Have you thought about restructuring your company? Or have you heard the term “restructuring” and wondered what it was, or if it was applicable to your business?
At some point, whether your business is facing challenges or not, many companies consider restructuring in order to improve their performance within their industry, save taxes and meet their goals. Many entrepreneurs also restructure their business early on when their small business begins to be profitable.
Simply put, restructuring refers to the management process of reorganizing a company in order to make it more profitable, often by reducing or deferring overall taxes. This can involve restructuring legal, ownership, operational, financial structure, or other aspects of a company. It is sometimes also described as “repositioning”, “corporate restructuring”, “financial restructuring” or “tax reorganizing”.
Cahill CPA has dealt with a number of restructuring situations due to changes in ownership (ex. bringing in new owners or changing owners entirely), mismanagement issues, response to a major crisis, and financial difficulties. Many reorganizations or restructuring are initiated for tax reasons, which may include:
- Accessing corporate losses
- Crystallizing the capital gains exemption
- Purifying the corporation to retain its eligibility as a qualifying small business corporation for capital gains exemption purposes
- Departure of one of several shareholders
- Break up of the corporation among several shareholders
Restructuring is often misunderstood and thought of as a negative thing; however, it is more often than not, a very positive opportunity for companies. In this quickly changing economy, businesses often need to make big changes in order to stay ahead in their industry and reach their full potential. In fact, our clients sometimes ask us about the possibility of restructuring before they are in a difficult position, and we are able to discuss the pros and cons of such a move. When done correctly, restructuring can deliver the intended outcomes and increase value for your company.
Further reading on this topic:
Cahill CPA is located in North Vancouver, and is a family-run practice of chartered professional accountants. If you are looking for an accountant who will work for your business, contact us to set up a meeting! www.cahillpro.com/contact
A recent article in Global News cited three common tax mistakes that you’re most likely to make according to Canada Revenue Agency.
See the full article here, or read below for our helpful summary:
- “Other” Deductions Section of your Return
Many of our clients have questions regarding this section, as it seems a bit of a “free for all” of items that you could potentially deduct. However, this section is very specific and also quite limited. This area on your tax return- Line 232- “Other” Eligible deductions, are listed here on the CRA website.
Some of these include:
- Income amounts repaid ex. EI benefits repaid to Service Canada, scholarships/bursaries, Old Age Security benefits paid directly to Service Canada, etc).
- Legal Fees Related to accounting/assistance for reviewing your assessment with CRA, payment of fees to collect a retiring allowance or pension benefit, or you incurred fees to make child support payments non-taxable.
- Other Deductible Amounts Depletion allowances, and specific unused RRSP contributions, transfer of RRSP payments and refund of RRSP premiums.
- Mistakes on Education Related Tax Breaks
- Tuition tax credit Students over the age of 16 enrolled in post-secondary level courses can usually claim their tuition costs, and pass on the credit to an eligible relative who have more taxes to offset (ex. parents and grandparents). However, it is still the student who needs to claim the tax credit on her or his return.
- Education/Textbook Credits This is more confusing to claim on your 2017 tax return because the education and textbook amounts were discontinued at the federal level as of Jan. 1, 2017, but continue to exist at the provincial and territorial level in many cases.
- Address Change
This may seem like common sense, but it is your responsibility to let CRA know of any address changes. If they are not able to get a response from you (after sending you mail requesting more information/documents), they have the power to deny or modify claims. This could ultimately result in a higher tax bill.
If you have questions about your return, it is usually wise to have a certified accountant help you with any questions or concerns you might have. Filing your return yourself, and making significant mistakes, can cause CRA to flag your return (which could result in penalties).
A Chartered Professional Accountant also has the knowledge and experience to complete your return in the most efficient manner, making the most of your return and limiting unnecessary payments. Remember, it doesn't have to cost you a lot to make the most of a professional accountant. Cahill CPA offers reasonably priced fees for basic returns, and can discuss the breakdown of costs up-front with you so you are comfortable with what you will be paying. You will feel confident that your return is done correctly, efficiently, and quickly.
Tax time is just around the corner, and Cahill CPA has compiled some information regarding important dates and preparing your tax return.
How to get your documents to us:
Cahill Chartered Professional Accountants is located in North Vancouver, and you are welcome to drop off your documents at our central Lonsdale location.
Suite 103 - 145 West 15th Street,
North Vancouver, BC
Checklists and Important Information
To determine what documents are needed for your tax return, we have created checklists to help simplify this process. Click on the link below for checklists for employment expenses, personal taxes, rental income & expenses, and self-employment income and expenses.
Cahill Chartered Professional Accountants has begun work already on tax returns, and early filing with CRA was at the end of February. Some deadlines and important dates to remember:
- Your 2017 tax return must be filed by April 30, 2018.
- The self-employment deadline is June 15, 2018 - taxes and/or GST owing must be paid by April 30, 2018.
- In order to file before CRA deadlines, it is important that you have your tax information to our office prior to April 15, 2018.
If you don’t already have a professional, certified accountant in Vancouver, come visit our website at www.cahillcpa.com to learn more about us, or schedule an appointment to meet with us in person.
Cahill CPA was recently a Bronze finalist for the Readers Choice Awards for favourite accountant in North Vancouver and West Vancouver, and our partner Jordan Cahill was nominated for the Young Entrepreneur award in 2015 by the North Vancouver Chamber of Commerce and the Business Excellence Awards Committee. We are a family-run accounting firm, proudly living, working, and taking part in the North Vancouver community.