February 2013

It’s that time of year again, when we dig deep into our shoeboxes full of receipts and wait eagerly for official tax documents toarrive in the mail.  Are you ready for it this year? Did you keep a good record of all the charitable contributions you made, the receipts you can write off?  Are you aware of all the incentives you might qualify for?

Most of us aren’t.  Don’t worry, you still have time to get it all in order. Here are the six steps to get ready for tax season.

1. Get organized

Try to set aside at least one weekend to get your tax receipts and documents in order. If you’re filing on your own return, you may need an extra day to sit down and input the numbers. Find the obvious stuff first: T4 slips, or if you’re self-employed all your invoice advice documents. Print out the official RRSP tax receipts and track down all your official charitable contribution documents.

2. Inquire about All Incentives

Visit the Canada Revenue Agency (CRA) website to investigate the incentives you and your family qualify for. Check out things like the child fitness credits, moving credits and education credits. There are numerous tax incentives that you may be able to take advantage of. Live agents are also on hand to answer tax questions and you can call in anonymously. Talk to colleagues doing a similar job and cross-reference each of your returns to make sure you’re not missing anything.

3. Using a Professional vs. Going it Alone

If you have a particularly complicated tax return, it might be in your best interest to seek the advice of a professional. If your tax refund is fairly simple you can use one of the reputable online tax filing programs to complete your refund. Remember to file online, sending your refund through mail delays your process by up to six weeks.

4. Have a Plan if you Owe Money

If your calculations show you owe money to the CRA, start putting that money away now. This will help you save enough to pay the balance off before it costs more in the form of interest and penalties. The faster you pay off your tax bill, the better.

Also investigate what changes you need to make this year to avoid paying next year. One of the easiest ways to lessen your tax impact is by contributing to your RRSP.  Check the Notice of Assessment you received last year.  You can calculate how much room you have.

5. Income Splitting

You can reduce your tax bill significantly by implementing income-splitting strategies if your spouse is in a lower income bracket. When you retire and withdraw money from your RRSP you will be taxed. By setting up a Spousal RRSP, you can transfer a portion of that income into your spouse’s RRSP to be taxed at lower rates upon withdrawl by your spouse after age 65. The contributor to the Spousal RRSP is able to bring their contribution room down and still enjoy the benefit of getting a larger refund.

6. Learn from your Mistakes

Start planning now for the 2013 tax season. Create a filing system to keep all your important documents organized. Have a permanent place for your records, charitable receipts and RRSP contribution documents. Using technology, such as a scanner to digitize all of your receipts and financial documents is also an efficient way to manage your documents, while removing the clutter.

Important Deadlines:

• Your RRSP deadline for contributing for the 2012 tax year is March 1, 2013.
• If you have a balance owing for 2012, it must be paid by April 30, 2013.

We have recently sent out our annual T1 Checklist used to assist our clients in preparing them for T1 Tax Season.  In the event you have not received this in the mail, please feel free to download the document here:

T1 Checklist for Clients

As always, if you have any questions regarding this or anything else, please feel free to contact us today!

Jeff Nightingale is the Senior Tax Partner at Lipton LLP, Chartered Accountants.  Jeff has written a number of publications and speaks to a variety of professional and business groups, including the Canadian Tax Foundation, the Institute of Chartered Accountants of Ontario and The Law Scociety of Upper Canada.  He has also completed the CICA In-Depth Tax Course as well as other advanced taxation courses and is a member of the Canadian Tax Foundation and the Society of Trust and Estate Practitioners.

Learn More about Jeff Nightingale

For various reasons, a business owner may decide to approach a new financial institution.  How do you establish a good relationship with a new financial institution, and maintain it?  Lipton LLP has helped many clients do this.  Having the right approach makes a big difference.

The thing to remember when you are looking for a new bank is that you are going in as a salesperson. You are going to sell the ability of you and your company to be successful, to somebody who is going to lend you money.  That means being knowledgeable about your products and services, and having information to back you up.

Clients often ask Lipton professionals for advice when they are seeking a new financial institution.  Our professionals frequently introduce clients to bankers, or accompany clients on their initial and subsequent visits to the financial institutions they have chosen.

Lipton LLP has long-established relationships with many financial institutions, and we know what they look for.

1.  Show me the money!

First of all, they want to see your financial statements – including future-oriented financial statements, with projected cash flows, because a potential lender wants you to look to the future.  You need to show the prospective banker that you are not just mired in the day-to-day running of the business, but that you also have a plan for where you are going to go.

2. What’s on the horizon?

Stagnation is the death knell of any business.  The bank wants to see that you have looked ahead.  Is your source of supply going to be maintained?  Is your customer base going to change, is your product going to be outdated?  You have to be dynamic, ready for change.

3. What’s the game plan?

The best source of comfort to a prospective lender is a business plan, containing financial information as well as a narrative about the enterprise.  This should include a presentation on the history of the company and its owners, and a description of the business.  The plan should examine the evolution of the market that the business is in, and analyze its suppliers, customers and competitors.  Lipton works with clients to prepare such plans as the basis for starting and maintaining good banking relationships.

What keeps the relationships going well?

The best way to manage an existing relationship with a bank is to eliminate surprises, and communicate continually.  Keep your financial institution informed when you are making major decisions.  Alert your lender to any potential problems well in advance.  Deliver interim financial information that will be consistent with year-end results.  Oh, and invite your banker for a visit to your business site, so that he or she will see your business as more than numbers on a page.

Mel is the managing partner of the firm as well as the lead engagement partner for a number of clients.  He has over 30 years experience specializing in assurance and advisory services, financing, tax, estate and strategic planning for corporations, partnerships, and not-for-profit organizations.  He constantly seeks to add value with his hands-on approach in such areas as reporting requirements, internal controls, tax matters, succession planning, organizational and strategic planning issues. Mel has completed the C.I.C.A. In-Depth Tax Course, the Alternative Dispute Resolution Course sponsored by the Faculty of Law – University of Windsor, and the Directors Education Program sponsored by the ICD and the Rotman School of Management, University of Toronto.

Learn More About Mel Leiderman 

In order to facilitate the accurate preparation of your 2012 T4 and T5 information returns, we have recently mailed a summary of significant taxable benefits that may apply to your employees.

It should be noted that if you are submitting more than 50 information returns (slips), you are required to file electronically.  As of January 1, 2014, if you fail to comply with this requirement, you may be subject to an incorrect filing format penalty.  We can assist you in ensuring your compliance with these new rules.

If you have any questions concerning the preparation of 2012 T4 and T5 information returns and slips, please contact us.

Jeff Nightingale is the Senior Tax Partner at Lipton LLP, Chartered Accountants.  Jeff has written a number of publications and speaks to a variety of professional and business groups, including the Canadian Tax Foundation, the Institute of Chartered Accountants of Ontario and The Law Scociety of Upper Canada.  He has also completed the CICA In-Depth Tax Course as well as other advanced taxation courses and is a member of the Canadian Tax Foundation and the Society of Trust and Estate Practitioners.

Learn More about Jeff Nightingale