To help organize small business in their attempt to claim their expenses we have designed a worksheet to simplify the complexity of tax law applicable to them. The clients may enter as much information as they feel comfortable. We do the rest of the work to finalize their claims.

The main purpose of this worksheet is to make the life of owners of small corporations comfortable. By gathering the information in this worksheet, the shareholders can very easily organize their allowable expenses for tax purposes.

Tax Laws and regulations regarding employment expenses are complex. Not every expense incurred is allowed for tax purposes.

First, the employee must get T2200

https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/t2200/t2200- fill-21e.pdf

Declaration of Conditions of Employment from the employer to allow them to deduct expenses. The employee will have to follow the requirement of T777

https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/t777/t777-fill- 21e.pdf

As guidance provided by CRA in T4044

https://www.canada.ca/content/dam/cra-arc/formspubs/pub/t4044/t4044-21e.pdf

We have tried to simplify the process and encourage the clients of this category to fill in the Employment Expenses Form, which we use to further guide the client and to make sure that their claims are just and accurate. You can see our form in the resources called Employment Expenses Schedule.

If you receive income from renting real estate or other real property you will have to file a statement of Income and Expenses separately for each of the properties. The form is called T776

https://www.canada.ca/content/dam/cra- arc/formspubs/pbg/t776/t776-fill-21e.pdf

It provides an area for you to enter your gross rents and claim rental expenses related to the property.

The difference between the gross rent you received and the expenses you incurred will determine the gain or loss from rental income. Rental income and expenses are generally reported on an accrual basis. That means you include rents in income for the year in which they are due, whether you receive them in that year. Similarly, you deduct your expenses in the year you incur them, whether you pay them in that period or not.

For your convenience, we provide a worksheet to help you organize your expenses and claim it in your Real Estate Income. Please visit our Schedule of Real Estate Rental Income.

Employees who sell goods or negotiate contracts for an employer can deduct some of the amount they paid to earn commission income. With the exception of interest and the capital cost allowance on your vehicle, the expenses you can deduct cannot be more than the commissions you received in the year.

You can deduct; accounting and legal fees, advertising and promotion, motor vehicle expenses, capital cost allowance of motor vehicle, food, beverages, entertainment expenses, lodging, parking, office supplies, license cost, computers, cell phones, and other equipment expenses, salaried you paid to your employees, office rent, training cost, travel fare, and work-space-in-the-home expenses.

If your total commission expenses are more than commissions you received, luckily, CRA allows another method you can use to claim expenses. Using this alternative method might be beneficial for you because it allows you to claim your expenses as a salaried employee instead of as a commission employee. If you deduct expenses this way, your claim is not limited to the commission you received in the year. You may claim travelling expenses, motor vehicle expenses, cost of supplies or office.

If you are interest in getting additional information you may like to study T4044

https://www.canada.ca/content/dam/cra-arc/formspubs/pub/t4044/t4044-21e.pdf

As a taxpayer you can claim allowable medical expenses, which CRA calls eligible medical expenses. You can claim medical expenses paid during any 12- month period ending in the year you are filing tax return. You can only claim that part of the expense that you or someone else have not been reimbursed for by your employer or insurance company.

Depending upon medical conditions eligible medical expenses comprises of an excessively big list, we have tried to present them in the table given below

Not-for-profit corporations are organizations that provide products or services to improve or benefit a community. These organizations are usually concerned with generating enough revenue to provide support to their chosen community and their selected activities.

Not-for-profit organizations are generally exempt from paying income tax but may be required to file a T1044 – Non-Profit Organization (NPO) Information Return with the Canada Revenue Agency (CRA). The information return is filed annually and, depending on your organization’s activities, you may also need to file additional forms. We can guide you for the requirements of CRA. Our client base includes the following types of not-for- profit organizations:

• Pet Rescue Societies
• Churches
• Welfare organizations
• Mosques
• Mandirs

The deadline to file your income tax return is usually around April 30 . However, if

you are self-employed, the deadline is June 15 of the following year. However, if you have a balance owing then you are still required to pay it on or before April 30th deadline. In addition, you could save a few bucks with your “tradesperson’s tools deduction” and, for employers, the “apprenticeship job creation tax credit” is an attractive proposition. We can guide you with all these deductions and benefits based on our expertise. Our clients come from the following walks of trades and crafts:

Several our personal tax return clients own their houses and rent it in portion or entire units. This income is slightly different from your employment income or active business income. Hence there are different form that you must fill out in your tax return to disclose this income and claim corresponding expenses. To save your time at our office during the income tax season, we provide worksheets in our “Resources” section of the web site. You can access it at your convenience and come prepared with complete set of information to save your valued time. Please visit our Schedule of Real Estate Rental Income.

