Kemp Harvey Goodison Inc. Burnaby BC CGA - Kemp Harvey Group Certified General Accountants

I have posted some of the more frequently asked questions to assist you in your business operations and tax compliance:

A. Bring along all "T" slips (T4, T5, T4RSP, T4P etc.), information about any other income, information about your business, and the completed "Checklist" from this site, along with any information on that checklist that pertains to you.

Q2. Why am I required to sign the engagement / rep form when I get my return prepared?

A. CRA (the bureaucracy formerly known as Revenue Canada and the Canada Customs and Revenue Agency but now known as Canada Revenue Agency) has issued a statement which will put the onus for the truthfulness of your return on us. While we are sure that 100% of our clients are honest, CRA’s policy of "shooting" the accountant for the client's oversights will have an adverse affect on all of us. If you would like to read their statement, IC 01-1, click here. Alternatively, if you would like to protest this injustice, please go to the CCRA web site. And in case you're wondering, yes this increased the insurance for accountant's - a cost which is passed on, once again, to the consumer - is anyone surprised?

A. First, you must have a product or service to sell. You must have the reasonable expectation of a profit.
You must have a viable market, or they may be no reasonable expectation. You may be required to register on 3 levels: Federally, by obtaining a business number; Provincially, through social services or the Ministry of Corporate Affairs; locally through business licenses and local regulation. Be sure and ask further about this when we meet in person.

A. This answer varies from person to person. You will find your own RRSP limit on the bottom of last year's notice of assessment. Alternatively, you can call CRA (this is what we call Revenue Canada now - they changed their name) at 1-800-267-6999 and follow the choices through to get your personal limit, or you can go online at the CRA site by clicking here - you will need last year's T1 to do this. Finally, you are always free to call our office at 604-291-1470.

A. Fees are charged depending on the amount of work required. Some people bring everything in bundles already totaled and do not require very much input from our office. On the other hand, many times people will bring data which must be corrected and regrouped for CRA (RevCan). This takes time. We want to ensure that we are providing you with a quality product and that you are getting value for your money. If you are concerned about your fees, please ask what you can do for next year to reduce your costs.

A. If you would like to see information on Netfiling, click here. You qualify if you have received information from CRA telling you that you qualify.

A.    Employment is a matter of fact and circumstance. Merely claiming you are self-employed does not make     it so. While the Income Tax Act makes no specific distinction between employee and independent contractor,     there are certain criteria which CCRA uses as a determination. Not all of these may fit in any circumstance,     and none are decisive on their own. CCRA looks at the fact pattern overall to make its determination. In advance, you should decide which best fits your circumstance:
    Employee:
                A "master-servant" relationship exists
                The employer has the power to direct what is done
                The employer has the power to direct how it is to be done
                There is only one entity - the employer - that the employee can work for.
    Independent Contractor:
            The individual (you) has control over what you do and how you do it
            The individual (you again) supplies the tools necessary
            The individual bears some financial risk (do you purchase goods for the job which will reduce your profit? If you fall ill, do you find someone or arrange to get the job done some other way?)
            The individual generally works for many people? (When customers pay, do they make cheques to you or someone else? The essence of this is integration - to what extent are you integrated with the person hiring you?)
    CRA has a checklist - which should not be taken as conclusive - which you can access right here.
    And most importantly, talk to your accounting professional who will be happy to translate this into
    English.

A. There are a variety of expenses, but essentially any expenses related to the earning of rental income. A general list includes such items as mortgage interest, property taxes, insurance expenses, repairs and maintenance to the specific area, hydro, and cable and advertising costs. A review of form T776 will provide a more comprehensive list (see the forms page). If part of your rental premise is also your personal residence, some amounts will be prorated, and you may also be eligible to deduct a portion of repairs and maintenance to common areas. A word of caution - rebuilding parts of the house to significantly extend their useful life, such as rebuilding the roof, is NOT a repair, but is a capital expenditure and is NOT a deduction! For further information contact your accountant.

