The Benefits of Taking a QuickBooks Training Course

Your business may be small but, even if you don’t feel you need a CPA (Certified Public Accountant), you do need to keep accurate financial records.

This task can be overwhelming but it is vital to the success of your business.

Luckily, there is accounting software available to help small business owners manage their finances as well as many other aspects of business.

Liu & Associates understands the value of being able to take care of business matters. Because of this, they recommend and offer training for an amazing accounting program called QuickBooks.

What is QuickBooks?

QuickBooks is accounting software geared toward small and medium sized businesses.

Some features of the software include:

  • Track income and expenses
  • Capture and organize receipts
  • Track mileage
  • Manage bills and payments
  • Send invoices
  • Maximize tax deductions
  • Accept payments
  • Track sales and sales tax
  • Payroll
  • Track inventory
  • Run reports
  • Send estimates

QuickBooks is designed to support multiple users as well as connect with third party apps.

Why Do So Many Small Businesses Use QuickBooks?

QuickBooks provides a do-it-yourself solution for small business accounting.

The interface is user-friendly and customer-oriented. With a QuickBooks training course, anyone can master this program.

The software also helps small businesses easily manage their taxes, which ensure that taxes are filed properly along with all the necessary information.

QuickBook’s integrated tools help businesses to increase their efficiency and productivity. They also regularly update and improve the software in order to keep the program up-to-date.

Most importantly, QuickBooks offers automated backup services, meaning that all of  the business’s information is safe from data loss.

What Are the Benefits of Taking a QuickBooks Training Course?

1. The Program Can Be Overwhelming

Because QuickBooks incorporates so many wonderful and helpful features, it can take some time to figure it all out. Even with a user-friendly interface, it can be a challenge to easily navigate the software upon first use.

A QuickBooks training course will guide you through using these features and help you gain the confidence to do so in a professional setting.

2. You’ll Learn its Full Capabilities

Even if you are able to grasp how to use QuickBooks, there are some features you may not be aware of. A QuickBooks training course will help you take full advantage of the program’s full capabilities.

QuickBooks’ full array of features are designed to increase the effectiveness of a small business’s accounting department. Understanding how to use them all is valuable knowledge.

3. It’ll Show You How to Apply Your Bookkeeping Skills

You may have plenty of experience as a bookkeeper but it may be difficult to transfer your practical skills to the QuickBooks software.

A QuickBooks training course can teach you how to combine your know-how with the program’s many features.

4. You’ll Make Yourself a Competitive Job Candidate

QuickBooks is quickly becoming the leading accounting software for small businesses. Knowing how to fully use the program is a valuable skill to add to your resume.

Having experience and training with QuickBooks can open the door to jobs in a variety of organizations, including:

  • Small businesses
  • Not-for-profit organizations
  • Government agencies

Businesses appreciate efficiency and productivity, which you can offer with your knowledge of using QuickBooks.

Ready to Step Up Your Business’ Accounting Game?

Liu & Associates is happy to offer comprehensive QuickBooks training!

Whether you are looking to introduce your staff to accounting, or train a new employee, Liu & Associates can tailor a QuickBooks training program to suit your needs. We offer one-on-one or group training sessions.

We work with your schedule to accommodate your QuickBooks training.

Contact us today for more information!

New Guidance for COVID Programs

As we are striving to bring you up to date information as quickly as possible, we are now providing you with further guidance from the www.Canada.ca site for COVID programs and benefits in relation to the Canada Emergency Response Benefit (CERB).

For those individuals who have received non-eligible dividends from corporations in which they held shares as the means of remuneration, the Questions and Answers section of the CERB application has been updated to address the qualification of this type of income in the application for CERB. Please note that non-eligible dividends are indicated in box 10 of any T5’s you would have received. The update is as follows:

Are self-employed small business owners eligible for the CERB?

Yes provided they meet the eligibility criteria including that they stopped working due to COVID-19 and do not earn more than $1000 in a period of at least 14 consecutive days in the first benefit period and for the entire four-week benefit period of any subsequent claim.

Small Business owners can receive income from their business in different ways, including as salary, business income or dividends. In determining their eligibility for the Canada Emergency Response Benefit:

  • Owners who take a salary from their business should consider their pre-tax salary;
  • Owners who rely on business income should consider their net pre-tax income (gross income less expenses);
  • Owners who rely on dividend income should consider this as self-employment income provided it comes from non –eligible dividends (generally, those paid out of corporate income taxed at the small business rate).

