Newsletter January 2020

 

PROFESSIONAL ACCOUNTANT

Newsletter – January 2020

 

President’s Note

Dear RPA Members and Students:

Happy New Year!

As we welcome the New Year, a new decade and new digital technology for accounting professions, RPA is preparing for an exciting new education program for 2020 that is well into its final stage. The Society plans to launch its new education curriculums in February 2020.  We have already received very positive input from our stakeholders and we are very excited to implement this plan through Ontario’s community colleges.

We have also seen a substantial increase in new student registration and new membership applications from foreign accounting designation holders. Our strong presence on social media is bringing high volume traffic to our website from all over the world.

RPAs continued professional development is getting attraction and we are looking forward to our Income Tax Workshop on Saturday January 25 at North York City Hall. If you have not registered for this Tax workshop please do it quick as seats are filling up very fast.

We have also issued an advisory to all of our members prohibiting all RPAs to use unauthorized foreign accounting designations in Canada. Accountants working in Canada without any Canadian accounting designation will have the chance to get their RPA designation. The FAST TRACK program to the RPA designation for foreign accounting designation (CPA, CA, CMA, CGA, ACCA, CIA, CISA, CGMA, and CIMA) holders has been extended.  All foreign designation holders can now apply under this program by February 29, 2020.

We encouraged our members to promote the RPA designation by educating their clients, employers and friends about RPA. If you find any prospective accounting professional or student feel free to connect them with RPA.

RPA Membership and RPA Student Membership Cards are in production and available now, please contact the office and provide us the relative information to issue you the Memberships Card. Online Membership Verification is also completed, please verify your membership online and if there is any issue please bring that to the attention of the office.

We encourage our members to use new RPA logo on your business cards, letterhead, website and other print material for maximum exposure to the RPA designation.

The Code of Professional Conduct Committee has finalized the Professional Code of conduct that will be approved at our next board meeting on January 30, 2020 and will be added on our website in the first week of February.

I wish you all a Successful Tax Season!

 

Zubair Choudhry, RPA, APA

President/CEO

T1 and T2 Workshop 2020

Have questions about changes in Personal and Corporate Tax rules?

This workshop led by Senior Tax Accountants, is your chance to get them answered. Join us for information packed day of practical tax updates, tax planning and insights presented by Canadian Tax Specialist.

 

Agenda
Morning Session Evening Session
Presenter : Cosimo Pellegrino, CPA, Senior Tax Accountant Presenter : Kiran Choudhry, CPA, Senior Tax Accountant
Residency RDTOH Changes
Non -Resident Tax Returns Tax on Split Income “TOSI”
Voluntary Disclosure program Canadian Integration – Earn in a Corp or Personally
Personal Tax Changes for 2019 Passive Income Small Business Deduction Grind
Foreign  Reporting Requirements Section 85 Tax Deferred Rollover
Accelerated Investment Incentive Program Change of Control Tax Issues
Tax on Split Income “TOSI” Recent Court Cases
Personal Tax Credits
Allowable Business Investment Loss  

[Zubair Choudhry]

Principle Residence Exemption
Deceased Returns
Recent Course cases

 

Limited seats. To register, send email to cpd@rpacanada.org. All requests will be accepted on first come first serve basis. For more information visit https://rpacanada.org/2019/12/19/tax-income-seminar/.

 

TAX  TIPS
 

HOME OFFICE AND MOTOR VEHICLE EXPENSES

 

In a September 17, 2019 Tax Court of Canada case (Wallens vs. H.M.Q., 2018-2042(IT) I), at issue was the percentage of the home and vehicle used for employment purposes. While initially challenged by CRA, the Court eventually accepted the credit card statements as support for the amounts expended. The taxpayer held and produced a T2200 which indicated that a motor vehicle and home office expenditures were requirements of employment.

 

Vehicle expenses – taxpayer loses

 

The taxpayer had initially claimed 90% employment usage but later asserted that only 1,015 of her total 1,353 kilometers travelled (75%) were for employment purposes. The Court then noted that the total

Kilometers driven for the year were more likely approximately 10,000 based on the odometer readings listed on the third-party garage repair invoices provided throughout the year. As the reported employment kilometers (which were supported by a vehicle log) were about 10% of the total reported on the invoices, only 10% of expenses were allowed.

 

Home office expenses – taxpayer loses

 

Originally the taxpayer had claimed 25% of house costs based on an estimate by the accountant and his rule of thumb. CRA had accepted 20%. The Court noted that the floor plan indicated that only 10% was used by the office and, therefore, upheld CRA’s determination noting that the taxpayer should consider herself fortunate. Editors’ comment The Court also noted that the home office was the taxpayer’s bedroom. Generally, it is difficult to meet the strict home office usage requirements for claims in respect of office areas that are inherently and inseparably personal. No analysis of these requirements was completed in the case.

 

TRAVEL EXPENSES – SHAREHOLDER-EMPLOYEES

 

For an employee to deduct travel or motor vehicle expenses against employment income, the employee must be normally required to work away from the employer’s place of business, be required to pay the travel expense under the contract of employment, and have a signed and completed T2200 (Paragraphs 8(1)(h) and (h.1)). Also, the employee cannot receive an allowance excluded from income.

 

In 2017, CRA began denying travel expenses claimed on the personal tax return of many employees who were also shareholders of the employer or related to a shareholder. After receiving concerns from stakeholders regarding this new assessing practice, CRA reversed their assessments, indicating that “clear guidelines for taxpayers and their representatives” were important to the Canadian self-assessment system and that additional consultation and guidance was needed in this area.

 

In September of 2019 CRA released the promised guidance. It noted that the following conditions had to be met for employment expenses incurred by shareholder-employees to be deductible:

1.    The expenses were incurred as part of the employment duties and not as a shareholder.

2.    The worker was required to pay for the expenses personally as part of their employment duties.

When the employee is also a shareholder, the written contract may not be adequate, and the implied requirements may be more difficult to demonstrate. However, CRA noted that both of these conditions may be satisfied if the shareholder-employee can establish that the expenses are comparable to expenses incurred by employees (who are not shareholders or related to a shareholder) with similar duties at the company or at other businesses similar in size, industry and services provided.

 

DATA ANALYTICS  – IMPACT MODEL

Data Analytics involves applying an algorithmic or mechanical process to drive insights and look for meaningful correlations between datasets, increasingly with the help of specialized systems and software. It’s a process of identifying business questions and problems that can be addressed with the help of data. Fortunately, a Data Analytics Model called IMPACT Model is very useful tool to share insights for effective decision making. Here are the steps of IMPACT model:

 

1.    Identify a business problem and ask yourself specific questions about what others can ask you. Having a concrete question that is answerable by Data Analytics is the most important step.

2.    Gather data that can be used to answer the questions identified in the first step. Mastering the data involves identifying sources of required data, collecting the data and applying ETL [Extract, Transform and Load] techniques to make it useable.

3.    Once data is ready, think of the right approach to extract knowledge from the data that can answer the questions. Identify relationships between datasets and create summaries, conduct analysis, and prepare reports and visuals.

4.    Slice and dice the data. Ask further questions to yourself based on your findings in step # 3. Revise and re-run the analysis and finalize what reports or visuals you would like to share.

5.    Share your findings, insights and recommendations using the right tool [PowerPoint, Excel, Power BI, Tableau, Cognos, Microstrategy, QlikSense, etc.].

6.    Track outcomes continuously through periodic reports or dashboards.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

We are waiting for your feedback
Please write to us about your significant achievements, suggestions, and feedback to include in the next eNewsletter. You can reach us at cpd@rpacanada.org