Recent News


MAR 17, 2020

To Our Valued Clients,


In the midst of the COVID-19 pandemic, we are aware that the daily lives of many people have been affected. The priority at this time from the Provincial and National health authorities is to take extra measures in order to flatten the curve of the outbreak.

It is our responsibility to protect our communities and, as such, we are taking the necessary steps to do our part. It is our goal to help make this tax season easier on our clients and so, if you have made the decision to stay home, or are unable to make the commute to our office, please note that you can still send us your documents via mail, email or ShareFile.

ShareFile is a secure file sharing and transfer service built for businesses in order to protect personal information. If you would like to send us your documents through ShareFile, please contact our office and we will have you added to our file.

If you have any questions or concerns, please do not hesitate to contact our office.

Thank you for your continued support as we work through these challenges together.




KSO Accounting Group

Protecting Yourself from Scammers

FEB 4, 2020

As tax season approaches, it is especially important for taxpayers to protect themselves and their personal information from scammers.

Following is a list of some indicators that a phone call, voicemail message or email is NOT from the Canada Revenue Agency:

·         The call is automated, ie. a recorded message or robot rather than a live person, DO NOT return the phone call.

·         The person calling does not ask for you or a member of your household specifically by name.  This means they do not know who they are calling.  CRA WILL ask or leave a message for a specific person.

·         The person calling uses threats of lawsuits or jail time in an attempt to get you to comply with their demands.  You will receive written notice from the CRA long before you will be in legal trouble with the tax department.

·         The person calling requests that you purchase gift cards or use prepaid credit cards to pay a debt owing.   CRA will NEVER ask for gift cards to pay an amount owed.  You can pay CRA by cheque mail or drop, cash or withdrawal at your Bank or even online from your bank’s website NEVER from an email.

·         You receive an email that contains links or requires you to provide personal or financial information. The CRA will only send an email containing links if you have requested a form or specific information, in which case, they will send the email while you are on the phone with them.


If you are still unsure whether or not it is the Canada Revenue Agency that has contacted you, you can ask for, or make a note of, the caller's name, phone number, and office location, and tell them that you want to first verify their identity. You can check that the call you received was in fact from the CRA by calling:

·         1-888-863-8657 for individual debts

·         1-877-477-5068 for GST/HST debts

·         1-877-548-6016 for payroll debts

·         1-866-291-6346 for corporation debts

·         1-866-864-5823 if the call you received was about a government program such as employment insurance or Canada Student Loan debts.

Advantages of a Tax Free Savings Account

JAN 28, 2020

The Tax Free Savings Account (TFSA) was created on January 1, 2009 with the intention of helping Canadians 18 and older to save money. The purpose of the TFSA is to provide Canadians with the opportunity to save money and earn investment income on a tax-free basis. Following is a list of the major benefits of contributing to a TFSA:

  • You can contribute to a TFSA at any time after you turn 18, there is no maximum age limit.
  • You can withdraw any amount at any time tax-free.
  • Withdrawals from your TFSA do not reduce federal income-tested credits such as Old Age Security or GST rebates.
  • You can contribute up to a maximum of $6,000 during 2020 and any withdrawals during the year can be added back in the following year on top of the maximum.
  • TFSAs side-step attribution rules - a higher income spouse can give money to a lower income spouse to allow them to contribute to a TFSA without any tax consequences.
  • You can borrow from your TFSA for other investments.
  • TFSAs can be set up as an emergency fund, as many people do not have an emergency fund for unexpected future events (i.e. losing your job, house repairs, etc.). Once an emergency fund has been established, you have the opportunity to use your TFSA for investment opportunities.
  • It is a great investment vehicle for inherited money.
  • You can hold stocks, bonds and term deposits.  Although it is called a “savings account”, it is more an investment account depending on which type of financial institution you hold your TFSA with.

TFSA strategies can vary over the years depending on your individual circumstances. As of 2020 you are eligible to contribute up to a maximum of $69,500 if you have not yet started a TFSA.  The amount you can contribute will appear on the Notice of Assessment available to you each year after filing your personal income tax return with the Canada Revenue Agency. Due to the tax avoidance advantages that come from a TFSA, it is very beneficial to start your own and contribute to it on an annual basis. Be certain to keep track of your contributions so that you do not exceed the maximum allowable amount as there are punitive penalties for over-contributing.

Tax Gap Estimate

SEP 3, 2019

Written by: Thomas Hirt, CPA, CGA

Mark Twain – “There are three types of lies:  lies, damned lies, and statistics.”

In June 2019, the Canada Revenue Agency (CRA) released a fifth report , “Tax Gap and Compliance Results for the Federal Corporate Income Tax System”, in its series of reports about the tax gap.

