FAQ

Accounting FAQ

Question

How can accounting help me make money?

Generally, accounting can tell us the financial situation of the company. Based on the information, we can make accurate decision and formulate strategic short-term and long-term plans. In addition, accounting helps us determine how much cash flow the firm currently possesses, which is a big advantage.

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Question

Do I really have to understand the different depreciation formula?

Since different depreciation formula results in different depreciation expense. In Canada, a company is required to use a constant formula to generate depreciation on a yearly basis. Different companies may use different methods to generate the depreciation amount. When comparing financial statements between companies, basic depreciation knowledge should be obtained.

Question

How much do I need to know about accounting and bookkeeping?

Every number in the company’s financial statement indicates a certain financial story and background. Therefore, as long as we can perceive the story behind the numbers, we can control the main operation of the company. Also, we can prevent some financial disasters before it happens. Therefore, if we are familiar with the accounting and bookkeeping structure, we can get a clear picture.

Question

What is HST? How does it affect my life?

HST stands for harmonized sales tax. It is first introduced to Ontario in July 1, 2010. Many items and services are taxed with 13% after that date. If we are aware of these changes, we can plan our budgets accordingly. For example, For example, before July 1, 2010, internet services were only taxed GST(5%). Presently, it charges 13% for HST.

TAX FAQ

Question

Do you need to file a tax return?

You have to file a return if there is tax payable. If you receiving Working Income Tax Benefit advance payments and want to apply for advance payments, sold real estate or shares, elected to split pension income between you and your spouse, have to repay Old Age Security or Employment Insurance benefits, or have to contribute to Canada Pension Plan, you also need to file a tax return.

 

Even if it is not required, you may still want to file a return in order to claim refund and apply for GST/HST credit.

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Question

When do you need to file a tax return?

Normally, personal tax return needs to be filed within 4 months after year end, which is April 30. For self-employed individuals and their spouses or common-law partners, filing deadline is June 15. If there is any balance remaining that is due on or before the corresponding filing deadline, penalty and interest will be charged.

Question

What types of income will not be taxed? What will be taxed?

Most income like salary, interest, dividends, rental income will be taxed, except Canada Child Tax Benefit, Working Income Tax Benefit, GST/HST credit, lottery winnings, and few other items are exempted. Property income, such as sale of real estate or shares, will only be taxed at 50%. As a Canadian resident, you need to report your total worldwide income for the year.

Question

Do you need to file tax return for you and your spouse separately?

Both you and your spouse need to file a separate tax return. However, many considerations in tax return are based on whole family, such as transfer of certain credits to higher income partner; only one partner in family could apply for GST/HST credit; and so on.

Question

Do you need to send receipts when filing tax return?

No. Tax payers are assumed filing returns with honesty. You should honestly file your personal tax returns and retain receipts for at least 10 years. If tax payer found guilty during tax audit, penalty and interest will be charged and the tax payer is exposed to higher tax audit frequency. Tax evasion is a criminal offense.

Question

Is Canadian tax heavy?

On average, Canadian tax is heavier comparing to the U.S.A. and some other countries. However, the general idea behind Canadian tax is to support low-income individuals using tax income. Low-income families, especially new immigrants who normally belong to this group for the first or two years after arriving Canada, always receive various benefits and credits from the government every year. Canadian tax system also ensures better public medical and education services.

Question

Do you get taxed on money brought into Canada as new immigrant?

No, these are not taxable. For new immigrants, settlement funds are required by government. It is roughly $10,000 per person, and $2,000 for each additional person. However, you must declare the amount if it exceeds the requirement.