Q10. I'm an actor or entertainer and I have self-employment income - what expenses can I deduct?

There are specific rules for the acting industry. Deductions are limited in some respects, but you should see me before you decide whether something is definitely not deductible if it is not on this list:

For a more detailed listing, see the IT Bulletin which can be obtained here.
If you are from outside the country, please read here about withholding taxes on the CCRA site.

Q11 Why do the rich get bigger tax cuts and I always seem to be paying too much tax?

A. I can't say it any better than Mr. Adams said it - and since he said it first, the following is quoted with his permission:
The following article appeared in the February 23, 2002 issue of the Lakeshore News - Salmon Arm, B.C.
It was written by Ron Adams, a local financial advisor who writes a regular column in the paper. Ron is sometimes a little irreverent and ruffles many conservative feathers in town but he is often entertaining and usually gets straight to the heart of the issue.
As written by Ron:
I was having lunch at PJ's with one of my favourite clients last week and the conversation turned to the Campbell government's recent round of tax cuts. "I'm opposed to those tax cuts," the retired college instructor declared, "because they benefit the rich. The rich get much more money back than ordinary taxpayers like you and I and that's not fair."

"But the rich pay more in the first place," I argued, "so it stands to reason that they'd get more money back." I could tell that my friend was unimpressed by this meager argument. Even college instructors are a prisoner of the myth that the "rich" somehow get a free ride in Canada. Nothing could be further from the truth. Let's put tax cuts in terms everyone can understand.

Suppose that everyday 10 men go to PJ's for dinner, the bill for all ten comes to $100. If it was paid the way we pay our taxes, the first four men would pay nothing; the fifth would pay $1; the sixth would pay $3; the seventh $7; the eighth $12; the ninth $18. The tenth man (the richest) would pay $59. The 10 men ate dinner in the restaurant every day and seemed quite happy with the arrangement until the owner threw them a curve. Since you are all such good customers, he said, I'm going to reduce the cost of your daily meal by $20. Now dinner for the 10 only costs $80. The first four are unaffected. They still eat for free. Can you figure out how to divvy up the $20 savings among the remaining six so that everyone gets his fair share?

The men realize that $20 divided by 6 is $3.33, but if they subtract that from everybody's share, then the fifth man and the sixth man would end up being paid to eat their meal. The restaurant owner suggested that it would be fair to reduce each man's bill by roughly the same amount and he proceeded to work out the amounts each should pay. And so the fifth man paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $12, leaving the tenth man with a bill of $52 instead of $59.

Outside the restaurant, the men began to compare their savings. "I only got a dollar out the $20," declared the sixth man pointing to the tenth, "and he got $7!"

"Yeah, that's right," exclaimed the fifth man. I only saved a dollar, too. It's unfair that he got seven times more than me! "That's true," shouted the seventh man. "Why should he get $7 back when I got only $2? The wealthy get all the breaks." "Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor."

The nine men surrounded the tenth and beat him up. The next night he didn't show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something important. They were $52 short!

And that, boys and girls and college instructors, is how Canada's tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore. There are lots of good restaurants in Switzerland and the Caribbean.

A. 1. Refer someone - word of mouth is our biggest form of advertising.
...........When they contact us and mention your name, your account is credited with $5
...........When their job is completed, you get an additional $5

2. If you only have a T4 and one other slip, ask about a summary return – a summary return is $25 cheaper (but caution – if you ever need the schedules, adjustments, or some other work, we charge our normal rate for that)

3. Seniors and income threshold - if you are receiving the OAP and a supplement or your income is below $10,000 per annum, we will credit your invoice with $10.