The tax gap is the difference between what the Canadian government believes it should have collected in taxes, and what was actually collected.

The usefulness of the tax gap estimate by CRA needs to be taken with a truckload of salt for a variety of reasons.

First is that this is the estimate of the tax gap for 2014. 

Imagine taking a picture of a bird; the bird has its wings stretched and the only other element of the picture is the sky.  The picture of the bird has limited utility.  You cannot tell from a single picture whether the bird is ascending, descending, or flying levelly. 

The same thing is true of the tax gap estimate for 2014.  This is an estimate of the tax gap for 2014, but without estimates for years before and after, you cannot tell if the tax gap is increasing, decreasing or level.

Hence, the snap shot of the 2014 tax estimate does not tell you what is going on with the tax gap.


Second, the total combined tax gap is based on the total of four different estimates. 

Simply adding together estimates is problematic. 

For example, let’s study Bill and Bob to estimate their annual incomes.

We are 90% certain that Bill’s income is $50-60 thousand and 90% certain that Bob’s income is $20-40 thousand (referred to as 90% confidence intervals).

The government’s tax gap estimate is the equivalent of saying that as a result of those studies, Bill and Bob’s combined income is estimated to be $70-100 thousand.

However, because you have combined studies, the odds of the combined income being $70-100 thousand is between 81% (= 90% x 90%) and 90% (it could be higher than 81% because there is the chance that the errors in Bill’s income and Bob’s income cancel each other out and the total is still in the $70-100 thousand range).

If you combine four studies, each with a 95% confidence interval, the odds of the total range being correct is between 81.4% (=95% X 95% X 95% X 95%) and 95%.

Hence there is a problem with combining four estimates to estimate the total tax gap.


Lastly, the estimate is only good for 2014.

Changes in the situations underlying a study invalidate the study’s usefulness for examining other years. 

For example, in 2016 the government began to require individual tax payers to disclose disposals of principal residences on their tax returns.  The purpose of this disclosure is to decrease the number of individuals inappropriately claiming that the gain made on the sale of a property was eligible for the principal residence exemption (and hence, tax free), when it should not be exempted.  As a result, starting in 2016, the tax gap resulting from the sale of residences will have decreased.

Hence the tax gap estimate for a given year cannot provide any information about the tax gap in other years.


After audit results, CRA’s statistics estimate the tax gap as $15.7 billion to $19.9 billion for the 2014 year.  We do not know if this estimate is: higher, lower or the same as prior years; the accuracy of the total; or anything about years other than 2014.  Hopefully, Canadians will look at this estimate with a suitably skeptical eye, and salt merchants will do a booming business.

Speculation Tax

FEB 13, 2019

The Speculation and Vacancy Tax is an annual tax paid by some owners of residential properties in designated taxable regions of BC. All residential property owners in the taxable regions must complete a declaration by March 31, 2019. The information you’ll need to register your property declaration will be mailed by mid-February and each person on title for a property must complete the declaration. For 2018, the tax rate is 0.5% of the assessed value of your residential property on July 1, 2018. 99% of all British Columbians are expected to be exempt as long as they file the declaration. The taxable regions are as follows; Municipalities within the Capital Regional District and Metro Vancouver Regional District, Abbotsford, Chilliwack, Kelowna, West Kelowna, Nanaimo, Mission and Lantzville.

For more information please contact your accountant or go to:

Accelerated Capital Cost Allowance

JAN 29, 2019

For capital assets purchased after November 20, 2018, a new accelerated capital cost allowance has come into effect.  For equipment used in the manufacturing or processing of goods or specified clean energy equipment, these rules will allow the purchase cost to be claimed 100% in the first year after purchase for tax purposes.  Generally, for equipment in other classes the amount which can be claimed for tax purposes (CCA) in the year of acquisition will be three times the amount allowed in the first year under the old rules.  For more specific information or for assistance, contact your accountant.

Automobile Rates for 2019

JAN 22, 2019

Whether you are self-employed, use your vehicle for work, given a monthly car allowance, reimbursed for vehicle expenses or given a company vehicle, the tax implications can be difficult to unravel.  For each situation there can be tax advantages and disadvantages.  Be sure you are recording the correct expense deduction for your situation. The Canada Revenue Agency also wants to make sure employees are not receiving a personal benefit free of tax. 


