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BC benefits by converting to HST at 12%
July 23, 2009
The Premier announced today that BC will benefit and business will benefit from the change to HST.
The downside is that clients who aren't business's will now pay tax on services that were previously exempt from PST, such as accounting fees.
One way to make your accounting fees deductible is to ensure that your accountant is accounting for your investments. If they are tracking your ACB and actually accounting, not just preparing your tax return, your tax return preparation costs may be at least partially or even completely deductible against income on your personal tax return. See IT 99 for more information.
http://www.cra-arc.gc.ca/E/pub/tp/it99r5-consolid/README.html?=slnk
Don't hit your accountant with this request at tax time as it will require time and cost you to get up to speed with your accounting, in fact, they will require a complete historical record keeping exercise if they aren't currently accounting for your portfolio. Your RRSP's, RESP's, TFSA, RDSP and portfolio held in a non registered account should all be part of the process. You may find there are unreported capital gains and losses and your old returns for the past 10 years may be able to be adjusted to include these figures in order to accurately track your income.
Why would you care? Capital losses carry forward and are utilizable against regular income on your final date of death tax return. That's also where you report the collapse of your RRSP or RRIF and pay tax on the whole lump sum at once. If calculating capital losses wasn't on your radar, you may want to determine if your parents have claimed theirs as the tax on death could be significantly lower with these valuable carry forwards.
Why would you want to do this now? The HST kicks in July 2010. If you get that accounting done before then, it's going to cost you 7% less than if you wait until after the HST kicks in. In BC, HST will be 12%, in Ontario, even more reason as their HST will be 13% because their sales tax component is 8%.
Eileen Reppenhagen CGA does not research or endorse any product or service appearing in ads on this site. Before making any major financial decision(s) you should consult a qualified professional.
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