social Insurance Number, the name of your financial institution, branch/transit number and your account number. It’s super easy to set up, but if you’re unsure, ask your accountant for assistance.

Prepare ahead if you owe tax

If you expect to be paying taxes on April 30, ensure you have set aside some money to pay off your tax liability. It may be good to speak with your accountant, perhaps they can help you develop a tax plan that works for you.

Best wishes from Scarrow Yurman & Co. as you prepare to make this personal tax season the best one ever!

Curb the Clutter Crisis – Start Housekeeping Now!

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Regular housekeeping is good for us mentally, physically and emotionally – especially when managing our personal tax paperwork. How so? Well, suppose you got a notice today from CRA asking for your 2017 tax return and all supporting documentation. Would that notice send you into panic mode wondering where you put everything? It has for many taxpayers. If your paperwork is scattered from here to oblivion, now is the time to sort through the clutter. Where should you start?

Sorting Through the Madness

This can actually be fun and very liberating. Book a date with yourself and start pulling out all your files, shoe boxes, envelopes or folders and sort your tax documents by calendar year. In Canada, it is important to keep personal tax information and all supporting documents for at least 6 years, in case of the dreaded CRA review. Any older tax information can, and should, be shredded. YUP – toss it! Just think of how Zen you’ll feel without all the extra clutter. In fact, why not pass on the “Zen” by getting all last year’s documents organized and ready for your accountant.

Keep Organized Going Forward

Once you’re in a happy place with your files – follow good housekeeping habits going forward. If you think it’s easier to throw your invoices or receipts in your car, wallet, or on your desk, think again! Receipts can easily get lost, damaged or destroyed this way. Instead, best practice is to designate ONE location where you keep all personal tax documents, then deal with each document ONCE. Knowing where they are and scheduling time regularly to address each one will ensure nothing gets lost and you will stay up to date. Also, take advantage of businesses that offer e-receipts and ensure you have a file on your computer, or on the cloud, to store these as well. In fact, it’s a good idea to scan all your other receipts and keep them altogether electronically.

Hubdoc – The Housekeeping Specialist

If you’re self-employed or a small business owner with loads of receipts and supporting tax documents, you’ll want to check out Hubdoc to manage and organize your records and receipts in softcopy – liberating you from drowning in endless paperwork. 

Benefits Await You

  • Face a CRA review with confidence
  • Avoid late penalties (with CRA or other vendors)
  • Increase your tax return refund
  • Keep your accountant happy
  • Peace of mind going forward

Now’s the time to kick clutter to the curb! Get organized today and you’ll reap good housekeeping benefits now and for years to come.

Introducing: Plooto!

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No, it’s not a planet. But if you’re a small business owner, Plooto may just change your world.

Plooto is a cloud-based technology that allows you to streamline repetitive, monthly bookkeeping tasks so you have more time to grow your business. When you connect Plooto to your cloud accounting software great things happen. Here are a few we wanted to share.

Pay vendors with your money, not your time

After some simple set up, you can auto-load upcoming accounts payables (bills) which saves you valuable time each month.

  • Customize payment approval – with a click of a button, anytime, anywhere.
  • Transfer money via email – from your bank to their bank, directly and securely.
  • Pay vendors easily – using only their email address, no login required or storing of confidential or sensitive information.
  • Payment continuity – allows you to pay anyone, anywhere with no surprises or confusing interfaces.
  • Payment records are automatically updated – without you having to match payments with invoices.

Make paying you foolproof

Plooto ensures that paying you isn’t frustrating for your clients. This helps your cash flow to – well, flow.

  • Getting paid through email – lets clients log into their bank account to schedule a payment.
  • Accepting credit cards – without having to share sensitive credit card information.
  • Accepting pre-authorized debit – ensures clients pay you on time, every time.
  • Payment status – allows you to see if your client opened your email and can gently remind them if they haven’t paid.  

So, while Pluto may have been decategorized as a dwarf plant, Plooto cloud-based software is hardly small or insignificant in comparison to other accounting software. Call us today to learn how you can start letting Plooto work for your business.

Cloud-Based Payroll Apps – TO THE RESCUE!

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We all enjoy getting paid. However, the process to ensure everyone gets paid accurately and on time can be a challenge. If payroll is part of your responsibilities, then you know what we’re talking about. Chained to your desk for hours, struggling to keep up with compliance rules, stressing to reach your payroll deadline and then – YIKES – you’re right out of cheques! Does this sound familiar? It might, if you’re using desktop payroll software. If you’re stuck in this vicious cycle, then cloud-based payroll apps may be the rescue remedy you need!

Set up takes minutes

Once you’ve transitioned to cloud accounting solutions, such as QuickBooks Online, it’s really becomes quite simple. A few minutes of your time setting up a payroll app today can save you BIG TIME down the road. For example, if your payroll is pretty consistent every month – it can basically run itself. Hourly employees, salaried employees, or contractors can all be set up to be paid at the same time.

Why should  you do all the work?

Most payroll apps offer similar features, some even do more than just payroll. The payroll apps outlined below allow employees to set themselves up and be responsible for their personal information. For example, they can review and access their paystubs on-line whenever they want. The apps also automatically perform payroll calculations and update the latest tax tables which takes the pressure off you! Here are some other liberating features:

  • Direct deposit – No more cheques required!
  • Automatic payroll calculations – No more tedious number cruching!
  • Online paystubs – Help save the environment!
  • CRA/WCB Remittances – Ensures you’re compliant!
  • Records of Employment – Off-boarding made easy!
  • Year end T4/T4As – The app prepares these, not you!