This guide provides information about the income you must report and the deductions and credits you may claim on your income tax and benefit returns. Spread over 74 pages this guide makes life much easier as everything is explained in simple language. The Guide organizes the main type of incomes in lines 10100 to 14900 giving a total at line 15000 for tax purposes. Then tax exemptions are allowed, which are listed from line 20700 to line 25600. After allowing these exemptions you get Taxable Income on which your tax liabilities for both federal and provincial governments are calculated. You are then given certain annual benefits, which CRA calls Non-Refundable Tax Credits.

For Income Tax purposes a business is an activity that one intends to carry on for profit and there is evidence to support that intention. A business includes a profession, a calling, a trade, a manufacture, an undertaking of any kind, and adventure of concern in trade.

You are required to file your business income on form T2215

(https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/t2125/t2125-fill- 21e.pdf.)

You can use either cash basis or accrual basis for reporting income and expenses for tax purposes.

Income tax law requires taxpayers to keep track of the gross income your business generate. Gross income is your total income before you deduct any expenses, including those related to the goods sold. Your income records must include the date, amount, and source of the income. You are supposed to record income whether you received them in shape of cash, property, or services. Support all income entries with original documents, such as, sales invoices, cash register tapes, receipts, bank deposit slips, fee statements, and contract.

Similarly, make sure that you always get receipts or other vouchers when you buy something for your business. The receipt should show; the date of purchase, the name and address of the seller or supplier, the name and address of the buyer, full description of the goods or services, and GST/HST Number of the supplier.

If you are employing any person, you will have to deduct appropriate taxes, CPP, & EI from the gross salary of the employee and remit it to CRA by 15th of the following month. You are also required to issue T4, T4A, and Summaries by end of February of following year.

CRA has summarised the Income Tax Act and Regulations pertaining to Real Estate Rental Income in their guide T4036

(https://www.canada.ca/content/dam/cra-arc/formspubs/pub/t4036/t4036- 21e.pdf.)

Basically, the guide introduces the form T776

https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/t776/t776-fill- 21e.pdf)

For reporting Income and Expenses from Rental Income. For Rental Income CRA prescribes accrual basis of reporting. You are to include rent income for the year in which they are due, whether you receive them in that year or not. Similarly, you can deduct expenses in the year you incur them, whether you paid them or not.

Your gross rental income is the total gross rents you earned during a calendar year. You can deduct reasonable expenses you incur to earn rental income. CRA make two big divisions of the expenses; (1) current expenses; and (2) capital expenses.

Current expenses may be claimed in the year incurred and covers those expenses that provide short-term benefits. The cost of repairs to keep a rental property in the same conditions as it was when you acquired it, is treated as current expenses and you can deduct such expenses from your gross rental income.

Capital expenses provide benefits that usually last for several years. For example, cost to buy or improve your property are capital expenses. You cannot deduct such expenses in full in the year you incur them. But you can deduct a portion of it over a reasonable period of time.

If you are an employee and your employer require you to pay expenses to earn your employment income, you can claim deductions for such expenses from your total income.

CRA guide T4044

(https://www.canada.ca/content/dam/cra- arc/formspubs/pub/t4044/t4044-21e.pdf)

This helps you to calculate the expenses you can deduct. It also gives you all the pertinent information you need to claim the employee goods and services tax/harmonized sales tax (GST/HST) rebate.

To claim Employment Expenses your employer will have to complete and sign Form T2200, Declaration of Conditions of Employment. If you have more than one employer, each employer is required to complete and sign a form.

