Hollingsworth & Associates

TFSA Concerns for the Investors
There are many people who are concerned as to what their TFSA “limit” is, and rightly so. Any overcontribution results in a “penalty” equal to 1% per month on the overcontributed amount. You should learn how to pull that overcontribution out pronto, or make sure you are making more than 12% / year on your investment income.

Now, investment income isn’t what you think it is. It’s not the result of you buying a stock, and selling it, and recognizing a gain. Especially when you are plugged into your computer and love “day trading”. This occurs when you are market savvy, and know when to buy, when to hold, and when to sell, and do that in order to make your investment grow.
Today, an article in the Financial Post regarding a “day trader”, indicated his contribution to that program was made early when the TFSA accounts were a reality, and was about $15,000. He was a stock broker, and had the knowledge of when to buy penny stocks and when to get out. After a short period of time, his $15,000 became closer to $600,000, and of course CRA comes dancing by with their hand out. Day trading is considered having a “business”.
A business is subject to income reporting, and it is not sheltered within a TFSA.
This person was reassessed about 4 years tax returns, and of course, his investments wouldn’t even be considered of a capital nature. They would be considered his “inventory”. He was buying inventory, and selling it at a profit. There is no capital gains exemption when you sell inventory. There are sales, cost of sales, and expenses. The bottom line is subject to CRA and the Taxation laws we have to understand, or at least abide.

So, the short of it is, when you are trading stocks within a TFSA, keep in mind, it is a business, and as such, is subject to income tax reporting.

Not everyone who buys stocks really know what they are doing. In some cases, you will loose. I believe the flip side of this situation should prevail, and business losses, providing you have a “reasonable expectation of profit”, should be held to offset any future business profits. I’d tread softly here, because at this point, it’s not about having a non capital loss to carry forward, it’s about investing, and loosing your money.

Jack

CRA offers $500 one time non taxable housing benefit for those that qualify. A single person can apply if their income in 2021 was less than $20,000 and for a couple, the family income cannot exceed $35,000.

The link is available for your “clicking pleasure” if you go to the Links tab, and check for “Housing Benefit Link”.

Jack

Many things have affected our lives in the past few years, since we first became aware of a pandemic that would take many lives, and leave many sick, in it’s wake.  

Businesses folded in a lot of sectors, and businesses changed where it needed to in order to survive. 

Our bookkeeping/accounting services had to change as well, in order for us to accommodate the curve balls that were tossed our way. Our costs in doing business changed, our prices changed to reflect some of those cost changes, and the daily way of doing things for us also dramatically changed. 

We are now settling into a new “normal”, and hopefully most of the changes that were made will be a benefit to us.

This year, in Canada, we are expecting again a personal tax filing date of April 30 which falls on a Sunday.  In all probability, the extension will get carried over to May 1, the first working day.  You may already know that T4’s reporting income from employment are required to be filed by employers, by February 28, or a penalty will be imposed on that company.  T3’s which report income from Trusts, are not due until March 31, allowing an extension for the companies issuing those documents.  

The problem with that situation for most of us, is that even thou the form may not be received by you before you file your tax return, it remains your responsibility to report income from all sources.  Failing that, CRA may reassess your filed tax return, even a year after it is filed, to include the unreported income.  The penalty in not reporting income is not something you should take lightly.  It can be very significant, and repeated times, even more expensive from a penalty and interest point of view.  

This year we are hopeful that you can round up your documents required for your tax reporting, put them in an oversized envelope with your name, address, phone number and email address, and make a note to us if you have made any changes that you believe is of importance in your tax filing.  A change of address, marital status, and phone number is important to us.  That file can be dropped off through our office door, when the building is open from Monday through Friday from 9:30 am until 1:00 pm.  We will contact you when we have any questions and when your tax return is ready for your signing authority for us to e-file your tax return. 

Our building is not fully occupied, and keeping restrictive hours allows for the landlord to safeguard the hallways, and doorways from unwelcome intrusion. 

Sometimes your cost of medical expenses paid out of pocket could have a bearing on your tax return.  We suggest that if you purchase prescription drugs, that you contact your pharmacy, and ask them to prepare an annual statement for you, for last year.  It is so much easier to look at that organized statement with it’s totals, than it is to add up little bits of tax deductible receipts.  The time saving to us is very much worth the extra step in just asking for a statement of your transactions with the pharmacy. 

Charitable donations can contribute towards a tax reduction when you file.  Modifications to your home to help towards your better health can sometimes be used.  Examples would include grab rails in your tub area, as well as modifications in your doorways to allow for an easier wheel chair passage.  You will know when you have paid out of pocket, those things that relate to your better health, and include those items for us to consider on your tax return. 

Those of you that have never had your own business will not know that the filing deadline for self employed individuals is June 15, and not April 30.  Those of you that have never had your own corporation may not know that the corporation is considered a “legal entity”, and also is required to file a tax return.  The filing deadline for each company is within 6 months of it’s “year end”.  Every company decides on it’s own year end, and stays with that date almost forever, while it is still considered a company. 