Income Requirements

What counts towards the $1,000 in income I can earn?

The $1,000 includes employment and/or self-employment income. This includes among others: tips you may earn while working; non-eligible dividends; honoraria (e.g., nominal amounts paid to emergency service volunteers); and royalties (e.g., paid to artists).

However, royalty payments received from work that took place before the period for which a person applies for the Canada Emergency Response Benefit do not count as income during that specific benefit period.

Pensions, student loans and bursaries are not employment income and therefore, should not be included in the $1000.

Applications will be verified against tax records to confirm income.

What income types count towards the $5,000 in employment and/or self-employment income?

The $5,000 includes all employment and self-employment income. This includes among others: tips you have declared as income; non-eligible dividends; honoraria (e.g., nominal amounts paid to emergency service volunteers); and royalties (e.g., paid to artists). If you are not eligible for Employment Insurance, you may also include maternity and parental benefits you received from the Employment Insurance program and/or similar benefits paid in Quebec under the Quebec Parental Insurance Plan.

Pensions, student loans and bursaries are not considered employment income and should not be included.

Does the minimum income of $5,000 have to be earned in Canada?

No.

The income does not have to be earned in Canada, but you need to reside in Canada.

If I am in receipt of dividends am I eligible for the CERB?

Yes as long as the dividends are non-eligible dividends (generally those paid out of corporate income taxed at the small business rate) and you meet the eligibility criteria.

Non-eligible dividends count towards the minimum $5000 in income required for eligibility. Non-eligible dividends also count toward the $1000 income threshold for a benefit period.

Do artists’ royalties count as employment or self-employment income with respect to the CERB?

Yes, in some cases. Artists’ royalties would be considered payments received as self-employment income if they were received as compensation for using or allowing the use of a copyright, patent, trademark, formula or secret process that is a result of their own work or invention. These royalties count towards the $5,000 income threshold, as well as towards the $1,000 that claimants can earn per month while receiving the Benefit. However, royalty payments received from work that took place before the period for which a person applies for the Canada Emergency Response Benefit do not count as income during that specific benefit period. Other royalties (i.e., from investment activities) do not count with respect to the Benefit.

To read this and more about the qualifications in order to make an application for CERB. Please go to: https://www.canada.ca/en/services/benefits/ei/cerb-application/questions.html .

 

For more information, please contact us today.

What Do I Do After Declaring Personal Bankruptcy?

Did you know that the average Canadian household owes close to $1.78 for every dollar earned?

It’s no wonder debt is a financial issue for Canadians, with many of them facing owing amounts so high that there is no hope of paying it off.

If you find yourself in this type of financial crisis, bankruptcy is an option for clearing your debts. However, it comes with certain obligations you are expected to fulfill.

What is Bankruptcy?

Bankruptcy is a legal process for individuals who seek relief from some or all debts when they cannot repay these debts to creditors.

Filing for bankruptcy requires a licensed insolvency trustee, who files the bankruptcy and sends a notice of bankruptcy to the creditors.

The creditors then cannot proceed with any lawsuits, garnishes or payment requests.

After filing for bankruptcy, you are eligible for discharge from the trustees after 9 months. However, the bankruptcy itself remains on your credit report for at least 6 years.

What Happens After My Bankruptcy is Filed?

Once the bankruptcy is filed, you are required to fulfill a few obligations with the trustee.

Your responsibility during the bankruptcy includes:

  • Sending your trustee proof of your income and a monthly budget once a month.
  • Notifying your trustee of any changes with your work or income.
  • Attending 2 credit counselling sessions. During these sessions, a credit counsellor will guide you through budgeting and money management techniques.
  • Making monthly bankruptcy payments to the trustee.

During this time, you can expect to no longer have to deal with creditor calls. When your bankruptcy is filed by the trustee, an “automatic stay” is forwarded to the creditors.

An automatic stay indicates to the creditors that they are not allowed to take collection action against you.

What Should I Do After I File Bankruptcy?

Once your bankruptcy is discharged, you will no longer be required to deal with the trustees.

