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.

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  The first job/training wage of $6.00 per hour is no longer in effect.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.

The Fairness for Self-Employed Act now allows self-employed persons access to EI special benefits on a voluntary basis; these benefits include:

• Maternity benefits - maximum 15 weeks, available to birth mothers,
• Parental / adoptive benefits - maximum 35 weeks, available to biological or adoptive parents while caring for a newborn or newly adopted child.  May be taken by either parent or shared between them,
• Sickness benefits - maximum 15 weeks, available to a person who is unable to work because of sickness, injury or quarantine,
• Compassionate care benefits- maximum 6 weeks, available to persons who must be away from work temporarily to provide care or support to a family member who is gravely ill with significant risk of death.

If you consider ONLY the income tax (BC Personal tax and the Active Small Business Corporate tax rate), you should be indifferent what form your income takes - either salary or dividend.  Our tax system is designed so that there is close integration of tax on these two sources.  However, there are several other factors that should be considered when making the salary versus dividend decision including:

• CPP
• EI
• RRSP Contribution Limit
• Income splitting
• Old Age Clawback