Please let us know of any specific questions you have regarding your bookkeeping, accounting and tax concerns.  We will return your phone call as soon as possible, and truly appreciate your questions left with our answering support.  When you simply want a return call, it really catches us off guard, so it is much better to be specific as to your question, or concern.  It gives us a chance to gather information together, or research an answer for you. 

Emailing to us is a very good way to document your information, and we will provide a “portal” where you can provide files, and scans in a secure manner, where the information doesn’t linger through an email service provided.  

We wish for all of you a very safe, and happy journey through the new year.  For your general interest, and if you made it this far in this blog writing, we are travelling around 1,000 miles per hour on the earth’s axis, and about 67,000 miles per hour around the sun.  

And you thought we were slowing down? 

Take care

Your Hollingsworth and Associates Team 

We will soon have the 2020 preparation of your personal tax returns on our desk, and we thought we would try to be more prepared than last year, when the pandemic, Covid-19 was first announced.

In order to accomplish this, there are a few changes we have made, that may help streamline our process to process your tax returns soon.

We have opened a “Self Help Desk” that you can access Here!

It is part of Zen Desk, and we are truly new at it, and hope you bear with us on it. We will try our best to document some of the most frequently asked questions (FAQ’s), and they point to a URL, or a link on your computer search bar. When we get your email asking the questions that are quite common, we hope you won’t be offended if we copy and paste the URL that gives an answer, and it will save us time, and point you to the “Self Help Desk”.

We know that you have computer access when you can read this little message, and because of that, we thought you should know that we do have a mail slot put in our office door, that we waited patiently for 3 months for it’s installation. It will accommodate something larger than the envelopes that you have been previously shuffling under our doorway, and hope that you can benefit from it. I am still searching if CRA has a program that will underwrite that cost the same way they do for the plastic screens hanging down in front of the cashiers, in the stores that you may have to frequent. Oh well, if they don’t they don’t.

Take care, and stay healthy, safe, and happy. It has taken us from 1918 to realize that we didn’t get it right then, and hopefully, if we get it right this time, our children’s children, and theirs may not have to go through the tragedies, and separations from loved ones that we did this time around.

Regards,

Your Hollingsworth and Associates Team

There are a number of government programs available for individuals, self employed business people, and business that require no interest demand loans, with a portion forgivable as grants, probably taxable.

Most of the information is available on the Canadian Government’s website, and I will write the link for your contemplation.

We can surmise that the attention given to “free” anything will be pretty great, and the best, and wisest know that free is only the time that has been given to us, to spend how we best choose, and anything else comes at a cost, or a price to be paid.

There will be a tremendous effort put into scamming the system, and I’m sure an equal and opposing effort to either stop that from happening, or, in the least, a good, costly follow up to make sure that those that took advantage of an unfortunate situation, will participate in the payback, in one form or another.

We try our best, in our office, to assist those in enrolling in the programs that would best benefit, and of course, it never ceases to amaze me, that those that reported less than $5,000 in income last year, would like now, to fess up, and report an amendment reporting an even higher income, possibly because it serves some advantage to them now. Should I wink, wink?

Here is some Government reading for you Here

Have a nice day!

Jack

Good morning.

We have been anxiously waiting for our office door to be fitted with a mail slot to allow anyone desiring to drop off documents when we are not in the office, to do so.

We have been informed that the necessary part which has back ordered for more than three months, has arrived, and we are hopeful that our door will be fitted with the mail slot, on Thursday November 12, 2020. The office building has been locked down since March, and is open between Monday and Friday between 9:30 am, and 1:00 pm. After and before those times, the doors are electronically locked.

You are more than welcome to drop off any documents you feel should be provided to us, anytime commencing November 12, between 9:30 am, and 12:00 pm, from Monday to Friday. We are only physically in the office on Thursdays, generally to pick up documents left for us, and to provide for a picking up of any documents that should remain with you.

We have retained in our office, your 2019 documents provided to us, and we would like to provide those files back to you, to be held by you.

In order to accomplish this, we would like “pick up appointments” to be made by you, where the appointments are equally spaced about 6 minutes apart to allow a steady but relatively constant flow of tracking in our building. The purpose of the appointment is to allow us time to secure, and place your file, outside our office door, on a pick up table, for you. We are thankful for you cooperation in scheduling a pick up appointment at your convenience, and will adjust the days for pickup available as more appointments are being made. We will start off with Thursdays, and gradually open the number of days a week for pickup, as time requires us to do so.

It will be nice to get back to our former routines for your tax preparation, and in case we must remain in a state of isolation to some degree, we will continually do our best to accommodate the process that is best for you.

Please do not hesitate to contact us by phone, or email, anytime, if you have any special requests, or concerns. It will be our pleasure to assist you whenever we can.

Sincerely,

Your Hollingsworth & Associates Team

This is the link to the our appointment calendar :Click Here