However, although your obligations to the trustee are compete, there are measures you can take to protect yourself from future bankruptcy and rebuild credit.

1. Check Your Credit Reports

Even though filing for bankruptcy clears your debts, you want to make sure nothing was missed on your credit report before beginning to reestablish credit.

About 3 to 6 months after your discharge from bankruptcy, you should check your credit report.

This is not the same as checking your credit score, which you can do for free now through most bank’s websites and apps.

According to Canada.ca, you can order a copy of your credit report through Equifax Canada and Transunion Canada without affecting your credit score.

2. Start a Budget

The reason bankruptcy proceedings require you to attend credit counseling is to try to prevent a bankruptcy from happening in the future.

You should continue what you learned from the credit counseling even after your bankruptcy is discharged.

Additionally, before you begin to build credit again, you want to make sure you can afford payments on a credit card.

Healthy financial habits will help you avoid a future bankruptcy as well as help you rebuild your credit quickly.

3. Build New Credit

Although the bankruptcy remains on your credit report for a minimum of 6 years, you can begin to build credit again immediately after your discharge.

While some financial institutions will deny you credit due to your bankruptcy, many lenders will look at you as if you have never had credit before, since bankruptcy essentially clears your credit status.

In order to reestablish credit, you should begin with a low limit secured credit card. Secured credit cards, as opposed to prepaid cards, offers you revolving credit.

This means that you can borrow against the card as long as you keep the balanced paid. Secured credit cards require a security deposit.

Be sure to use the card responsibly and only spend what you can afford to pay off each month.

Is Bankruptcy the Right Option For You?

Whether bankruptcy is the right choice for you or there is another viable option to help with your debt, you should speak with a professional accountant to ensure you are heading down the right financial path.

Contact our experts at Liu & Associates for more information about bankruptcy and other debt-solving options.

 

New COVID-19 Protocols

Last updated December 15, 2020.

 

To all our clients, we hope that this finds you well and safe.

Like all of you, we have been affected in many ways by the pandemic as well so please know that we are here to stand with you and to give you support in what ways we can.

In hopes of protecting our clients and staff, we have put in place some additional measures.

  • We will not be scheduling office meetings with clients for the duration of the new restrictions, however, as before, we are offering meetings by zoom, teams or telephone conferencing;
  • All client drop offs will be by appointment only and because our front doors are now locked at all times, we ask that you call us when you arrive at our premises at your appointed time so that we can open our doors to you. A drop off table will be right inside our doors for you to safely drop off your materials with minimal contact, and;
  • A new doorbell is available for you outside our doors on the third floor, as well there is a calling system right at the front doors of the building that you can use to call up to our office.

At the time you make your drop off appointment with us , please let us know if you, or someone you have been in close contact with, have traveled out of the country in the last 14 days or if you are experiencing flu-like symptoms.

When arriving at our office you must be in compliance with bylaw 19408 which requires that you wear a face mask in all indoor public places indoors, if you do not have a mask, we will provide you with a non-surgical face mask. We will also request that you use the hand sanitizer which we will supply.

We thank you for your assistance and cooperation in this matter.  Please feel free to contact us should you have a special circumstance and require special arrangements.

To assist our clients, we have compiled a list of resources for both businesses and individuals. 

We thank you for your assistance and cooperation in this matter.

Please contact us if you have any questions about our services during this time.

 

Updated 12/15/2020

COVID-19 Tax Implications

The team at Liu and Associates LLP want to assure you we are closely monitoring the COVID-19 situation and recognize it is truly a global crisis and is constantly changing. This is an unprecedented time for all of us, and we feel the need for everyone to work together to weather this storm.

We want you to know you have our commitment to continue providing you with the services you depend on, including up to date economic information.

You are not alone; we are in this together. So, how are we working together to support each other?

Health & Safety

First and foremost, our plan ensures the health and safety of our employees and our clients. We have implemented special protocols and continue to update them to support our team and to ensure we maintain our ability to serve you, for the long term.

