Monthly Archives: March 2017

Links to key 2017 Federal Budget coverage

News, Small Business, Tax Information

Nevcon Accounting is pleased to provide the following links to articles, analyses and more, to help you learn more about the 2017 Federal Budget, delivered March 22, 2017.

Surviving the tax audit process

Tax Information

The following is an excerpt from an article referenced in the Nevcon Accounting resources archives – and it is still timely and relevant today:

According to Canada Revenue Agency’s mission statement, their objective is to promote compliance with Canada’s tax, trade, and border legislation and regulations. Their main tool is the audit process. The majority of taxpayers file relatively simple tax returns with mostly T4 and T5 income. These tax returns do not represent a large compliance risk since tax is withheld at source on the T4 income and the amounts are easily verifiable. Accordingly, many taxpayers who report this type of income may never be audited by the tax department or have any dealings with a tax auditor.

167-tax-tipsThe complete article is found here, on the Globe and Mail web site:

The audit: How to survive a visit from the taxman
by Stephen Thompson
(from 2011/2012)

The book from which the article is excerpted is entitled 167 Tax Tips for Canadian Small Business. Here is an updated link to the book.

Do you need to take a look at the Employers’ Guide to Taxable Benefits and Allowances?

Tax Information

Canada Revenue Agency advises you to use this guide (download it here or click on the book graphic) if you are an employer and you provide benefits or allowances to your employees, including individuals who hold an office, for items such as:

tax-guide-cover

  • automobiles or other motor vehicles;
  • board and lodging;
  • gifts and awards;
  • group term life insurance policies;
  • interest-free or low-interest loans;
  • meals;
  • security options;
  • tool reimbursement or allowance;
  • transit passes; or
  • tuition fees.

If you or a person working for you is not sure of the worker’s employment status, either one of you can request a ruling to determine the status. If you are a business owner, you can use the “Request a CPP/EI ruling” service in My Business Account. For more information, go to cra.gc.ca/mybusinessaccount. You can also use Form CPT1, Request for a Ruling as to the Status of a Worker Under the Canada Pension Plan and/or the Employment Insurance Act, and send it to your tax services office.

The importance of business interruption insurance

Small Business

“Your ability to generate sales could be threatened at any moment. With business interruption coverage, a business owner can collect the income he or she would have expected to generate were it not for the unexpected event.”
– Insurance Bureau of Canada

The following article from the Nevcon Accounting resources archives is still useful and relevant today:

All owners of small businesses naturally hope that their company will never be faced with a sudden and unexpected interruption. However, like automobile and home insurance, business interruption insurance should be purchased just in case the unthinkable happens. Failure to do so could leave both your and your employees at risk.

The problems following a loss of property, equipment or inventory are frightening. Proper business interruption insurance can ensure the survival of the business both during and after the rebuilding process. The accompanying chart addresses the options involved in this type of insurance, which is usually included in business insurance packages.

Option Applicable
businesses		 Description
Rental Insurance Real Estate Indemnifies for lost rent and other income derived from tenants. Standard insurance covers a period of twelve months or the time required to restore the property, whichever is less. More comprehensive coverage can be purchased allowing the insured reimbursement until rental income returns to pre-loss levels, thus compensating the owner until all repairs to the property have been completed.
Gross Profits Insurance All Covers a business up to net income before taxes and continuing expenses. If gross profits are under-insured, the insurance company may adjust the claim in event of a loss. If a business has insurable gross profits of $1 million but carries coverage for only $500,000, should it suffer a loss of $250,000, the insurer may only reimburse the owner to the same percentage that should have been insured – n this case, 50% or $125,000. This type of insurance can be purchased for periods extending beyond the standard twelve-month policy to allow the insured to be indemnified until such time as gross profits return to pre-claim levels.
Gross Earnings Insurance All Similar to gross profits insurance above, but can only be purchased for maximum of one year. Consequently, the indemnity period may run out before allowing the purchaser to cover the predetermined percentage of gross profits he/she wishes to insure.
Increase Valuation Insurance All This insurance is not provided by many carriers. If obtainable, it provides an alternative to gross profits/earnings insurance described above in that it predetermines coverage of inventory on a cost plus basis. This type of insurance is suitable for importers and distributors who do not hold stock beyond one inventory turnover period. Manufacturers or companies dependent on their physical premises to conduct business will not find this option attractive.
Extra Expense Insurance All Allows company to resume regular operations more quickly by providing funds for such items as temporary rent at an outside location, additional labour cost, etc. This type of insurance does not provide sufficient coverage on its own and is usually offered only in conjunction with other coverages outlined above.
Professional Fees Insurance All Pays for professional assistance to prepare proof of loss should a claim be required. This type of insurance can only be purchased in conjunction with other forms of coverages outlined above.

Article ©1998 The Quarterly Dividend
Reprinted with permission