Following are the current rulings from The Canada Revenue Agency:

  • If a personally owned vehicle is used by an employee for work related business the employer can pay a tax exempt allowance of $0.58 per kilometre for the first 5,000 kilometres and $0.52 per kilometre for every additional kilometre
  • The tax exempt allowances are supposed to reflect the key cost components of owning and operating the vehicle, including amortization, insurance, repairs and maintenance, possible financing and fuel costs.
  • If the business provides employees with a company owned vehicle, an operating benefit of $0.28 per personal kilometre should be calculated and either paid back to the business or treated as a taxable benefit and included on the T4.  This means that the employee would pay tax on the value of the operating costs.  A standby charge would also need to be calculated for the vehicle.  This is calculated by taking a percentage of the personal mileage divided by the total mileage driven in the year times the cost of the vehicle.

The Canada Revenue Agency announces planned rate changes each year to ensure businesses are aware of the new rates before they apply.  In all situations it is important to understand the tax consequences when using a vehicle for business.

Tax Free Savings Account Advantages

JAN 15, 2019

The Tax Free Savings Account (TFSA) was created on January 1, 2009 with the intention of helping Canadians 18 and older to save money. The purpose of the TFSA is to provide Canadians with the opportunity to save money and earn investment income on a tax-free basis. Following is a list of the major benefits of contributing to a TFSA:

  1. You can contribute to a TFSA at any time after you turn 18, there is no maximum age limit.
  2. You can withdraw any amount at any time tax-free.
  3. Withdrawals from your TFSA are not considered income and, therefore do not reduce federal income-tested credits such as Old Age Security or GST rebates.
  4. You can contribute up to a maximum of $6,000 during 2019 and any withdrawals during the year can be added back in the following year on top of the maximum.
  5. TFSAs side-step attribution rules - a higher income spouse can give money to a lower income spouse to allow them to contribute to a TFSA without any tax consequences.
  6. You can borrow from your TFSA for other investments.
  7. A TFSA is a great way to save money as an emergency fund, as many people do not have an emergency fund for unexpected future events (i.e. losing your job, house repairs, etc.). Once established, you have the opportunity to use your TFSA for investment opportunities.
  8. It is a great investment vehicle for inherited money.
  9. You can hold stocks, bonds and term deposits.  Although it is called a “savings account”, it is more an investment account depending on which type of financial institution you hold your TFSA with.

TFSA strategies can vary over the years depending on your individual circumstances. As of 2019 you are eligible to contribute up to a maximum of $63,500 if you have not yet started a TFSA.  The amount you can contribute will appear on the Notice of Assessment you receive each year after filing your personal income tax return with the Canada Revenue Agency. Due to the tax avoidance advantages that come from a TFSA, it is very beneficial to start your own and contribute to it on an annual basis. Be certain to keep track of your contributions so that you do not exceed the maximum allowable amount as there are punitive penalties for over-contributing.

The Real Cost of Robo-advising Services

DEC 11, 2018

Written by: Evelyn Suvajdzic, CPA, CGA

I read a recent article in Business in Vancouver written by Albert Van Santvoort regarding investing fees in traditional finance firms versus robo-advising services.   All costs may not be clearly evident leaving you, the consumer, comparing apples to oranges and paying more for less.

With the advancement of technology we have been introduced to more user-friendly services in the financial sector. We should, however, be aware that user-friendly is not necessarily user-focused.

Robo-advising uses computer algorithms and artificial intelligence to trade investments; the cost associated with these services is advertised as low-fee trading options offering financial and trading services.

The article states that beginning in August 2018 Wealthsimple Financial Inc. and Fidelity Investments Inc. started offering no-fee trading options.

What does “no-fee” really mean?  When you make a “trade”, which is a buy or sell of funds, a fee is included as a percentage of the assets under the firm’s management.  The exchange-traded funds also charge an additional annual percentage as a management fee.  These fees are often nearly the same as standard brokerage fees invested in individual stocks.

Robo-advising replaces a personal advisor who would take other factors such as your tax and estate issues into consideration when advising on investment portfolios.  Low fee and no fee advising relies on algorithms, which means when a stock reaches a certain price, either up or down, it is sold and invested in other holdings to keep the percentage of the portfolio holdings at a predetermined level.

Make sure you are aware of all the fees you are paying in each situation.  Traditional investment brokers are required to clearly state what they charge for their services.  They can also give advice as to when to take CPP or how to manage your portfolio going into your retirement years.  Robo-advising may be low cost investing, but make sure it is the right fit for your needs. 

Referendum on Voting in British Columbia

OCT 22, 2018

Written by: Howard Karpes, CPA, CGA

This October 22nd,  2018 we in British Columbia (BC) will be voting on whether to change the voting style for future Provincial Elections.  If you want, you can read the 114 page document “How we Vote 2018 Electoral Reform Referendum,” or you can read further for a summary.

 You will have to answer 2 questions:

Question #1

Keep the current First Past the Post (FPTP) – Yes or No?