We are being very cautious and have put in place precautionary measures to limit the potential spread of the virus including:

  • Frequent hand washing, supplying hand sanitizer, and masks if needed.
  • By requesting any staff member who has been out of the province to self-isolate for 14 days.
  • Maintaining social distancing within our office.
  • Working remotely wherever possible and using specific software as a unified communication and collaboration platform combining workplace chat, video meetings, file storage, and application integration.
  • Taking steps to limit our outside contact and discouraging in-person meetings as much as possible by asking our clients to provide us with their tax or financial information electronically, and if that isn’t possible, to please make an appointment in advance for an in-person meeting.
  • Materials physically coming into our office are being quarantined, and our intake staff are using precautionary measures.

Monitoring

Our senior leadership team remains vigilant and is monitoring the situation in real time and responding swiftly as conditions evolve.

Please view our most recent update on our COVID-19 protocols.

Tax Changes

We undertake to keep you up to date on changing tax deadlines or government directives, as follows:

You may already be aware of Canada Revenue Agency’s (CRA) announcement to extend the personal tax filing deadline. So instead of an April 30th filing deadline for the 2020 tax filing season, Canadians will have until June 1st to submit their income tax return to CRA. The deadline to pay off any outstanding balances interest-free will also be extended, this time, to July 31st.

Businesses will also have more time to pay their taxes. The CRA will allow all businesses to defer, until after August 31st, 2020, the payment of any income tax amounts that become owing on or after today and before September 2020 including tax balances due, as well as required instalments, under Part 1 of the Income Tax Act.

No interest or penalties will accumulate on these amounts during this period. For more information, please see the statement from the Department of Finance. 

The CRA continues to monitor the evolving situation closely, in collaboration with other government departments and agencies as well as our provincial and territorial partners.

The Government of Canada is taking immediate, significant and decisive action to help Canadians facing hardship as a result of the COVID-19 outbreak. Today, March 18, 2020, the Prime Minister announced a new set of economic measures to help stabilize the economy during this challenging period.

These measures, delivered as part of the Government of Canada’s COVID-19 Economic Response Plan, will provide up to $27 billion in direct support to Canadian workers and businesses. For detailed information please visit their website.

Moving Forward

We are following the guidance of major public health organizations, including the Public Health Agency of Canada, local health authorities, and the World Health Organization, and will continue to do so as the situation unfolds.

To protect ourselves and the communities around us, we can’t stress enough to please follow all the protocols for COVID-19 including frequently washing hands, regular cleaning of work surfaces, and avoiding public or crowded places whenever possible.

Best of health, be safe, and take care of yourselves.

Your trusted financial team at Liu and Associates LLP

How Incorporating Your Business Can Affect Your Taxes

You own a small business and you’re ready to take it the next level. Incorporating your business carries many benefits including easier access to capital, enhancing your business’s credibility and creating an enduring legal business structure.

It also provides protection from personal liability, meaning that you can safely separate your personal assets from the business.

Does this mean you can protect your personal taxes as well?

Read on to learn how you can avoid having your taxes negatively affected by your business’s activities as well as tax benefits from incorporating and how to file your corporate income tax return:

What Does Incorporating a Business Mean?

When you incorporate a business, it means you are turning a sole proprietorship, or general partnership, into it’s own legal business structure. This business structure is set apart from the individuals who founded it.

Incorporation creates a separate legal entity in order to transact business.

Can Incorporating My Business Affect My Personal Taxes?

Because of the limited personal liability that incorporation offers, your personal assets are protected from tax-related issues.

There is an exception if you fail to deposit taxes withheld from wages. For those, you are held personally liable.

Also, if you treat the corporation as an extension of your personal affairs instead of as a separate legal entity, you could be held personally liable for financial issues. For example, you may be considered using your business as an extension of your personal affairs if you fail to follow routine corporate formalities.

As the owner, and as an individual, you are otherwise expected only to pay personal taxes on your income like any regular employee.

The corporation pays taxes on residual income after salaries, bonuses, overhead and other expenses are paid.

Can I Save Taxes By Incorporating?

In general, corporate tax rates are lower than personal tax rates – so there is opportunity to save taxes by incorporating.

However, in order to benefit from lower tax rates, the company would have to generate a substantial profit.

You can take advantage of lower tax rates if you earn more than you need to live on. Should your profit exceed what you require as a living wage, you can leave the difference in the corporation and pay a reduced income tax rate.

Otherwise, you can take advantage of income splitting in order to save taxes with your corporation. This involves splitting the business income with family members.

