Retained earnings are an important concept in accounting, including in Canada. Here’s an explanation of what retained earnings are and their significance: Definition: Retained earnings represent the cumulative net income or profit of a business that is retained within the company rather than distributed to shareholders as dividends. It’s essentially the portion of a company’s […]
In Canada, as in most other countries, the distinction between the income statement (also known as the statement of comprehensive income) and the balance sheet remains the same as described earlier. However, there may be slight variations in terminology or formatting based on accounting standards or regulations specific to Canada, such as those set by […]
Calculating the capital gain on a rental property involves determining the difference between the property’s sale price and its adjusted cost basis. Here’s how you can calculate it: Capital Gain = Sale Price – Adjusted Cost Basis Tax Considerations: Reporting: Report the capital gain on your income tax return for the year in which you […]
Depreciation of a rental property is the process of allocating the cost of the property (excluding land) over its useful life for tax purposes. It allows landlords to deduct a portion of the property’s cost each year as an expense against rental income, reflecting the wear and tear or deterioration of the property over time. […]
Expenses and capital assets are both financial aspects of owning and managing a rental property, but they are treated differently for tax and accounting purposes: Expenses: Capital Assets: In summary, expenses are ongoing operational costs necessary to maintain and manage a rental property, deductible against rental income in the year they are incurred. On the […]
Landlords can deduct various expenses related to their rental properties to reduce their taxable rental income. Some common deductible expenses for rental properties in Canada include: Mortgage Interest: The interest portion of your mortgage payments is deductible. Property Taxes: Taxes levied by the municipality on the property are deductible. Insurance: Premiums paid for property insurance […]
Bookkeeping is essential for maintaining accurate financial records for your business. Here’s a general guideline on the information you should provide and keep: Business Transactions: Record all financial transactions related to your business. This includes sales, purchases, expenses, and any other financial activities. Sales Records: Keep detailed records of all sales transactions. This includes invoices […]
If you are a business with sales exceeding a certain threshold, you are required to register for the Goods and Services Tax (GST) and the Quebec Sales Tax (QST), which are commonly referred to as TPS (Taxe sur les produits et services) and TVQ (Taxe de vente du Québec) respectively. Registration for these taxes depends […]
Eligible expenses refer to expenditures that can be deducted or claimed as tax credits by individuals or businesses to reduce their taxable income. These expenses are typically incurred for the purpose of earning income or carrying on a business. Here’s an overview of some common eligible expenses in Canada for individuals and businesses: It’s important […]
Let’s walk through a demonstration of how taxes and contributions are calculated for a Canadian corporation based on its income statement. For simplicity, we’ll use fictional numbers and assume the corporation is subject to the federal corporate income tax rate and relevant provincial tax rates. Here’s a sample income statement for our fictive corporation: Revenue: […]
Clinton Tano Professional Corporation
