How to file your taxes on an inheritance in Toronto?

In Canada, there is no such thing as an “inheritance tax” or “death tax” so there are no taxes to file on monies received in an inheritance, although you may have to pay tax on income that inheritance generates.

However, there are probate fees which may have to be paid from the deceased’s estate. These fees differ from province to province. Not everything in the estate is necessarily subject to probate though; certain assets held by the deceased are excluded from the estate for probate purposes. These normally include assets held in joint tenancy with rights of survivorship, insurance proceeds, and registered accounts (i.e. RRSPs & RRIFs) with named beneficiaries.

Jake Anand explains, “I’ve found from providing tax services in Toronto for many years it’s important to discuss your estate plans with a qualified financial professional to avoid paying more needlessly. Many people view probate as something to avoid at all costs, but it’s not always to your benefit to do so. The fees for probate are actually quite modest, yet every year we see people who try to avoid leaving anything subject to probate, just to incur tax liabilities in the process that end up costing them far more than the probate fees. Not only that, but most people also forget to apply for the CPP death benefit of $2,500”

The executor also has to file the deceased individual’s final tax return and wait for a clearance certificate before the estate can be distributed.

Visit one of our Toronto locations to help you file your final return quickly and professionally.

5 Tips for Small Business Accounting in Brampton

Keeping track of things when you’re running a business is always a challenge, since most owners inevitably spend more time focused on the big picture of trying to build the business (and understandably so) and not enough dealing with the minutiae of the financial side.

“It’s something that any business owner can fall into all too easily.” says Brampton-based accountant Jake Anand. “You’re looking at the proverbial forest, making sure it’s taking proper shape, but not noticing problems with the individual trees in the process.”

Here are some tips to help you keep things straight:

1. Make a Budget – “Most of us hate to even hear the word, but it’s really necessary to separate the various types of expenditures you have on a monthly basis, and plan for how much you’re going to spend on each.” Jake tells us. “Whether it’s money budgeted toward generating income, rent, marketing, or even your salary, it’s vitally important to know exactly where it’s being spent to manage it properly.”

2. Focus on the Long-Term – It’s more beneficial to spend money on things which provide long-term returns. Jake Anand explains, “You can put money towards projects that provide immediate returns, like building a fire to keep warm. But shifting to a long-term view is like building you a shelter that keeps you warm indefinitely.”

3. Keep a Sharp Eye on Costs – “It’s vital to not to sacrifice quality for the sake of costs, and there are some costs you really can’t do a lot about, such as rent. But there are other expenditures over which you have a large amount of control.” Says Brampton-based accountant Jake Anand. Jake continues, “Try negotiating better deals with your phone provider, or other suppliers. Many people fail to realize they can haggle.” Other options might involve looking for lower cost or free solutions, or meeting with clients via online meeting versus travelling by vehicle. Jake reminds us, “The key is keeping customers happy above all.”

4. Be Systematic, Organized, and Thorough – Make sure to keep proper records of everything just in case CRA ever decides to check up on things. “To be safe, it’s best to keep duplicates and electronic copies as well of your documents so in case of emergency, you’ll still be able to track everything clearly.” Jake Anand advises. “Additionally, it makes things much easier for your accountant to get your taxes filed at the end of the year.”

5. Maintain separate accounts – Jake Anand says, “It’s all too easy (and common) to spend your own money when you’re focused on building your business and all too easy to leave yourself strapped in the process. Not only that, and this ties into the previous tip, but keeping your personal spending separate from your business makes it much clearer for CRA to understand. And the fewer questions they have, the less chance of a reassessment during an audit.”

Buying versus Leasing: Small Business Taxes in Toronto

In most cases CRA doesn’t allow you to claim most personal expenses when it comes to your job, so individuals have to bear the financial burden of having a vehicle to drive themselves to and from work on their own.

For business owners and those employees who have to operate a vehicle for the purposes of generating income, like salespeople, etc. claiming motor vehicle expenses can lead to significant savings. That helps with operating costs, but what about the cost of owning the vehicle itself?

“That’s where leasing comes in…” says Jake Anand, a Toronto-based accountant specializing in small business. “Those individuals who lease a vehicle for business purposes can claim expenses for leasing costs which can easily add up to thousands of dollars. “

“But there are additional factors to bear in mind which determine whether leasing a vehicle is preferable to buying for the small business owner.”

Mileage – How much are you going to travel? Many leasing companies limit the amount of mileage you can use before charging overage fees, which would be specified in the lease contract. If you’re going to end up paying a lot of charges for extra mileage, then buying the vehicle may be preferable to leasing.

Vehicle Lifetime – Are you the type of person who changes vehicle after two to three years or do you like to keep your vehicle for five to ten years? It is better to lease if you are only keeping vehicle for a short period of time.

Cash Flow – Do you have enough cash to purchase vehicle or can you get financing? If not, it may be better for you to lease. Leasing a vehicle is easier for a person with bad credit rating.

Legal Issues – Are there any court orders against you, i.e. owe money to other people or in the course of divorce settlement? If so, then any of your assets may be seized or distributed. Then it might be better for you to lease a vehicle.

Visit one of our Toronto locations to let us help determine what the best option, i.e. leasing versus buying a vehicle, is for you.

Tax Savings for Students in North York

For post-secondary students, life is usually pretty complicated. Most of us see tax returns as equally complicated, so it’s no surprise there are a lot of questions when it comes to students and their tax returns. Here are a few pointers to get you headed in the right direction:

Scholarships, Bursaries and Other Awards – “Depending on one’s situation, some or all of a student’s award can be non-taxable as income, which can be a great help when many students have trouble getting by.” explains Jake Anand, a tax accountant specializing in student tax services in North York. “I deal extensively with student tax returns annually, and it’s a bit surprising how much confusion there is.”

“If you are enrolled full-time and can claim the full-time education amount, post-secondary school scholarships, fellowships and bursaries received are not taxable up to the total amount required to support you in the program. For part-time students, the exemption is to the tuition fees and costs incurred for program-related materials.”

If you are not eligible for the full-time or part-time education amount, you can still claim the part of the post-secondary award that is more than $500.

Tuition, Education and Textbook Amounts – “Many students wish to claim the amounts they spend on textbooks and similar materials. Unfortunately this won’t work as planned. While it would certainly be nice to be able to claim the total amount spent, CRA will only give you a credit based on the number of months in study.” says tax accountant Jake Anand.

“What’s less well appreciated is that students can transfer unused amounts to their spouse, parent or grandparent, provided those amounts were accrued in the current year. Students can either transfer these unused amounts for an immediate benefit, or hold on to them for use in a future year.”

Registered Education Savings Plans (RESP) – Jake Anand tells us, “Registered Education Savings Plans can be a great way for people to help provide for their children or grandchildren’s education. Not only will their own contributions grow tax-free but the government may also add in funds under the Canada Education Savings Grant (CESG). And perhaps the best part is that only the income generated in the plan is taxable when it’s received. “Students that receive payments from a RESP must declare those payments as income.