A. Engagement Authorization - Terms and Conditions
Terms and Conditions the purpose of these paragraphs is to outline the nature of involvement of Kemp Harvey Goodison Hamilton Inc. with your tax return. As agreed, we will prepare your personal tax return, including related schedules and any bookkeeping necessary, from information you shall provide. This shall also include review of assessments, advice on income tax matters generally and any discussion with the Income Tax Department, as well as any additional ancillary services or consultations as requested by me. We will not audit, review or otherwise attempt to verify the accuracy or completeness of such information nor attempt to determine whether the return and any ancillary schedules contain departures from generally accepted accounting principles or the income tax act in general beyond any specific discussions. The return may not be appropriate for general use. You are responsible for the accuracy and completeness of the information. You understand your fees will be based on the time and degree of responsibility and skill required to complete my return. It is your responsibility to provide us with accurate and complete information necessary to complete the tax returns related to herein. It is understood this engagement cannot be relied upon to prevent or detect error, fraud or other irregularities. It is emphasized and understood that responsibility for the prevention and detection of error and fraud and other irregularities remains with you, the taxpayer. My services will not result in the expression of an audit opinion or any other form of assurance nor the fulfilling of any statutory or other audit requirement. You may wish to obtain legal advice concerning statutory (or contractual) audit requirements. It is understood and agreed that - You will provide me with accurate and complete information necessary to compile such statements; The responsibility for the accuracy and completeness of the representations in the T1 Personal return remain with you; The T1 Personal tax return, including any business schedules, may either lack disclosure required by, or otherwise not be in accordance with, generally accepted accounting principles, and may not be appropriate for general purpose use; and Uninformed readers could be misled unless they are aware of the possible limitations of the statements and my very limited involvement. The arrangements outlined in these terms and conditions will continue in effect from year to year unless changed by our firm. Changes will be posted on our website.
Personal Information
It is acknowledged that we will have access to all personal information in your custody that we require to complete our engagement. My services are provided on the basis that - You represent to us that you have obtained any required consents for collection, use and disclosure to me of personal information required under applicable privacy legislation; and we will hold all personal information in compliance with our firm's Privacy Statement.
File Inspections
In accordance with professional regulations (and by firm policy), our client files must periodically be reviewed by practice inspectors and by other firm personnel to ensure that I am adhering to professional and firm standards. File reviewers are required to maintain confidentiality of client information. The working papers, files and reports that we assemble during the course of our return preparation are the property of the firm.
Use and Distribution of my Communication
The compilation of the T1 personal tax return is solely for the use of those whose names appear on the T1 control form and CRA. We make no representations of any kind to any third party in respect of these returns and we accept no responsibility for their use by any third party.
Preparation of 1040 U.S. Tax Return
In the event you are a U.S. Citizen, or where appropriate, you have asked us to prepare a U.S. 1040 return, all terms and conditions applicable to a Canadian T1 Return are applicable to the U.S. 1040 return. In that instance, where the term "T1" appears in this engagement, it may be used interchangeably with "1040".
Other Terms of Engagement
We will carry out such bookkeeping as we find necessary prior to the preparation of the T1 (or 1040 if applicable) return; prepare the necessary federal and provincial schedules to support such preparation; and prepare any special reports as required. You will provide the information necessary to complete the returns/reports and will file them with the appropriate authorities on a timely basis. It should be noted that my accounting work in the area of GST/HST and other commodity taxes is limited to that appropriate to compile the T1 Personal return. Accordingly, we may not detect situations where you are incorrectly collecting GST/HST or incorrectly claiming input tax credits. As you are aware, failure to properly account for the GST/HST could result in you or your company becoming liable for tax, interest or penalties. These situations may also arise for provincial sales tax, custom duties, and excise taxes. We will also be pleased to provide other additional services upon request. Such services include income tax planning, GST/HST and PST advice, and management consulting.
Indemnity
You hereby agree to indemnify, defend (by counsel retained and instructed by us) and hold harmless Kemp Harvey Goodison Hamilton Inc. and its partners, agents or employees, from and against any and all losses, costs (including solicitors' fees), damages, expenses, claims, demands or liabilities arising out of or in consequence of: The breach by you of any of the covenants made by you herein, including, without restricting the generality of the foregoing, the misuse of, or the unauthorized dissemination of your personal tax return or any other work product made available to you by my firm; and the services performed by Kemp Harvey Goodison Hamilton Inc.. pursuant to this engagement, unless, and to the extent that, such losses, costs, damages and expenses are found by a court of competent jurisdiction to have been due to the negligence of Kemp Harvey Goodison Hamilton Inc.. In the event that the matter is settled out of court, you will mutually agree on the extent of the indemnification to be provided by usu. We will use all reasonable efforts to complete the engagement as described in this letter within the agreed-upon time frames. However, we shall not be liable for failures or delays in performance that arise from causes beyond our control, including the untimely performance by you of your obligations. If, with respect to this compilation engagement or related services, we are required by government regulations, subpoena, or other legal process to produce my working papers, or to respond to information requests, we will bill the time incurred based on my regular rates plus direct out-of-pocket expenses and applicable
Fees
Professional fees will be based on the regular billing rates plus direct out-of-pocket expenses and applicable GST and are due when rendered. Fees for additional services will be established separately. All policies and procedures are listed on our website. You agree to be personally responsible for the information contained in the personal tax return, and the amount billed. Terms are net cash, and all amounts are due when rendered. You understand and agree that a charge of 2% per month (26.97% p.a.) calculated semi-monthly applies to overdue amounts, to which I/we agree to be fully responsible for. You hereby confirm to Kemp Harvey Goodison Hamilton Inc. that we have prepared the required income tax return(s), including the related schedules, from the information provided. You confirm that everything you have told us is the truth to the best of your belief and knowledge and that you have omitted no information. You have reviewed the return, and understand and accept them, and believe them to be correct and fairly presented. It is understood that the information in the income tax returns may be inappropriate for other purposes. You also confirm receipt of the documents provided to prepare this return
If you have any questions about the contents of this letter, please raise them with me. If the services outlined are in accordance with your requirements and if the above terms are acceptable to you, please sign this communication in the space provided on the front of this document and return it to me

