FAQ

Questions:

Q. Does my company need to register for WSIB/ Health & Safety? Q. Should I incorparte my business or remain self-employed? Q. Should I lease or buy automobiles? Q. What should I know about reimbursing Empolyees/Owners for business use of personal vehicles? Q. What percentage of my Meals and Entertainment expences are tax deductable? Q. Should I invest in a Registered Retirement Savings Plan?

Answers:

Q: Does my company need to register for WSIB/Health & Safety A: Every company that has employees or uses a third party contractor to perform services on their behalf most likely needs to be registered with WSIB except for a few exempt industry groups. Failure to register can result in serious fines and penalties for past premiums owing as well as charges against the owners and directors of the company, especially if a serious accident were to occur. Health and Safety compliance issues also represent one of the most overlooked liability areas for the business owner. For example, when is the last time you conducted safety training, updated your safety manual, instructed employees on using chemicals/solvents in your business? At SourcePoint, we have alliance partners that specialize in this important business area.

Q: What should I know about reimbursing Employees/Owners for business use of personal Vehicles? A: For 2008, CRA will allow you to deduct for corporate income purposes up to 52 cents for the first 5,000 kms and 46 cents for additional km for each individual using their personal vehicle for business applications. Please consult our office for tax planning opportunities for vehicle use by business owners.

Q: Should I incorporate my business versus Self-Employed? A: Many business owners chose to incorporate to limit their personal liability. In this way, they are able to protect their personal assets from creditors in most cases such as their homes or investments. In addition, you can generally obtain more beneficial tax planning opportunities such as income splitting, wealth management and retirement planning if you are incorporated. For example, if you do not take every dollar earned in your company out as salary, you can retain that profit and more funds in the company for investing as the small business tax rate is just over 17.6% in Ontario versus a top personal rate of 46%. Therefore, you have 83.4 cents to invest versus 54 cents. Let SourcePoint explain how we can help you maximize your wealth.

Q: Should I lease or buy automobiles? A: Given today’s low interest rates and competitive environments, it is no easy answer to advise clients. For example, will the vehicle be used primarily for business or pleasure as this has a profound impact on taxable benefits? What is the cost of the vehicle? Canada Revenue Agency only allows you to write off the cost of a vehicle up to $30,000 plus GST and PST. but the taxable benefit is based upon the original cost. There are also caps on leasing vehicles. Contact your SourcePoint office and we can help you understand the decision so that you minimize your tax or taxable benefit burden and can claim maximum GST input credits as well.

Q: What should I know about reimbursing Employees/Owners for business use of personal vehicles? A: In December of each year, CRA issues an update on vehicle expenses and allowances for the upcoming year. One of the items updated is the level of tax free reimbursement an employer can pay to an employee for business driving. For 2008, the reimbursement Is 52 cents for the first 5,000 km. and 46 cents for each additional kilometre driven. The rate is slightly higher for driving in the Yukon, North West Territories and Nunavut. The reimbursement is designed to cover both capital and operating expenses, i.e. depreciation, financing, insurance, repairs and gas.  Employer’s can maximize the individual’s reimbursement by paying the highest amount allowed by CRA. Please consult our office for tax planning opportunities for vehicle use by business owners.

Q: What percentage of my Meals and Entertainment expences are tax deductable? A: One of the most common area’s of non-compliance uncovered during CRA audits is in the area of meals and entertainment. Although the basic principle is fairly simple in that the taxpayer is only allowed to deduct 50% of expenses related to meals and entertainment, there are some exceptions. Give your SourcePoint office a call and we will help walk you through this area and ensure that you are always in compliance.

Q: Should I invest in a Registered Retirement Savings Plan? A: Although registered retirement savings plans have been around for years, other plans such as IPP’s (Individual Pensions Plans) are becoming more and more popular as an additional resource to fund the retirement of Canadian business owners. These  taken and combined with our  business strategies unique to your own specific needs allows us to maxmize your retirment wealth. Please contact your SourcePoint office for a confidential review of these programs with our alliance partners. We  ensure your retirement planning is secure.