Depending upon the conditions numerated in T2200

(https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/t2200/t2200-fill- 21e.pdf)

You may deduct expenses, such as, Travelling, Parking, Supplies, Computer, Cell phones, and other office equipment, salaries of employees working full or part-time for you, proportionate expenses of your work space in your home.

If you are an employee who sells goods or negotiates contracts for an employer, you can deduct expenses like other employment expenses except your deduction generally can not exceed the amount you earned as commission.

Or if you are a salesperson and your employer require you to pay expenses to earn your employment income, you can claim deductions for such expenses from your total income. CRA guide T4044 helps you to calculate the expenses you can deduct. It also gives you all the information you need to claim the employee goods and services tax/harmonized sales tax (GST/HST) rebate.

To claim Employment Expenses your employer will have to complete and sign Form T2200

https://www.canada.ca/content/dam/cra- arc/formspubs/pbg/t2200/t2200-fill-21e.pdf

Declaration of Conditions of Employment. If you have more than one employer, request each employer to complete and sign a form.

Depending upon the conditions enumerated in T2200

https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/t2200/t2200-fill- 21e.pdf

You may deduct expenses, such as, Travelling, Parking, Supplies, Computers, Cell phones, and other office equipment, salaries of employees working full or part-time for you, proportionate expenses of your work space in your home.

If you are an employee of a transport business, a railway employee, or other transport employee, you may be able to claim the cost of meals and lodging in addition to the expenses generally claimable by employees earning a salary.

You will have to have form T2200

https://www.canada.ca/content/dam/cra- arc/formspubs/pbg/t2200/t2200-fill-21e.pdf

Declaration of Conditions of Employment duly signed by employer and you prepare TL2 (https://www.canada.ca/en/revenue-agency/services/forms- publications/forms/tl2.html); Claim for Meals and Lodging Expenses.

To calculate your meal expenses, you can choose either (1) simplified or (2) detailed method, or in certain situations, the (3) batching method. The most you can deduct for meal expenses is 50% of your claim, unless you are a long-haul truck driver claiming meals for an eligible trip. If you use the simplified method, which is based on a daily meal rate of $17 per meal, the most you can deduct is $8.50 for each meal.

If you are filing a return for either a testamentary trust or an inter vivos trust you may benefit immensely from reading CRA guide T4013

https://www.canada.ca/content/dam/cra-arc/formspubs/pub/t4013/t4013- 21e.pdf

That provides information on how to complete the T3 Trust Income Tax and Information Returns, the T3 slip, Statement of Trust Income Allocations and Designations and T3 Summary, Summary of Trust Income Allocations and Designations.

Generally, you must file a T3 return if income from the property is subject to tax, and in the tax year, the trust:

Has tax payable
Is requested to file
Is resident in Canada and has either disposed of, or is deemed to have disposed of, a capital property or has a taxable capital gain
Is a non-resident throughout the year, and has a taxable capital gain or has disposed of taxable Canadian property?
Is a deemed resident trust
Holds property that is subject to subsection 75(2) of the Income Tax Act

Has provided a befit for more than specified amount to beneficiary Received from the trust property any income, gain, or profit

Every corporation subject to the Business Corporations Act is required to complete and file T2

https://www.canada.ca/en/revenue- agency/services/forms-publications/forms/t2.html

Corporation Income Tax Return. This return is used by CRA to calculate federal income tax and credits. Corporations that have a permanent establishment in any province or territory other than Quebec or Alberta also use this return to report provincial and territorial income taxes and credits. Corporations with a permanent establishment in Quebec or Alberta must file a separate provincial return.

All corporations including non-profit organizations, tax-exempt corporations, and inactive corporations, have to file a T2 return for every tax year, even if there is no tax payable. The only exceptions to this rule are tax-exempt Crown corporations, Hutterite colonies, and corporations that were registered charities throughout the year. A non-resident corporation has to file a T2 return if, at any time in the year (1) it carried on business in Canada; (2) it had a taxable capital gain; or (3) it disposed of taxable Canadian property.

Every corporation is required to file its income tax return within six months of the end of each tax year. If you are late in filing corporate tax return CRA imposes a penalty of 5% of the unpaid tax that is due on the filing deadline plus 1% of this unpaid tax for each complete month that the return is late, up to a maximum of 12 months.

