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Now viewing: July 2019

Employee Expense Claims: The Good, The Bad, and the Head-Scratchers

Posted July 28, 2019

Shaw & Associates Chartered Accountants is happy to take on all of your accounting needs, including checking and reimbursing employee expenses. 

There is a rise in non-allowed employee expense claims in Canada, with some of those claims varying from puzzling to outrageous. Having a good plan for employee expense reimbursement and having someone like Shaw & Associates working with you will go a long way to preventing employees from taking advantage of an expense reimbursement plan.

Legitimate Expenses Reimbursed – No Problem

Most companies reimburse employees for legitimate expenses they have incurred on behalf of the company. These include things like travel costs that an employee pays for a work trip, supplies that an employee buys for use in the business, or costs incurred while meeting clients for the business. These expenses should be reasonable and common for your industry. For example, a salesperson who is often required to meet with clients at their job would normally be reimbursed for the expense of driving their car to the client’s worksite.

Nope, No One Gets to Claim for THAT!

While most employees who put in claims for expense reimbursement are not trying to take advantage of their employer, some employees seem to operate on the basis of a, “You never know if you don’t try it” system. 

Some of the more notable claims for expense reimbursement that employees have tried to claim are for illegal activities, expensive restaurants (far beyond what would be normal for taking a client out for a working meal), hiring a limousine when a taxi would have sufficed, or buying personal items for the employee or the employee’s house.

Expense Plan and Employee Engagement

Your best plan is to have an employee reimbursement plan, discuss employee expense reimbursement with all your employees regularly, and make sure everyone understands what is and what is not a legitimate business expense. It’s also an extremely good idea to require proof of expenses for all expense claims, and make sure these receipts are checked before money is given out.

Here’s a quick video with some tips on staff expenses and reimbursement.

Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.

Death and Taxes

Posted July 3, 2019

No Inheritance Tax In Canada—Except…

There is no inheritance tax as such in Canada, and you do not need to pay income tax on money you inherit. What happens in Canada virtually amounts to an inheritance tax, however, and should be planned for with a financial expert.

Your Assets Will Be Considered Sold And Taxed

In Canada, an estate will be considered to be liquidated upon the death of the owner of the assets, bank accounts, RRSPs, TFSAs, etc., and the estate will be required to pay any taxes owing on these assets before releasing any money to beneficiaries.

As noted in RetireHappy.ca, “Reme[m]ber that at death there is no tax on the asset but there is a potential deemed disposition of the asset for taxation purposes.” This is a critical point and the reason estate planning needs to be done with a financial professional like those at Shaw & Associates—preparing for this type of taxation in advance can save the estate quite a bit in taxes.

This Includes Real Estate, Land, Investments, Etc.

Real estate, land, businesses, RRSPs, RRIFs, TFSAs and other investments may all be considered to be “sold” upon death of the owner, with the taxation rates that come along with that.

Again from RetireHappy.ca, an example comes from Real Estate, “whether it’s an investment property or a recreational property. Let’s pretend Elizabeth has an investment condo that she has owned and rented out for over 15 years. When Elizabeth passed away on June 30th, her condo is deemed to have been sold for tax purposes. Let’s say she paid $150,000 originally for the condo and now it’s worth $275,000. There is a capital gain of $125,000 of which 50% is taxable. Elizabeth’s final tax return would have to show net rental income for 6 months of the year plus the $67,500 of taxable capital gains.”

Plus The Probate Fees

There are also probate fees to be considered: “Probate is a legal proceeding whereby the Will of a deceased person is validated by the courts. The fees vary from province to province and in most cases these fees are based on a percentage of the value of the estate.”

Here is a brief video talking about the process of filing a tax return for a deceased person.

Don’t Pay More Tax Than You Have To

A death in the family is a very stressful thing, but talking to a financial professional like Shaw & Associates well in advance and making good plans is a very, very good idea. And can save you from having to pay the government a ton of money!

Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.