A. CRA has this detailed on their website

You can pay online, at your bank, mail a cheque, buy a money order. If you want to pay online using your online banking, go to 'Add Vendors' and do a search on "CRA" (or some have it under 'Canada Revenue'). Add CRA using your SIN as the account number and picking the 'Current year filing' as the option. Then pay your amount owing as you would any other bill. Not online? Don't use online banking?
You can also make a cheque payable to the 'Receiver General for Canada' and clearly mark your SIN and the words "CURRENT YEAR FILING" and mail it to "Canada Revenue Agency, Surrey Taxation, 9755 King George Hwy, Surrey, BC V3T5E5". If you are not comfortable just mailing in a cheque, either include a cover, or ask me to email you a copy of the T7DR - the remittance form.
If you want to pay at the bank, you will need to get your tax package from me with the form for bank payment in it, or some banks have blank form T7DR for you to be able to pay there - check with your bank.
For more details go to: http://www.cra-arc.gc.ca/electronicpayments/

From CRA:
Reasonable per-kilometre allowance
If the allowance paid to your employees is based on a per-kilometre rate that we consider reasonable, it is not taxable.
When your employees complete their returns, they do not include this allowance in income. A non-taxable allowance is not subject to CPP and EI withholdings.
We consider an allowance to be reasonable only if all the following conditions apply:
* The allowance is based only on the number of business kilometres driven in a year;
* the rate per kilometre is reasonable; and
* you did not reimburse the employee for expenses related to the same use, except in situations where you reimburse an employee for toll or ferry charges or supplementary business insurance

If you have determined the allowance without including these reimbursements. The type of vehicle and the driving conditions usually determine whether we consider an allowance to be reasonable. The per kilometre allowance that we usually consider reasonable are the amounts prescribed in section 7306 of the Income Tax Regulations. Although these rates represent the maximum amount you can deduct as business expenses, you can use them as a guideline to determine if the allowance paid to your employee is reasonable.

Q16: How can I be sure a GST # that has been given to me is valid, so that I am entitled to claim the GST?

In April, 2006 CRA launched a website that allows a claimant to verify that a GST number provided by a supplier is valid. Recipients enter the supplier's name, GST number,