Income splitting can create tax advantages more beneficial than reduced tax rates.

Liu & Associates can prepare and file your corporate income tax return for you as well as take advantage of any and all tax benefits. Contact us to find out more information.

How Do I File Taxes for Incorporation?

Corporations are expected to file a T2 corporate tax return every year within six months of the end of its fiscal year. A fiscal year can be the same as the calendar year or it can begin in any months and end twelve months later.

You can file a corporate income tax return electronically with tax preparation software certified by the CRA.

The T2 corporate tax return is more complex than a personal income tax form. It is recommended that you have your corporate tax return prepared by a professional tax accountant.

If your corporation owes taxes after filing a return, the balance can be paid through the CRA online services, from the business’s bank account or by cheque.

Put Your Corporation In Good Hands

Navigating the world of taxes once you incorporate your business can be tricky and complicated.

Avoid making costly mistakes by contacting our expert accountants at Liu & Associates. We can help you properly prepare and file your corporate taxes so that you can experience all of the benefits of incorporating your company.

When Do I Need to Report Rental Income?

Renting property seems like a lucrative entrepreneurial opportunity as more and more individuals are renting out portions of their home and even offering space through popular accommodation services such as Airbnb.

Acquiring rental income is a great way to offset the cost of a mortgage or justify an investment in a secondary property.

However, if you are renting your property to a third party, you are required to report your rental income on your tax return.

While it may be tempting to not disclose this income to the CRA (Canada Revenue Agency), not doing so can lead not only to penalties but also missed opportunities for some tax savings.

What is Rental Income?

When it comes to claiming rental income on your taxes, rental income is considered to be any earned income from a rental property you own. This includes houses, apartments, rooms, office space and other real or movable property.

Rental income from Airbnb, income suits and any short term rentals must be claimed as well.

The duration of the rental, whether it be for one night, a week or a month, does not exempt the income from having to be claimed on your income taxes.

Exceptions to Claiming Rental Income

There is one exception to having to claim rental income on your income taxes – if you are renting a space below fair market value.

Renting below fair market value means that you are charging a rent significantly lower than rents charged for other properties that are similar to your property in your area.

Typically, home owners will charge family members below fair market value rent for allowing them to stay in their home.

If this is the case, you do not need to claim the income. However, you cannot claim any rental expenses or rental loss on your taxes.

The government considers this situation to be a “cost-sharing arrangement”.

Claiming Rental Income at Tax Time

If you are in a situation where you rent a property, or a portion of your property, at or above fair market value, the CRA requires that you pay taxes on the income earned.

In order to claim rental income on your tax return, you must declare the net income on line 160 of form T1. From there, you can subtract any qualifying expenses as well as capital expenditure depreciation expenses. The difference is your reported rental income.

Here are some common rental expenses that can be deducted against your rental income:

  • Advertising
  • Insurance
  • Mortgage interest
  • Repairs and maintenance
  • Property management
  • Utilities

To ensure that you are claiming the appropriate expenses for your rental property, contact the expert accountants at Liu & Associates for more information.

What Happens If I Don’t Claim Rental Income?

When the CRA expects you to claim any sort of income on your tax return, not doing so can lead to unpleasant consequences:

  • Interest accrual. If you owe taxes on rental income, and fail to report it, the amount can be subject to interest.
  • Penalties and fines. The CRA is within their rights to implement penalties for filing your taxes late. This amount is backdated to the time when the rental income should have been reported. Interest is also charged on the penalty amount.

Withholding your rental income from the CRA not only leads to financial consequences, but it also means that you miss out on the valuable deductions listed above.

Avoid the Confusion of Claiming Your Rental Income

Get in touch with the professional accountants at Liu & Associates to find out more information about how to properly claim your rental income as well as all of the tax benefits you can reap by renting out your property.

 

 

 

Does Declaring Corporate Bankruptcy Affect Me or My Credit?

Bankruptcy may seem like a golden ticket when you are looking at clearing debts from your creditors – but there are many things to think about before you file for bankruptcy, especially if you are doing so for your corporation.

One such concern is whether or not declaring corporate bankruptcy will affect your personal credit.

When it comes to owning a corporation, as opposed to a sole-proprietorship or partnership, you are not legally responsible for business debts.

