Every year I remind people that their claim for the medical expense tax credit is based on a minimum. You can only deduct the amount of medical expenses that you have that exceed 3% of your taxable income. So if your taxable income is $10,000 you can get a credit for any expenses over $300.
If your taxable income is $20,000 you can get a credit for any amount over $600. There is a maximum, for 2019 it is $2,352. If your medical expenses are over $2,352 then you can get a credit for the amount over $2,352, even if your taxable income is millions of dollars.
So, the reason that I am talking about this in October is that if you have enough medical expenses already in 2019 to make a claim, then any medical expenses you incur in November and December will add to that claim. Do you need glasses, hearing aids, dental work or physiotherapy? If so, now is the time to make those appointments.
The case “The Minister of National Revenue v Les Développements Béarence Inc., 2019 CF 22” concerns a CRA request that asked a taxpayer to provide their transactions in an Excel spreadsheet format. The taxpayer refused and was held in contempt of court.
This court case held that CRA did not have the right to request that the taxpayer prepare the Excel document because all of the information was available to CRA without the Excel spreadsheet. This is interesting because we have been told that CRA has the right to information in an electronic format.
This taxpayer would probably have spent less money doing the spreadsheet than taking CRA to court, but we do appreciate someone who takes a stand and helps out their fellow taxpayers. This is a case that we will be able to refer to when a CRA auditor asks for information to be sorted into a different format.
As we approach the federal election, I believe that it is important for business owners in Canada to remember the July 2017 announcements made by Morneau and Trudeau about changing the tax rules in Canada. I have had a lot to say about those changes, as have many others.
Not all of the changes announced in July 2017 were made, largely due to a huge outcry by business owners. Those proposals indicated that Morneau and Trudeau do not understand the reality faced by small business owners in Canada and they do not support our efforts to build businesses which provide employment for many people.
What is important to remember now, as we have a chance to vote, is which party said that business owners were exploiting loopholes when what we were doing was following the law as written. Which party said that we were not paying our fair share of taxes?
When we vote, we make decisions about who we think will best lead our country. We make decisions based on what we hear the parties promising, but let’s not forget the realities of what they have actually done when we are making our voting decision.
I hear the following sentence “That is what I make on paper, I actually do better than that.” The way I understand this sentence is that the person makes money, but does not report all of that money, so it is not on paper. I also hear that the rules “on paper” are different than the rules in real life. I of course find this very interesting because a lot of my life involves complying with rules that are written on paper. We are required to follow the Income tax act which is written on lots of paper and I teach governance.
One problem with having more income in real life than you do on paper is that you can’t get a loan based on income that you do not report. You will not be able to sell your business for what it is worth if you don’t report all of your income.
Many of us make our living by selling our time. In order to sell our time we have to be offering something that people want to buy. A first step is to figure out what problem we solve for our clients. Once we know what problem we solve, we can figure out if there is any other way that a client could solve that problem. If there is, then we have to figure out why the client would choose us? What do we add to solving the problem that would make it worthwhile for the client to choose us?
I do tax returns. So it looks like the problem I would solve for a client would be to do their tax return. However, a person can do their own tax return with software or manually. I don’t solve the problem of filing the return, but I do solve the problem of filing the tax return correctly. So I would focus on the skills and experience that our office has, when marketing tax returns to customers, not just the fact that I can do a tax return.
This applies to your business too. What problem do you solve for your customer and how can you focus your marketing on that?