What’s the use of saving money? (Accountant Woodbridge)

Why not borrow and invest to earning higher return since the banks are giving low mortgage rates on homes by Accountant Woodbridge. How years of ultra-low interest rates have punished savers, rewarded spenders, and now might be smothering any hopes of recovery
Steven Patterson and his family moved to Vancouver from Cambridge, Ont., in mid-2008, just as the financial crisis hit. After years of scrimping and saving to pay off their first mortgage, they had earned a tidy profit when they sold the Cambridge house and put the proceeds into GICs, where the money would be safe and easily accessible should they decide to buy another home in B.C. Three years later, Patterson, a 42-year-old IT manager, is still sitting on the sidelines, renting, while real estate prices march ever upward in a city where a three-bedroom bungalow covered in warped siding can fetch $1 million.

That might seem like a prudent move in an uncertain economy, but Patterson says his cautious approach has come at a steep price: all his money is steadily being eaten away by inflation, which the meagre interest income from his GICs can’t cover—particularly after the taxman takes a cut. Meanwhile, several of Patterson’s friends have taken advantage of those same low interest rates, loaded up on debt, and bought into Vancouver’s frothy housing market in recent years. And they have enjoyed a windfall—at least on paper—as the value of their homes continues to climb. As for Patterson, “I’m only a few thousand dollars ahead—minus inflation,” he says, clearly frustrated. “So actually, I’m way behind, and I don’t have a house.”
Welcome to the world of ultra-low interest rates, where profligacy is richly rewarded and saving is, well, for suckers. Those who’ve opted to be austere with their personal finances have found themselves on the losing end as governments and central bankers have worked to get people to borrow and spend in the wake of the global recession. While emergency interest rate cuts were to be expected after the financial crisis seized up lending markets, it’s been nearly four years since central banks started slashing rates to the lowest levels in history. For that matter, over the last 10-year period, following the 9/11 terrorist attacks, the Bank of Canada’s benchmark interest rate stayed above four per cent for just six quarters (in 2006 and 2007), while the average headline rate of inflation over that time was 2.1 per cent.
As a result, those saving money have seen almost nothing in the way of returns for a painfully long time. In fact, after accounting for inflation, anyone who dares to be prudent risks seeing the value of their money decline. If one were to put $10,000 into a five-year GIC at two per cent this year, and assume headline inflation goes no higher than the current rate of 2.7 per cent, the future value of that investment in 2016 will have shrunk to around $9,670. (The consumer price index the Bank of Canada uses when setting interest rates is lower than the headline rate because it excludes volatile items like fuel and food, which is fine, if you don’t drive, or eat.)

For more information:
http://ca.finance.yahoo.com/news/What-use-saving-money-yahoofinanceca-3131370975.html?&mod=pf-sp14b

Moving Expenses you can deduct by Tax Accountant

You must first determine if you qualify to deduct moving expenses, either as an individual who is employed or self-employed or as a full-time student by Accountant Brampton. The difference in distance must be at least 40 KM closer to your work place or school from old resident to the new. If you qualify, you can deduct reasonable amounts that you paid for moving yourself, your family, and your household effects. Not all members of your household have to travel together or at the same time.

Eligible moving expenses include:

•transportation and storage costs (such as packing, hauling, in-transit storage, and insurance) for household effects, including items such as boats and trailers;

•travel expenses, including vehicle expenses, meals, and accommodation, to move you and members of your household to your new residence (you can choose to claim vehicle and meal expenses using the simplified method – see the Note below);

•costs for up to 15 days for meals and temporary accommodation near either residence for you and the members of your household (you can choose to claim meal expenses using the simplified method – see the Note below); and

•the cost of cancelling a lease for your old residence, except any rental payment for the period during which you occupied the residence.

When your old residence is sold as a result of your move,
eligible moving expenses also include:

•legal or notarial fees for the purchase of the new residence, as well as any taxes paid (other than GST/HST or property taxes) for the transfer or registration of title to the new residence, if you or your spouse or common-law partner sold the old residence, and

•the cost of selling your old residence, including advertising, notarial or legal fees, real estate commission, and mortgage penalty when the mortgage is paid off before maturity.

If you moved, and your moving expenses were paid in a year after the year of your move, you can claim them on your return for the year you
paid them against employment or self-employment income earned at the new location by accountant brampton.

The same possibility is also extended to students reporting scholarships, fellowships, bursaries, certain prizes, and research grants.

This may apply, for example, if your old residence did not sell until after the year of your move. If this is the case, you may be asked to submit Form T1-M, Moving Expenses Deduction, with the receipts and explain
the delay in selling your home.

You can carry forward any unused amounts and deduct them only against eligible income earned at the new location in the following years.

However, you cannot carry back moving expenses to a previous
year. For example, if you paid moving expenses in 2011 for a move that occurred in 2010, you cannot claim the expenses paid in 2011 on your 2010 return, even if you earned employment or self-employment income at the new location in 2010.

Keep all your receipts and documents supporting your claim.

Note

Instead of claiming your actual expenses (the detailed method), you can choose the simplified method of claiming vehicle and meal expenses by Tax Accountant Brampton. Although you are do not have to submit detailed receipts for actual expenses if you choose to use the simplified method, we may still ask you to provide some documentation to establish the duration of temporary lodging.

Incidental costs related to the move  You can claim the  cost of:

•changing your address on legal documents;

•replacing driving licences and non-commercial vehicle permits (not including insurance); and

•utility hook-ups and disconnections.

Costs to maintain your old residence when vacant

For more information please call 905-794-8283.