However, there are exceptions for which you can be personally liable.

Before explaining these exceptions, it’s best to understand the difference between corporate bankruptcy and personal bankruptcy:

Corporate Bankruptcy versus Personal Bankruptcy

Because both individuals and corporations can own assets, they are both able to file for bankruptcy under the Bankruptcy and Insolvency Act.

The process is fairly similar, which a few key differences:

  • When declaring personal bankruptcy, all assets and liabilities are considered personal.

  • When declaring corporate bankruptcy, an incorporated entity is considered a legal “person” according to the Bankruptcy and Insolvency Act. This means that while some debts may be eliminated under bankruptcy, there are those exceptions that you may be held personally liable for.

The process of declaring bankruptcy is similar as well. The individual or corporate business owner must meet with a Licensed Insolvency Trustee (LIT) to file for bankruptcy. Once the bankruptcy is filed, creditors are notified and not permitted to contact you regarding the debt.

From the date of filing, you are eligible to be discharged from the bankruptcy after 9 months. However, the bankruptcy will remain on your or your business’s credit history for at least 6 years.

Before making any decisions about bankruptcy, talk to a trusted advisor at Liu & Associates to consider alternative solutions to your financial problems.

How Corporate Bankruptcy Can Affect Your Personal Credit

As mentioned above, there are special circumstances in which filing for corporate bankruptcy could affect your personal credit.

These circumstances include making personal guarantees on loans or credit and the company’s tax liabilities.

Personal Guarantees

It’s possible that when you apply for a loan or credit, the lender or creditor will require the corporate business owner to sign a personal guarantee for the credit.

This is an agreement that you, as an individual, will take full responsibility for the payments.

Should you file for corporate bankruptcy, this debt then becomes your financial responsibility. If the debt is unpaid, it affects your personal credit.

Business Taxes

Unpaid business taxes are not typically cleared through corporate bankruptcy. This includes any taxes withheld from employee salaries or sales tax (also known as trust fund taxes).

You are personally responsible if you collect these taxes but fail to forward them to the taxing authority. This unpaid debt will directly affect your personal credit.

Bankruptcy As a Last Resort

Before you file for corporate bankruptcy, it is recommended that you seek professional assistance to discuss all of your options.

Even if you have no debts that could be held against your personal credit, there are considerations that should be made before declaring corporate bankruptcy:

  • The business will be finished.

  • Your employees will lose their jobs.

If your corporation has run into financial difficulties, there may be an alternative to your situation.

Our expert accountants at Liu & Associates can review your corporate finances to determine if there is a better path for you, your business and your employees.

Contact us today to discuss your options. We are more than happy to help you save your business!

What Are Tuition Tax Credits? (And How You Can Claim Them)

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In 2017, the Canadian government eliminated the federal educational and textbook tax credits. However, they did not eliminate the tuition tax credit, allowing students the opportunity to apply tuition costs toward owing taxes.

While it may not seem like a huge tax break, it can relieve a significant financial burden on students who balance post-secondary studies with working and making an income.

If you are a student attending, or planning to attend, a post-secondary educational institution, you are going to want to make sure you take full advantage of this tax credit.

What is the Tuition Tax Credit?

The tuition tax credit is an education tax break offered to Canadians by the Canada Revenue Agency (CRA). It allows students 17 years of age and older who are enrolled in post-secondary education to use their tuition to reduce their taxable income.

The tuition amount, up to $5000, can also be transferred to a spouse, common law partner, parent or grandparent.

In order to be eligible for the tuition tax credit, students must attend a post-secondary level course at an accredited institution in Canada – although individuals may qualify at school abroad as well.

Student Loan Interest Deduction

In addition to the tuition tax credit, students may also be able to deduct interest from government issued student loans from their taxes. This only applies to government loans – interest from personal loans or lines of credit are not eligible.

Other School-related Deductions

Although Canada has done away with claiming textbooks and other school-related costs as tax deductions, students can take advantage of tax breaks related to moving costs.

The moving expenses deduction applies to individuals who move more than 40 kms away from home to attend an accredited educational institute on a full-time basis. This deduction may cover the costs of moving, airfare and the connection and transfer of utilities.

However, there are restrictions. A student can only apply relocation costs against the tax they are required to pay on scholarships, bursaries, fellowships, prizes and research grants.

