Keep The Invoices

Improper input tax credit (ITC) documentation is one of the main reasons for GST/HST reassessments. Proper invoices to support ITCs are required by Canada Revenue Agency auditors. For example, the input tax credit may be disallowed if only the credit card slip is provided rather than the actual invoice.

The supplier’s GST/HST registration number should be printed on the source document. Some clients use credit card receipts, bank statements, and cancelled cheques to substantiate the GST/HST input tax credits. However, none of these documents show the supplier’s GST/HST registration number.

Early CPP

Normally, you would start your retirement pension the month after you reach 65. However, you can begin the CPP as early as your 60th birthday or as late as your 70th.

The amount of the pen-sion is adjusted by 0.5% for each month that you start to receive your pension ei-ther before or after your 65th birthday. It is a permanent adjustment, which means that if you decide to take it before you reach 65, it will not be adjusted when you reach 65.

Here are some examples. If you commence your pension at age 60, your monthly payment will be 30% (12 months x 0.5% x 5 years) lower than if you wait until age 65. However, by starting sooner, you are more likely to get a pension for a longer period of time. Or if you start your pension at 70, your monthly payment will be 30% higher than it would have been if you had taken it at age 65. However, if you apply for the CPP after age 70, retroactive payments are only payable for a maximum of 12
months.

To qualify for the CPP between 60 and 64, you must do one of the following:

• Have low earnings. Your earnings must be less than the cur rent maximum monthly CPP retirement pension ($934.17 in 2010) in the month prior to the month your pension begins and in the month it begins.
• Stop working. By stopping work, it means that you are not working by the end of the month prior to the month CPP retirement pension begins and also during the month in which it begins.
• Once you receive your Canada Pension Plan pension, you can work as much as you want and it will not affect your CPP payment. Unfortunately, you cannot contribute to the CPP on your future earnings.

Employment Insurance Benefits for Self-Employed People

Since January 2011, self-employed Canadians will be able to voluntarily access Employment Insurance (EI) special benefits. There are four types of EI special benefits:

• Maternity benefits (15 weeks maximum) available to birth mothers. It covers the periods surrounding birth. A claim can be submitted up to 8 weeks before the expected date of birth;
• Parental / adoptive benefits (35 weeks maximum) available to adoptive or biological parents while they are caring for a newly adopted or newborn child. It may be taken by either parent or shared between them;
• Sickness benefits (15 weeks maximum) which may be paid to a person who cannot work because of injury, sickness, or quarantine; and
• Compassionate care benefits (6 weeks maximum), that may be paid to persons who have to be away from work temporarily to provide support or care to a family member who is gravely ill with a significant risk of death.

You may be eligible to access the EI special benefits beginning in January 2011 if you:

• Are a self-employed person; and
• Are a Canadian citizen or a permanent resident of Canada; and
• Have voluntarily entered into an agreement with the Canada Employment Insurance Commission through Service Canada.

Self-employed Canadians will be required to voluntary opt into the Program at least one year prior to claiming benefits. They will make premium payments beginning in the tax year in which they enrolled in the EI Program. The program had a start date of January 1, 2010. Claims could be made beginning January 1, 2011.

Self-employed individuals need to have earned a minimum of $6,000 in self-employed earnings during the previous year to access the EI special benefits.

Self-employed persons can opt out of the EI Program at the end of any tax year, provided they have never claimed any benefits. If a claim for benefits was made they have to continue to contribute to the EI Program on their self-employed earnings for as long as they are self-employed.

Self-employed Canadians that opt into the EI Program will pay the same EI premium as salaried employees (maximum of $787 in 2011). She or he will not be required to pay the employer’s portion of the EI premiums.

Self-employed residents of Quebec continue to receive maternity and paternal payments under the Quebec Parental Insurance Program. Self-employed Quebec residents could also choose to apply for the federal program mentioned above.

Do you have to file a tax return?

A tax return must be filed if you have to pay income taxes. A tax return must also be filed if you have not repaid all amounts withdrawn from your RRSP unde the Home Buyers’ Plan or the
Lifelong Learning Plan.

Other situations may warrant the filing of a tax return. They are:

• You want to claim a refund;
• You want to apply for the GST/HST credit;
• You want to carry forward the unused part of your tuition and education amounts;
• You received income for which you contribute to an RRSP. To keep your RRSP deduction limit up to date, you must file a return; and
• You or your spouse wants to begin or continue receiving Canada Child Tax Benefit payments.

Balancing the books isn’t always easy.

Business owners understand the importance of keeping records up-to-date. Unfortunately, pa-perwork has a habit of piling up – quickly!

PADGETT BUSINESS SERVICES now offers a solution – PADGETT CONNECT

PADGETT CONNECT is an easy-to-use business software applications package that is customized for your business. You don’t need to be a com-puter whiz or an accountant to use this product. New users can start entering their records within a ½ hour of installation on their computer. The pack-age contains the following:

PADGETT CHEQUEBOOK –– Makes bookkeeping simple PADGETT INVOICING – Tracks and reports sales, customers and products

PADGETT PAYROLL — Makes paying your employ-ees controlees a breeze and keeps you in control

For more information on PADGETT CONNECT , visit us at www.padgettconnect.ca or contact your Padgett representative