Complete Accounting Solutions is proud to announce it is the winner of the 2016 Consumer Choice Award in the category of Accountants – Small – Medium Business – South Mainland for the Greater Vancouver Area. We are Professional Business Accountants (PBA), members of the Surrey Board of Trade 2014-2016, and maintain an A+ BBB rating.
Planning for your Scientific Research and Experimental Development (SR&ED) must take place in advance of actual research and development. This tax incentive program provides individuals, partnerships and corporations with possible cash refunds or reduction in taxes payable. The potential investment tax credit could total 15-35% of qualified expenditures.
The reporting deadline is generally 18 months after the company’s tax year end. More specifically, the deadline is 12 months after the filing due date for the year in which the expense was occurred.
While 18 months may seem like a gracious period of time to prepare SR&ED claims, expenditures are subject to review. The review process can take upwards of 6 months and therefore it is suggested to submit earlier to have recollection.
Furthermore, expenditures must qualify under the SR&ED terms and the following questions must be asked:
First off, the rules vary from province to province and it is important to understand how they affect British Columbians in particular. The expenditures which are allowed to be claimed can be carried forward indefinitely. This includes: salaries, materials, prototypes, contract work, university costs, overhead (can be 40-50% of project) and certain testing. Work related to debugging is not considered under SR&ED. Coined the ‘Scientific research and experimental development tax credit’ CCPCs may claim a refundable tax credit for the lesser of:
Furthermore, a non-refundable credit may be claimed for those expenditures in excess of the limit. This amount is 10% of the qualified expenditure minus the refundable amount and any amount renounced for that year. The non-refundable amount can be carried forward 10 years or back three years.
More information is available from the BC Government on their SR&ED page.
Contact one of our public business accountants for a free consultation to understand how your SR&ED claim can be successful.
Looking for ways to decrease your taxable income? If you have sold a business, or shares in a business, and are thinking about selling a business, the Capital Gains Exemption may be right for you.
Under the Income Tax Act, an individual can claim a lifetime capital gains exemption (LCGE) to reduce the amount of taxable income made from such an arm’s length sale. The current amount for 2014 is $800,000 and will rise to $813,600 in 2015 to account for inflation – which is a cumulative amount over your lifetime. Individuals must include the capital gain made from the sale as total income (keeping in mind that half of capital gains are taxable), and then claim the deduction.
There are limits to the type of sales which are eligible for the exemption, and are described as such:
In order for the shares to qualify for the exemption the business must have been a small business corporation at the time of disposal. This means the company is defined as a Canadian controlled private corporation (CCPC) and that 90% of its assets on a fair market value basis are used in the active business primarily located in Canada. In addition to being a small business corporation, during the 24 months prior to the disposal, 50% of its fair market assets needed to be used principally in a business carried out in Canada. It is recommended to move assets which do not qualify (such as stocks, bonds and rental property) outside of the business to meet the 24 month and disposal requirements.
For the 24 months before the disposition, the shares must not have been owned by any one else, other than a person or partnership related to the individual. Transferring the shares from a spouse, your children or even from a “family trust” will qualify under the 24 month period.
For example, if an individual sold their personally owned company for $1M and realized a gain of $500,000, they would need to declare $250,000 in capital gains under their total income and assuming a 46% tax rate, pay $115,000 in additional taxes. The exemption would allow the individual to apply $500,000 of their lifetime capital gains exemption and avoid $115,000 in taxes. Furthermore, the individual has a remaining $300,000 of the exemption moving forward.
There are other restrictions and tax implications. The prior year allowable business investment losses (ABIL) and cumulative net investment losses (CNIL) are used as reductions to the Capital Gain Exemption calculation. There is also an alternative minimum tax (AMT) calculation that might trigger taxes payable.
For tax planning purposes, you will want to consider the timing of your sale to meet the requirements outlined. Get in touch with Complete Accounting, or book a free consultation online to meet with us.
Since January 27, 2009, qualifying home purchases can result in a $750 non-refundable First-Time Home Buyer’s tax credit. This credit is not just available to first-time homebuyers. It is also available to existing homeowners provided someone with the Disability Tax Credit (DTC) benefits from the new purchase.
If you purchased a home and think you may have missed out on this credit we can review your income tax returns and file a prior year adjustment if necessary. If someone in your household has a disability but did not apply for the DTC, we can also help file prior year adjustments to claim the DTC as well as the First-Time Home Buyer tax credit. The DTC is a much more valuable tax credit that carries additional benefits so make sure you don’t make any assumptions about not qualifying.
Visit our contact page to see how you can book an appointment with one of our experienced accountants in Surrey, Langley, Kelowna or Penticton http://www.completeaccounting.ca/contact/.
If you were laid off from work in 2013 and received a large severance package, make sure to do your tax planning before the end of February. If you have substantial RRSP contribution room you may want to max out your contributions. If you don’t have a new source of income in 2014 you could even remove some of your RRSPs in order to make the RRSP contribution. Doing so can shift your high income in 2013 to a potentially lower tax bracket in 2014.
If you would like professional tax planning this year please book an appointment at our Surrey Accounting office to speak with one of our designated accountants.
We have opened our new Surrey office location and are expecting to have everything completed within the next month. We will be holding a grand opening shortly after everything has been completed.
The new address is #100 – 17619 – 96th Ave, Surrey, BC, V4N 4A9 and the phone number is 604-498-2655.