How to Claim Tuition Tax Credits

The tuition tax credit is a non-refundable credit, meaning that if the tuition amount is greater than the tax owed, you won’t get a refund from the claimed amount. It works by decreasing or eliminating any amounts owed to the government.

Unused tuition amounts can be carried forward to the next year or transferred to a spouse, common law partner, parent or grandparent.

For example, if you claim $4500 worth of tuition but your owing tax bill is only $1000, you can transfer the remaining $3500 or carry forward to a future tax year. Because it is a non-refundable tax credit, you cannot receive that $3500 as a refund.

Calculating the Tax Tuition Credit

The Tax Tuition Credit is calculated by combining all eligible tuition fees then multiplying the total by the lowest federal tax rate percentage for the current tax. The federal tax rate percentage depends on your income bracket, which depends on which province you live in and how much income you declare.

Claiming the Tax Tuition Credit

Post-secondary institutions issue form T2202A (Tuition and Enrolment Certificate) to students, certifying that you have taken the eligible courses of necessary duration in order to qualify for the tax credit.

The form indicates in Box A the total eligible tuition fees paid as well as the months you were enrolled in school either part-time (Box B) or full-time (Box C).

Take Full Advantage of Tax Relief

If you are eligible for tax breaks because you are a student, be sure to take full advantage of these opportunities.

Our accountants at Liu & Associates can answer any questions you have related to your tuition costs and tax claims.

Contact us today for more information!

8 New Year’s Resolutions to Save You Money in 2020

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When it comes to making New Year’s resolutions, there seems to be two goals everyone tries to commit to: get in shape and save money.

While our professional accountants at Liu & Associates may not be able to help you tone up your beach body, we can definitely address the goal of saving money.

The idea is to start small and to not overwhelm yourself with financial goals. Consider the following 8 resolutions you can try this year to begin saving money and brightening your financial future:

1. Create a Budget

The best way to keep your spending and saving on track is to create a budget.

Budgets don’t have to be elaborate plans that are difficult to follow.

Begin By tracking your spending for a month or two to see where your money is going. Calculate your income and expenses. From there, adjust your spending habits to free up some saveable money.

2. Set Small Savings Goals

Saving money can be a daunting task – but most people think too big and bite off more than they can chew. When the savings plan isn’t working out, they tend to throw in the towel.

Start with smaller savings goals. You can even begin a savings challenge where you save $1 the first week and add a dollar each following week.

3. Start an Emergency Fund

Did you know that 75% of Canadians do not have any money set aside in case of an emergency?

Medical issues, loss of employment, household damage and car repairs can come out of nowhere. You want to avoid relying on credit or loans to deal with these issues.

For 2020, look into opening a TFSA. This is a tax free savings account available for Canadians over the age of 18. Although there are caps on how much you can place in the account per year, these accounts are flexible, great for emergency funds and withdrawals are tax free.

4. Consolidate Your Debts

If you carry multiple balances across different debts, you are likely paying varying interest rates.

To save money on interest payments, consider moving all of your debts to one place. You can apply for a line of credit, personal loan or credit card to cover all your debts.

5. Plan Trips and Vacations in Advance

The earlier you book a flight or hotel, the better rate you can receive. Try to plan your vacations and trips as early as possible.

This also gives you an opportunity to save money instead of making all of your purchases on a credit card and having to pay it all back later.

6. Switch Service Providers

There’s always a better deal out there – shop around for cable, internet and cell phone rates.

Most companies will offer you an introductory rate for signing up. Just be aware of the expiration dates of these deals and what you will expect to pay once the promotion ends.

Also consider bundling services to save money each month.

7. Create Meal Plans

Meal planning is a great way to cut down on your grocery bills and avoid the temptation to eat out.

(And, if you’re looking to get in shape, it can help with that too!)

To create a meal plan, simply decide what meals you are going to prepare for your family for the week, taking into consideration any leftovers that can be used again or served as lunch. Make your grocery list in accordance with your plan and stick with it.

8. Learn About Money

This could be the year for you to improve your financial literacy. Take time to learn more about money management, budgeting, investing and paying off debts.

 

If you have any questions about making changes to your personal finances, or learning more about financial literacy, feel free to contact us at Liu & Associates for more information!