Claassen CPA
Chartered Accountants in Richmond and Vancouver
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Claassen Updates

News

Noteworthy

Accounting Standards
There has been great deal of change to accounting standards in the past few years.  As a business owner, are your financial statements up to date?  How might this affect your business?  Contact us if you have any questions.

Corporate Tax Rates
The small business income tax rate for 2019 on the first $500,000 of active business income in British Columbia is 11.0%.

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New Tax Proposals

On July 18, 2017, Finance Minister William F. Morneau released a series of documents and draft legislation curtailing tax planning using private corporations.  In his letter, the Minister says "Addressing tax planning strategies, closing tax loopholes and making sure all Canadians pay their fair share is the next step in our plan; a plan that recognizes that Canadians deserve to feel confident that their Government is working for them."

The proposals address three perceived "strategies and loopholes":

  • Sprinkling income using private corporations, which can reduce income taxes by causing income that would otherwise be realized by a high-income individual facing a higher personal income tax rate to instead be realized (e.g., via dividends or capital gains) by family members who are subject to lower personal tax rates or who may not be taxable at all.

  • Holding a passive investment portfolio inside a private corporation, which may be financially advantageous for owners of private corporations compared to other investors. This is mainly due to the fact that corporate income tax rates, which are generally much lower than personal rates, facilitate the accumulation of earnings that can be invested in a passive portfolio.

  • Converting a private corporation's regular income into capital gains, which can reduce income taxes by taking advantage of the lower tax rates on capital gains. Income is normally paid out of a private corporation in the form of salary or dividends to the principals, who are taxed at the recipient's personal income tax rate (subject to a tax credit for dividends reflecting the corporate tax presumed to have been paid). In contrast, only one-half of capital gains are included in income, resulting in a significantly lower tax rate on income that is converted from dividends to capital gains.

The proposals dramatically change the landscape that the Canadian tax community has been legally working in.  Collectively this group of proposals represent the most significant change to the tax regime affecting private corporations since tax reform in the early 1970s.  Almost certainly the proposals will result in increased income taxes for many families and corporations.

We will be monitoring the legislation carefully and adjusting our tax planning priorities to take into account the new rules as they become effective.

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Did you know?

Frank has actively volunteered in the community for over 30 years.  Frank is currently the Chair of the Richmond Arenas Community Association and sits on the board of the Richmond Community Foundation.

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NewViews

We use NewViews accounting software, a recognized leader in providing software solutions for the non-profit sector. We can set up and customize NewViews to fit your situation.

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Come join us!

We are always keeping an eye out for fantastic new clients and team members.

If you are interested in finding out more about how we can help you, email us at info@claassen.ca

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A new era begins

We are now Chartered Professional Accountants

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On June 24th the Chartered Professional Accountants Act was proclaimed into force by the government of British Columbia. The Act unifies the accounting profession through the amalgamation of the Certified General Accountants Association of BC, the Institute of Chartered Accountants of BC and the Society of Certified Management Accountants of BC.  

The CPA designation is Canada’s pre-eminent accounting and business designation. With more than 38,000 members and students in B.C. and over 190,000 members across Canada, CPAs are providing crucial financial expertise to businesses in every sector of the economy.

Chartered Professional Accountants play key roles within diverse segments of the economy, including industry, public accounting, education, government, and the not-for-profit sector. We offer a strong set of accounting and managerial skills required for today’s complex and evolving environment. CPAs are broad-minded, forward-thinking professionals who undertake appropriate analysis, exercise good judgement, communicate effectively, and act to protect the public interest.

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