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Ledgers in Partnership with the Law Firm HART Legal!

Ledgers Accounting is always looking for new ways to provide a one stop shop for our customers. We have helped tens of thousands of clients with their tax issues, but many of our clients also have business law issues.

Often, it is as simple as incorporating a company or having employment agreements created. However, from time to time businesses must either initiate a lawsuit or defend themselves against a claim.

In order for Ledgers to better serve our clients, we have teamed up with an innovative law firm in Canada called HART Legal. They currently have 18 law firms. The law firm is able to provide our clients with legal advice since accountants are not allowed to.

“We are extremely excited to be working with a large accounting firm such as Ledgers. The dedication to their clients made Ledgers a good cultural fit for us.” said Alistair Vigier of HART Legal.

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Home Office Expenses, Can You Claim Them? and What Can You Claim?

NOTE: This article concerns home office expenses for a business, not an employee working from home.

 

Owning a small business can have several perks, one of them being the ability to claim the cost of operating from a home office. In effect, some of your living expenses can become a deductible cost for your business.

There are of course a couple of conditions. To be able to claim home office expenses, you must meet ONE of the two following conditions:

1. It is your principle place of business;
or
2. You use the space only to earn business income, and you use it on a regular and ongoing basis to meet clients, customers or patients.

Point #2 is a very sticky one; the space must be a distinct and separate area of your home and cannot be used for any other purpose. In other words, using the kitchen table twice a week for processing paperwork does not entitle you to claim home office expenses.

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Section 160 Assesments, What Are They and How Can You Fight Back?

As a small business owner, you have likely heard “put it in your spouse’s name, and you can protect it from CRA”. Well, as usual, advice from your neighbour is not always accurate.

Under Section 160 of the Income Tax Act, the Minister (CRA) can attach liability to another individual that has received a transfer of property when the person transferring the property has an outstanding tax liability.

Note: Section 160 of the Income Tax Act is virtually identical to Section 323 of the Excise Tax Act so the same rules apply to GST/HST liabilities.

So, to make this a little clearer, Jane and Bob are married. Jane owes the CRA $50,000 in taxes and the CRA is getting aggressive. To ‘save the house’, Jane transfers her interest in the home to Bob. Bob now exclusively owns the home.

Using the provisions of Section 160, CRA can assess Bob for the taxes that Jane owes because the transfer was merely a means of avoiding the tax liability.

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Is YOUR Investment in Your Business Secured?

When you start your business, you likely apply for a loan; the Bank makes you sign a General Security Agreement, pledging the assets of your business (and likely personal assets) to cover the loan in case something goes wrong.

In other words, the bank is a secured creditor.

The Canada Revenue Agency holds Directors of a Corporation and owners of Sole-Proprietorships accountable for ‘Trust Funds’ – GST/HST and Payroll Taxes. Therefore, CRA is also secured.

Often if you lease equipment or finance equipment through a bank or other third party, they too will likely require a General Security Agreement to protect their interests.

But what about the money you personally invested in your business?

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