 

Meal and vehicle rates used to calculate travel expenses by your accountant at brampton

Meal expenses

If you choose the detailed method to calculate meal  expenses, you must keep your receipts and claim the actual amount that you spent. If you choose the simplified method, you may claim a flat rate of  $17/meal, to a maximum of $51/day (Canadian or US funds) per person by Accounting Brampton. Although  you do not need to keep detailed receipts for actual expenses if you choose to  use this method, we may still ask you to provide some documentation to support  your claim.

Vehicle expenses

If you choose the detailed method to calculate vehicle
expenses, you must keep all receipts and records for the vehicle expenses you  incurred for moving expenses or for northern residents deductions during the  tax year; or during the 12-month period you choose for medical expenses.

Vehicle expenses include:

•Operating expenses
such as fuel, oil, tires, licence fees, insurance, maintenance, and repairs.

•Ownership expenses
such as depreciation, provincial tax, and finance charges.

You also have to keep track of the number of kilometres you  drove in that time period, as well as the number of kilometres you drove  specifically for the purpose of moving or medical expenses, or for the northern  residents deductions. Your claim for vehicle expenses is the percentage of your  total vehicle expenses that relate to the kilometres driven for moving or medical expenses, or for northern residents deductions.

For example, if you drove 10,000 km during the year, and
half of that was related to your move, you can claim half of the total vehicle  expenses on your tax return.

Although you do not  need to keep detailed receipts for actual expenses if you choose to use the  simplified method, we may still ask you to provide some documentation to  support your claim. You must keep track of the number of kilometres driven  during the tax year for your trips relating to northern residents deductions  and moving expenses, or the 12-month period you choose for medical expenses. To determine the amount you can claim for vehicle expenses, multiply the number of  kilometres by the cents/km rate from the chart below for the province or  territory in which the travel begins.

For more information: Please call our office at 905-794-8283.

http://www.cra-arc.gc.ca/menu-e.html

Sole proprietorships by Accountant

Advantages of Sole proprietorships

The most common and simplest form of business is a sole proprietorship. Many small businesses operating in the Canada are sole proprietorships. An individual proprietor owns and manages the business and is responsible for all business transactions. The owner is also personally responsible for all debts and liabilities incurred by the business. A sole proprietor can own the business for any duration of time and sell it when he or she sees fit. As owner, a sole proprietor can even pass a business down to his or her heirs.

In this type of business, there are no specific business taxes paid by the company. The owner pays taxes on income from the business as part of his or her personal income tax payments. Sole proprietors need to comply with licensing requirements in the province in which they’re doing business, as well as local regulations and zoning ordinances. The paperwork and formalities, however, are substantially less than those of corporations, allowing sole proprietors to open a business quickly and with relative ease – from a bureaucratic standpoint. It can also be less costly to start a business as a sole proprietor, which is attractive to many new business owners who often find it difficult to attract investors.

Disadvantages of Sole proprietorships

The sole proprietor of the business can be held personally liable for the debts and obligations of the business. Additionally, this risk extends to any liabilities incurred as a result of acts committed by employees of the company.

• All responsibilities and business decisions fall on the shoulders of the sole proprietor.
• Investors won’t usually invest in sole proprietorships.

 

Please see your accountant at Brampton

for more information about which business you should registered.

Pro & Cons of Incorporation by Accountant Vaughan

ADVANTAGES OF INCORPORATING

1. Limited Liability. Number one reason why most people incorporate their businesses! Creditors are only able to seize assets of the company to settle outstanding debts, Accountant Vaughan. Your personal assets are protected.

2. Status. Your customers will view your business as larger and more prestigious.

3. Capital. If additional capital is required, a corporation is more attractive to those who have money to invest.

4. When a private corporation realizes a capital gain or a capital loss, other than on certain gifts, the portion of the gain or loss that exceeds the taxable capital gain or allowable capital loss is included in its capital dividend account. A positive balance (gains less losses in this account) may be paid out as a non-taxable dividend to resident shareholders, provided the appropriate corporate resolution has been passed and recorded and a special tax election form T2054 is filed with the CRA on or before the date the dividend becomes payable. Capital dividends are non-taxable for both ordinary and alternative minimum tax purposes. In addition to capital gains, the tax-free portion of proceeds from the sale of eligible capital property or capital dividends received from another
corporation may create a positive balance. A positive balance in the capital dividend account should be paid as soon as possible, as subsequent capital losses will reduce the amount otherwise available for tax-free distribution. The capital dividend account is also increased by the proceeds of life-insurance policies received, less the adjusted cost base (ACB) of the policy—which takes into account various factors that change an underlying investment value—upon the insured’s death. This account is reduced by the amount of dividends elected for payment. Consult Your accountant in Vaughan to determine how tax planning can create capital dividends.

5. Tax Savings. Although there is more record keeping required, there are significant tax advantages such as a lower tax rate.

6. Estate Planning Benefits. Since the corporation is a separate “person” under the law it does not expire when the shareholders die. Significant estate planning benefits may exist to help your family.

Disadvantages of Incorporation
As the corporation is a creature of statute, it is subject to some supervision by the Government of Ontario and it must conduct its affairs in accordance with the applicable statutes. For example, the constitution or by-laws of the corporation, the election of directors and the calling of meetings of members are all governed by the Corporations Act. In addition, a corporation is required to report certain information on a regular basis to certain departments of the Government.
Failure to comply with reporting or disclosure requirements could render the corporation and its directors and officers liable to certain penalties, including the cancellation of the corporation.

Incorporating your business in a high-quality, efficient and cost-effective way!

Call for more information. 416-419-2144

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