There are a number of tasks to complete when wrapping up the calendar year for your business, among them are filing the T4s and WCB return.

Don't panic, you have until February 29th to file but payroll remittances for 2011 must be remitted by January 16, 2012 (date extends to Monday when the 15th falls on a weekend).  Short remittances are subject to penalties so it is a good idea to reconcile your payroll before sending the December payment. 

T4s may seem like a simple thing to do so why not tackel this on your own and save the accounting fees?  Every year we spend needless time correcting mistakes made by clients who attempted this seemingly easy task on their own.  The penalties and interest from Canada Revenue Agency were far greater than the accounting fees would have been if we had filed the returns for them in the first place.  On average, when we have prepared the year end, the fees to file the T4 are about $200 or less (depending on the number of employees).  Do what you do best - and hire out the rest!

There are four main changes to CPP effective January 1 2012:

1. The requirement to stop working or reduce earnings in order to apply for early benefits is removed.
2. CPP recipients who continue to work will continue to make premium contributions (as well as their employers) to age 70.
3. The rate of adjustment for early and late pension application increases.
4. The low earnings years ‘drop-out’ provision is increased.

These changes do not affect those already receiving CPP retirement benefits UNLESS they will not be 65 before 2012 AND are still earning pensionable earnings. These individuals will have to start contributing again in 2012.

For those who are between the ages of 65 – 70, they can elect to stop making further contributions to CPP by filing form CPT30. For those who are self-employed, this election is made on their tax return.

These changes are significant, time sensitive and should be reviewed with your financial planner.

Meals and entertainment expenses are often a significant portion of the advertising budget for businesses. Time spent with clients, potential clients and strategic alliances are a productive way to build relationships which ultimately build business. Often what makes perfect sense to the business owner may not make sense to the tax governing bodies. Understanding the rules will help you make the most of this deduction.

Meals and Entertainment

For the meal to be deductable for tax purposes it must be incurred for the purposes of producing business income. For example, taking a customer out for lunch or to a hockey game strengthens the relationship which is generally considered a valid business expense. Even though the expense is allowed for tax purposes, only 50% of the meal or box seat is deductible. The background to the 50% deduction is that there is a personal element to expense, so CRA restricts the deduction (the HST recovery is also restricted). There are however a few exceptions to the 50% limitation such as certain celebratory events such as Christmas parties*and specific industries such as those in the food industry*(see IT-518R for additional exemptions).

Receipts

When claiming meals, it is important to keep adequate documentation which includes the itemized meal receipt and, if paid by credit card, the payment receipt as well which indicates the tip. Submitting a credit card statement only will not get you very far with an auditor.

Memories fade so be sure to make a note on the receipt indicating who joined you for the meal and how it relates to business. Attaching a business card to the receipt is a quick way to accomplish this.

Recent Audit Rulings

Without sufficient proof that the expense is necessary for business purposes, the expense may be denied by the tax department. Recent audits of meals and entertainment expenses denied single meal receipts considering these to be personal in nature (an exception to the single meal receipt is when the meal relates to travel). Another reason to pick up the tab!

As a business owner, you'll want to make the most of your meals and entertainment budget. Understanding the tax rules will help you get the most out of these expense dollars.

The minimum wage increased in BC May 1, 2011.  The general minimum wage has been increased to $8.75 per hour.  Liquor servers had their minimum wage increased to $8.50 per hour.  The first job/training wage of $6.00 per hour is no longer in effect.  Check your payroll records before your next payroll run to be sure you are meeting the minimum standards.  For additional information check the BC Government Minimum Wage Factsheet.