The Budget and Your Bottom Line: April 15th, 2022

Hello Everyone,

As many of you probably know, the federal government released their budget for 2022 last week. While perhaps not super exciting for most Canadians, it is at least somewhat interesting to see what types of initiatives affect all of us and the small business community.

Given the macro environment where spending by the government has been at an unprecedented high along with significant inflation that affects all of us, the budget didn’t have much in the way of tax breaks for individuals and small business owners. There were, however, some financial measures that will have an impact, many of which relate to making housing more accessible and affordable to the average Canadian. Some of the more relevant measures include the following:

Housing Initiatives:

• One-time $500 payment to those having trouble affording a house. The specifics will be announced at a later date.

• A new Housing Accelerator Fund with the goal of incentivizing municipalities to create 100,000 new housing units. I

• A rapid housing initiative that will be similar to the above except it will happen more quickly. The goal is 6000 housing units within the next 2-3 years.

• The creation of a Tax-Free First Home Savings Account or FHSA that will allow a lifetime contribution of $40,000 (maximum of $8,000 per year). Withdrawals from the FHSA to buy a home would not be taxable.

• Those who buy and sell houses within the same year would have to report these as taxable income (not capital gains which are 50% deductible nor can you use the principal residence exemption which is tax free). There are some specific exceptions where the sale of the house is by necessity.

• The first time home buyers tax credit will increase from $5,000 to $10,000

• Restrictions that would prohibit foreign commercial enterprises and people who are not Canadian citizens or permanent residents from acquiring non- recreational, residential property in Canada for a period of two years.

Other Measures:

• There will be an additional tax of 1.5% for life insurers and banks as well as a one time charge of 15% on profits for 2021 (with certain deductions).

• While small business taxes remain the same at 9%, there is reduction in tax rates based on the amount of capital that a business has. This mostly applies to medium sized business.

• Provision to expand healthcare to include dental care for Canadians. This will start with under 12-year-olds in 2022, and then expand to under 18-year-olds, seniors, and persons living with a disability in 2023, with full implementation by 2025. It will be restricted to families with an income of less than $90,000 annually.

• Travel and relocation expenses deduction for Tradespeople in the construction industry. This measure would allow eligible workers to deduct up to $4,000 in eligible expenses per year.

The federal government will have it’s hands full over the next few years as it combats a huge deficit largely relating to COVID support spending, deals with the housing crisis, climate change and tries to bring inflation under control.

For more details on the various provisions in the budget, I encourage you to read the release from Budget Canada.

If you have specific questions about QBO, accounting or tax, don’t hesitate to send me an email at contact@montrealfinancial.ca and I will attempt to answer it in future newsletters.

My latest blog post discusses the what small businesses/self employed workers should take into consideration before filing their taxes this year. Also an older post about what both unincorporated and incorporated businesses should know about deducting car expenses

Small Business Articles/Tips

Some Cons and Scams to Watch Out For: CPA Canada has an informative article on some scams and cons that are fairly sophisticated, that we should all be alert to. It is always good to be skeptical of people trying to give you money that seems a little too easy.

Tax Tip: An article from the Canadian Federation of Independent Businesses (CFIB) about what the budget missed in terms of helping businesses recover from Covid and the initiatives that CFIB are working on to help small businesses.

QuickBooks Tip:

You can change details relating to your GST/HST and QST filings, including your filing period (annual, quarterly or monthly), adding rates for other provinces, entering your GST/HST and/or QST number that appears on invoices etc., by clicking on “taxes” on the left hand side (to get to sales tax) and then clicking on “manage sales tax”.

Books and Resources

Small Business Tax Facts(Sole Proprietorships/Registered Businesses/Self Employed Workers)

This book helps you have a better understanding of tax (brackets, tax rates, deductions etc), how it applies to your unincorporated small businesses and how to do your own tax return (or at least understand what your accountant does). It also includes a comprehensive breakdown of deductible expenses, by category with special sections on more complex deductions such as home office, vehicle and capital cost allowance.

FastStart Your Corporation(Corporations)
A step by step guide to starting your small business corporation, including what you need to know about incorporation, setting up your accounting and tax considerations.

QuickStart your QuickBooks(Sole Proprietorships and Corporations)
A comprehensive guide that takes you through the many features of QBO and gives you step by step instructions on how to setup and work with QBO day to day. It is ideal for beginners who have never used QBO before and also for those who are currently using it, but have questions or need guidance.

FastStart Your Business (Sole Proprietorships)
A step by step guide for anyone who is planning to start a Canadian business or become self employed (and does not want to incorporate) and wants to know what they need to do or simply has questions.

Small Business and Your Dividends (Corporations)
For incorporated small business owners who want to know more about small business dividends, the differences between salary vs dividends and which is better and step by step instructions on how to file your own dividend declarations (T5s).

Use discount code “special” to save 20% on any (or all) book(s) when you purchase from the website.

Please note that all books on my website are in PDF format.

If you prefer a print version, all books are also available at Amazon . Note that print versions purchased on Amazon include a complimentary PDF - you just need to email me and include proof of purchase.

Free Resources

New: Business 2022 Tax Deadline Calendar
Starting A Corporation Checklist
Start Your Business Checklist
Dividend Declarations Checklist
Small Business Tax Return Checklist
QBO Set Up Checklist.
Small Business Calculators
Previous newsletters.

Consultations

I also provide consultation services where I can answer your specific questions relating to your small business and/or finances, provide clarity and give you guidance. Additional details can be found here and here.

Note that I no longer provide ongoing accounting or tax preparation services.

Reviews/Feedback

• I would love to hear your comments on my current blog posts, topic ideas for new blogs, book feedback or anything else that you want to talk to me about. You can use my feedback form or email me directly at ronika@montrealfinancial.ca.

• For anyone who has purchased my books through Amazon or directly and found them useful, I would be very grateful for a review on Amazon (to leave a review you only need to have an account with Amazon even if you did not purchase the book from there).

• Finally, if you think anyone would benefit from this newsletter, you can send them to my subscribe link.

Hope everyone has a great holiday weekend!

Ronika