So, if you’re interested in breaking free and saying good-bye to the old-school approach to payroll, call us today. We’ll help you get current, get organized, and save you the precious time you need to focus on growing your business.

Goodbye “Old School” Data Entry – Hello Hubdoc!

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Are you up to your eyeballs keeping track of receipts, invoices and bank statements? Business owners know that the CRA requires these supporting documents to be in order in the event of an audit. However, the time it takes to gather and input all this information throughout the year can seem daunting! We feel your pain and want to share a more efficient way to keep track of these necessary documents.

Introducing: Hubdoc! Hubdoc is a cloud-based software that helps you collect, manage and organize receipts, invoices and statements seamlessly. Here’s how it works:

  • Hubdoc automatically fetches the latest monthly bank and credit card statements from all major banks. It can also fetch monthly bills from a growing list of vendors. (Yes, it’s that helpful!)
  • Hubdoc keeps a digital backup of your receipts and invoices in one central location. These can be easily submitted to Hubdoc through automatic fetch, email forwarding, scanning or just taking a picture through their mobile app. (Yes, it’s that easy!)
  • Using machine learning technology, Hubdoc extracts key information such as vendor name, dates and dollar amounts from your uploaded documents. (Yes, it’s that smart!)
  • Hubdoc integrates with QuickBooks Online which can help you automate your bookkeeping. With a click of a button, you can export the extracted data from Hubdoc and automatically create a transaction in QuickBooks Online. (Yes, it’s that automated!)

Using Hubdoc to automate your data entry and bookkeeping chores will leave you valuable time to focus on expanding your business. To refresh your memory about Cloud Accounting, please refer to our June 2019 blog. To find out if Hubdoc is right for you, contact us anytime. Say goodbye to old school headaches and say hello to Hubdoc!

What is Cloud Accounting

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Cloud accounting software is similar to desktop-based solutions, only they are hosted on the “cloud”. This means users will have access to their data from anywhere that has an Internet connection, and from any device – including laptops, smartphones, and tablets. 

Why should you adopt it?

One great reason is that cloud software applications are automatically kept current, so users no longer spend their time dealing with version updates. Cloud accounting also provides business owners the ability to get their information updates in real-time, anytime. Additionally, new features are being added regularly to increase productivity, which frees up precious time to focus on your business.

Similar to Netflix, most cloud accounting solutions carry a monthly subscription. No long-term commitments mean you won’t feel locked in with a specific vendor or cloud accounting technology. A monthly subscription allows you to manage your accounting records (including importing bank and credit card feeds), email invoices, and add useful third-party productivity improvement applications (applications are an additional cost).

What are the benefits?

Here are some other benefits to think about when contemplating cloud accounting solutions:

  • Access to extra software features that are not available on the desktop versions
  • Streamlined data-importing processes and built-in controls ensure superior data accuracy
  • Multi-user access
  • Unauthorized access prevention
  • Safe storage of financial data
  • Sync data automatically
  • Most accounting software companies are improving the features and functionality of their cloud-based software, NOT their desktop software

Still unsure if cloud-based accounting solutions are for you?

Here’s where we can help. We’ll provide a thorough analysis of your situation to ensure you are moving to the right software environment. Once you’re ready to move forward, we can help transition from the desktop applications you may presently be using into the appropriate cloud-based solution. Call us today and follow the “cloud”!

Should You Steer Clear of Company Owned Vehicles?

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It depends on how much business driving you do. In cases where business use is minimal, a company owned vehicle is simply a tax nightmare.

The Bumpy Ride from Phantom Income

On company owned vehicles, CRA imputes phantom income to the employee as follows:

  • Standby Charges – Calculated with reference to the purchase price of the vehicle (if owned) or the manufacturer’s suggested retail price (MSRP) for a leased vehicle.
  • Operating Cost Benefit – Calculated in relation to the company paid outlays like gas, repairs and insurance, etc.

In either case, you must include this phantom income depending on the extent to which the vehicle is used for business purposes.  If you don’t drive more than 1,000 KM per month on business AND have more than 50% personal use, the standby charge is a big number – the more expensive the car, the bigger the number gets.  The kicker is, as your car depreciates each year, the standby charge income stays high based on the original price you paid (or MSRP, if leased).

A Typical Road Travelled

Consider a typical scenario. A vehicle costing the company $40,000 is used 365 days a year by an employee (maybe the owner) who drives it to and from work (which is NOT business use) for a total of 30,000 personal KM a year.  The automobile benefit for this employee is $18,000 each year.  This amount is taxed at the same rate as salary and must be included on the employee’s T4.  If the automobile is used for five years, the benefit will remain at $18,000 even though the vehicle is depreciating over time. Over five years there would be $90,000 reported on this employee’s T4, even though the original cost of the vehicle was only $40,000!

Driving the Point Home

If you want to reduce the standby charges and operating cost benefit because you believe you are using your vehicle a lot for business purposes, buckle up for a tough drive! CRA requires you to maintain an accurate mileage log as proof of the percentage you use your vehicle for business. Also, if your phantom income is not reported properly, a CRA audit is sure to ensue, along with penalties and interest – we see this all the time!

The bottom line to our opening scenario, is that it makes better sense for the employee to buy the vehicle and ask for a tax-free mileage reimbursement for business KM’s driven at CRA’s allowed per KM rate.  No T4 implications, no phantom income, no complex reporting, no hassle. They simply keep track of the few business KM’s to support their expense claim. Done and done!

If you’re contemplating a business vehicle, we suggest giving us a call to discuss the tax implications. In the meantime, use this Automobile Benefits Online Calculator and start steering yourself in the right direction today.  https://apps.cra-arc.gc.ca/ebci/rhac/prot/ntr.action

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