The corporation tax return comprises of the following:

Page 1 of the return Identification spreads from line 001 to line 085 o Line 001 Business number of the corporation
o Line 010 to 018 Address of the head office
o Line 020 to 028 Mailing address

o Line 030 to 038 Location of books and records
o Line 040 to 043 Type of corporation at the end of the tax year o Line 060 to 066 Tax year of the return
o Line 067 Is the corporation a professional corporation?
o Line 070 Is this the first year of filing after incorporation?
o Line 071 Is this the first year filing after amalgamation.
o Line 072 Has there been a wind-up.
o Line 076 Is this the final tax year after amalgamation?

An NPO, is a club society, or association that is not a charity and that is organized and operated solely for social welfare, civic improvement, pleasure or recreation, or any other purpose except profit. To be considered an NPO, no part of the income of such an organization can be payable to or available for the personal benefit of any proprietor, member, or shareholder, unless the proprietor, member, or shareholder is a club, society, or association whose primary purpose and function is to promote amateur athletics in Canada.

An NPO is exempt from tax under Income Tax Act on all or part of its taxable income for a fiscal period if it meets all the above requirements for that period. However, an NPO must submit information return no later than six months after the end of its fiscal period to Ottawa Technology Centre, Ottawa.

An NPO has to file T1044

https://www.canada.ca/en/revenue- agency/services/forms-publications/forms/t1044.html

If it received or is entitled to receive taxable dividends, interest, rentals or royalties totalling more than $10,000 or it owned assets valued at more than $200,000 at the end of the immediately preceding fiscal period, or it had to file an NPO information return for a previous fiscal period.

The information an NPO is required to file on form T1044 comprises on the following seven parts:

1. Identification

2. Amounts received during the fiscal period

3. Statement of assets and liabilities at the end of the fiscal period

4. Remuneration – total remuneration paid to employees, officers, and

   members

5. The organization activities

6. Local of books and records

7. Certification that the information given on the return is correct and

   complete.

A study of Income Tax Guide T4117

https://www.canada.ca/en/revenue- agency/services/forms-publications/publications/t4117/income-tax-guide-non- profit-organization-information-return.html

This provides complete picture of the requirements and responsibilities of the reporting activities to CRA.

When you sell your home or when you are considered to have sold it, usually you do not have to pay tax on any gain from the sale because of the principal residence exemption. This is the case if the property was solely your principal residence for every year you owned it.

Before 2016, if you sold your property, and it was your principal residence for every year you owned it, you did not have to report the sale to claim the principal residence exemption.

For dispositions in 2016, you had to report the sale and designate the property on Schedule 3, Capital Gains (or Losses) in all situations.

For dispositions in 2017 and later years, in addition to reporting the sale and designating your principal residence on Schedule 3, you also have to complete Form T2091 (IND)

https://www.canada.ca/content/dam/cra- arc/formspubs/pbg/t2091ind/t2091ind-fill-21e.pdf

Designation of a Property as a Principal Residence by an Individual (Other Than a Personal Trust). Complete only page 1 of Form T2091 if the property you sold was your principal residence for all the years, or for all but one year, that you owned it.

For the sale of a principal residence in 2016 and subsequent years, CRA will only allow the principal residence exemption if you report the disposition and designation of your principal residence on your income tax return. If you forget to make this designation in the year of the disposition, it is very important to ask CRA to amend your income tax return for that year. Under proposed changes, CRA will be able to accept a late designation in certain circumstances, but a penalty may apply.

If your home was not your principal residence for every year that you owned it, you have to report the part of the capital gain on the property that relates to the years for which you did not designate the property as your principal residence. To do this, complete Form T2091(IND). You are also required to complete the applicable sections of Schedule 3 as indicated on page 2 of the schedule. If you are the legal representative for a deceased person, you can designate a property using Form T1255,

If only a part of your home qualifies as your principal residence and you used the other part to earn or produce income, you have to split the selling price and the adjusted cost base between the part you used for your principal residence and the part you used for other purposes (for example, rental or business). You can do this by using square meters or the number of rooms, as long as the split is reasonable. if you filed a capital gains election on the property you disposed