A Good reason to shop (hint: reduce your Tax bill)
Hello All,
As we approach the year end, I thought I would give everyone a quick tip and an excuse to shop.
As many of you might know, fixed assets such as furniture, computers, cameras, printers, large tools or something else that is specific to your business cannot be claimed all in one year as an expense. Rather you can only claim the depreciation amount based on a rate established by Revenue Canada. This is referred to as capital cost allowance or CCA.
In 2018, CRA increased the amount of CCA you can claim, on fixed assets, as an incentive for businesses. This allowed businesses to claim 3 times the amount of CCA than they normally could under the regular rules, thereby resulting in a higher tax deduction in the year of purchase ( offset by a lower deduction in future years).
Starting in 2024, this incentive (called the Accelerated Investment Incentive) is starting to be phased out. Consequently, the deduction, that was formerly three times has now been reduced to double the CCA (that you would normally be permitted to take in the first year of buying an asset). This still lowers your taxes payable, but the amount is less.
It should be noted that this deduction, for unincorporated business owners, is particularly beneficial in a year where your income is high as the amount of the deduction results in a more valuable tax benefit, due to marginal tax rates. (let me know if you want to understand how this works and I will write a future newsletter around it. You can simply reply to this email with "marginal tax rates")
So, if there is large purchase that you need to make anyway within the next few months, such as a new computer or desk or something work specific, it might be a good time to buy it now, before the year end. Not only might you be able to get a Black Friday/Cyber Monday/Boxing Day (or whatever they call it) deal, you can also save on your taxes.
Announcements
Webinar: Year-End Tax Planning Tips For Small Businesses
I am doing another Webinar for YES Montreal to help small businesses prepare for the new year. This one costs $20, but it's for a good cause as all the proceeds go towards a good cause :) (and a recording will be available).
Hope to see you there!
GST/HST Made Simple Course
I'm excited to share that I'm putting the finishing touches on a new GST/HST course. This builds on my webinar from September - I've added resources, templates and guides and broken it up into easy to understand sections.
The goal of this course is to help small business owners, administrators, solopreneurs to confidently manage their GST/HST filings, save both time and money, and make compliance as easy as possible.
Join the Waiting List for Exclusive Early Access: You’ll be the first to know when the course launches—and you’ll receive an exclusive discount just for signing up early!
From the Blog
How The CRA AII Program Increases the Tax Deduction for Computers and Other Fixed Assets:
For those of you who are interested in the mechanics of how the AII program works, check out my blog post complete with an example.
Accounting and Tax Treatment of Computers
A related post on how to account for computers and ordinary tax treatment (without the AII program). Note that you can still use this method, if you choose.
Video Tutorials
How To Account for Fixed Assets and Depreciation in QBO. In this tutorial I explain how to reflect fixed assets and depreciation in QBO and then show you how the financial reports (balance sheet and profit loss) are impacted by the entries.
Check out my channel for other QBO, accounting and tax tutorials
If you find the videos useful, please subscribe.
If you would have a request for a video please leave a comment directly in the video or email me directly at ronika@montrealfinancial.ca
Articles of Interest
The point of this measure is confusing to me (it seems that a tax break could have been accomplished in a simpler way) and is going to be an administrative hassle for small businesses that have to implement and report on it. This article from PwC is a good breakdown of the key considerations. You can also see more on the original announcement here.
Funding/Support for Canadian Entrepreneurs:
A good list of funding and support initiatives for Canadian small businesses for women, young entrepreneurs, indigenous people and everyone else.
A Six Step Financial Plan for Canadians
From WealthSimple, some common sense advice that serves as a useful reminder.
Apparently interest rate cuts haven't helped Canadian Small Businesses
"Despite the early optimism, Canadian small businesses have yet to feel the lift that they hoped lower inflation and rate cuts would deliver."
An interesting video about the evolution of the internet
From the creator of Patreon. I find his storytelling to be quite compelling.
How I Help
My goal is to simplify finance, accounting and tax for small business owners, minimize the stress that comes from uncertainty and help improve confidence through financial literacy.
Free Resources
Small Business Books
All books are also available on Amazon
Consulting Services
For those of you who would like personalized guidance about your situation, I provide one one one consultations. For more details, and to book a consultation, check out my services page.
Note that I no longer provide ongoing accounting or tax preparation services.
Reviews/Feedback
For anyone who has purchased my books through Amazon, a review would be greatly appreciated.
I would love to hear your comments on my current blog posts, topic ideas for new blogs, book feedback or anything else that you want to talk to me about. You can use my feedback form or email me directly at ronika@montrealfinancial.ca.
Finally, if you think anyone would benefit from this newsletter, you can send them to my subscribe link.
Wishing everyone a successful start to their holiday shopping!
- Ronika
