Whether you’re volunteering at your church, participating in a local walkathon, or donating to a charitable organization, we Canadians live in a society full of generosity. Along with the colossal feeling of knowing you’ve made a difference; your donation can also yield a tax break. Donating to a charitable organization is helps lower your taxes payable!

 

1. First things first– This tax credit helps to lower your taxes payable… however, this is a non-refundable tax credit. As such, it can only be used to reduce tax owed; if you don’t owe any tax, you don’t get a refund from this credit. Generally, your tax savings will be equal to the amount of the charitable tax credit calculated.

 

2. Balance Owing – If you know you’re going to owe money to the government, why not donate some of that money to a qualified charity, rather than the government? This will not only lower your taxes payable, but you’ll be supporting a charity in need.

 

3. Qualified Charities – It’s important to know if you’ve donated to a qualified charity.  As an example, unfortunately GoFundMe donations are considered a “personal gift” and not a donation. (This doesn’t mean you can’t donate to these campaigns, it’s just not tax deductible).  It is extremely important to ensure the charitable organization you are contributing to is a registered charity and has an eligible charitable registration number.

 

4. Tax Credit Rates – You can’t always claim the full value of gifts given to charities. Instead, you are limited to claiming gifts up to 75 percent of your net income in most cases. If you donate $200 or more, you qualify for a higher rate. This means that you are eligible for a tax credit worth15 percent on the first $200 donated, plus a tax credit worth 29 percent on any amount above $200. For example, if you donate $200, you receive a tax credit worth $30 (15 percent of $200). However, if you donate $500, you receive the same $30 tax credit, plus a tax credit worth $87 on the amount above $200.

 

5. Timeline– You can claim donations made on or before Dec 31 in the same tax year. You can also claim any donation amounts not claimed by you or your spouse or common-lay partner in the past five years. This being said, you can also carry forward donation receipts for up to five years and claim them all at once in a single tax year. If you are claiming several credits this year, such as tuition and education credits, check to see if your donation would be better claimed in a future year. Remember, donation credits are non-refundable which means that if you are already in a position where you don’t owe any tax, you won’t benefit from claiming the credit.

 

6. Super Credit – The super credit started in the 2013 tax year and is listed as only temporary for the 2013 to 2017 tax years. This credit results in an additional 25 percent to the federal rates. For the first $200, you receive the old 15 percent plus another 25 percent worth of credit. For amounts over $200, the amount would be the 29 percent plus another 25 percent federal credit. The maximum contribution that qualifies for the super credit is $1,000. Any amount over that $1,000 does not receive the additional credit.  This credit is only considered to first-time donors.   To be considered a first-time donor, you, or a spouse or your common-law partner, must not have claimed the charitable donations tax credit in the past five years.

• The super credit is only beneficial to individuals who are behind in taxes and if you have carry forward amounts owing. If you are one of these individuals it is most beneficial to apply all donations on your 2017 return!

 

And that’s my tips in 6!

If you have any questions in regards to the Donation non-refundable tax credit, reach out to us today!  Happy to Help!

Shannon Smith and the SheDo Tax Crew

Congratulations, Being an entrepreneur is so rewarding! You’ve taken your dreams and plans and created a reality and are NOW a small business owner!

You are excited and ready to get started on the right foot! Learning to balance your books and bringing in revenue is a MUST.  Keeping track of your expenses, and your cash flow is probably the most important aspect of running a successful and profitable business.

“I just keep my expenses on a spreadsheet.”

I cringe often at statements like this. Not because I hate spreadsheets. I’m a bookkeeper, I LOVE spreadsheets. The problem with keeping track of your expenses on a spreadsheet is one of memory and will power. If you don’t remember to track the expense on the spreadsheet, it doesn’t get tracked.

And unless you’re meticulous, you probably aren’t reconciling your receipts to your bank accounts or creating financial statements. These steps are key to not only your financial overview of your company – but filing your taxes at fiscal year end!

The answer:  Switching from Excel Spreadsheets to Bookkeeping Software!

Switching from spreadsheets to bookkeeping software is a great tool for your business. Here are a few reasons:

• By connecting to your bank account, it downloads all transactions, they just need to be categorized.
• You can upload pictures of the receipts, keeping everything in one place.
• Connecting to software allows you or your bookkeeper to reconcile your accounts and get you those financial reports in seconds.
• Create invoices and estimates with breeze, and even collect payments!
• Have employees? Why not use software to run your payroll and track employer taxes not to mention your HST payments each quarter.

There are plenty of different bookkeeping software systems that work great, but my software choice is QuickBooks Online.

We use QuickBooks Online for most of our clients, and I have no complaints. There are multiple affordable packages available for you to choose from that we are proud to offer. One of my favourite aspects of this software is it take a lot of the guess work out and allows you an to take an up-to-date snapshot of your company… whenever you need it!

One piece of advice I recommend, if you are not confident in using the software yourself, contact a professional first. (SheDo… SheDo…) We have had some clients that have come in that require many corrections in the books and records after trying to figure it out themselves year after year. This can often get timely and extremely costly.

This is where we come in….

Before trying to figure your bookkeeping plan on your own, you may need a little guidance from your favourite tax accountants…. Simply message us, we are here and happy to help!

We get it…You just want to run your business. That’s why you should let us handle your bookkeeping!

Looking forward to working with you!

Rachel Whitlock and the SheDo Squad