Question #2

If BC moves to Proportional Voting rank the following options:

1.      Dual Member Proportional

2.      Mixed Member Proportional

3.      Rural-Urban Proportional Representation

Let’s start with Question #2.  What are the new methods proposed?

Method 1 – Dual Member Proportional.

Two Electoral ridings will be combined.  Each party will provide two candidates to the super riding. One candidate will be voted by the vote (FPTP), the other candidate in the super riding will be allocated by the overall Provincial vote.  So the top candidate in a super riding will always get their seat but the 2nd place person may not.  Consider adjacent ridings that are current party strong holds. Vancouver – Mount Pleasant (NDP since it existed) & Vancouver – Kingsway (NDP except for 1 election).  In the 2017 election Jenny Kwan would be the winner.  Adrian Dix may or may not get in depending on the formula and whether he is politically connected enough for his party to let him become their candidate of choice. The party decides NOT the voters.

Method 2 -  Mixed Member Proportional

Combines electoral ridings, or in the alternative, creates more seats to create a List Proportional Representative seats to be allocated from a parties’ list.

Mixed-member proportional is a mixed electoral system in which voters get two votes: one to decide the representative for their riding and one for a political party. Seats in the legislature are filled first by candidates in local ridings, and second, by party candidates based on the percentage of Province-wide votes that each party received. Again, the party decides NOT the voters.

Method 3 - Rural–urban proportional (RUP)

Rural–urban proportional is a hybrid proportional system. It would use mixed-member proportional representation (MMP) in rural areas and the single transferable vote (STV) in urban and semi-urban areas. Of the three systems on the referendum ballot, RUP is the only system that lets voters rank individual candidates in order by preference.

Droop formula used to determine electoral quota; Weighted Inclusive Gregory method for distributing surplus votes; (look them up, would be a whole new article for each).

This method is the only method that the political party does not finish off the proportionality in the Urban areas, but they still do for rural areas.  Further, it is the same methodology that we voted against in 2005 and 2009; with 60+% voting against it in 2009.  The complexity is what I believe makes this a poor choice.  In 2017 11,662 ballots were rejected.  And this being: “make an X next to your candidate of choice.”  Now we expect a computer system to read people’s handwriting for 1, 2, 3, 4 & 5?  How many unidentifiable 3’s and 5’s will spoil your vote?

All of the above options will likely create a larger amount of MLAs.  Why would you want that?

Finally, let’s review Question #1 about First Past the Post, or the current method.

First Past the Post (FPTP)

As mentioned above, this is the current methodology of the vote in BC.  The concern that people bring to the foreground is that this does not require any single party to have a majority of the votes throughout the Province to have a majority of the seats in the Provincial Legislative Assembly.  The primary flaw in this logic is that each singular candidate does have the most votes in their riding. An example:  The 2 ridings with the highest winning Margins in 2017 are Peace River South; Mike Bernier (Liberal) (6,634 votes) and Vancouver-Mount Pleasant; Melanie Mark (NDP) (15,962 votes). So if you use these two ridings as a proxy for the whole Province, the NDP has 48.11% of the total vote Liberals have 20.0% yet they each have 50% of the seats. THAT’S NOT FAIR. (Total Votes in 2 ridings 33,177).  Yet, in the riding of Peace River South, Mike Bernier had the highest win percentage at 75.94%.  But because his is a Northern riding, it has smaller total votes cast at 8,736.  You cannot look at the Province as a whole and say NDP got 48.11% of the vote they should have 48.11% of the seats.  It does not work.  Should the rest of the Province decide who is the best representative in Peace River South? No.  The point of the riding system is to have a local representative for you, the voter, in Victoria in the Legislative Assembly.  An MLA should have local accountability to the voters.

The final point in all of this discussion is about candidates that are Independents. If you have been doing some research or listening to debates.  Have you heard about independents? Not likely.  Because in all this discussion a party decides who is the list of candidates, a party decides who gets your balance vote.  That means that the fact that independents had more seats than the Green Party for 2009 and 2013 probably will not happen.  Delta South would probably be sad.


When you see your ballot I encourage you mail it in with a vote to keep the First Past the Post method.

Dealing With CRA - The Audit

AUG 21, 2018

Written by: Evelyn Suvajdzic, CPA, CGA

During audits, I am frequently asked by clients if the Canada Revenue Agency is entitled to the information they have requested.  The Income Tax Act of Canada gives very broad powers to the CRA auditor.  They are able to inspect, audit or examine any books and records belonging to the taxpayer. You must reasonably answer all questions relating to the administration of the business. They are also allowed to inspect any document belonging to any other person that contains information relating to the information found in the books and records of the taxpayer.  If you are not related to the taxpayer under audit you may want to consult your accountant.   

CRA auditors are permitted to make copies of any documents, including electronic documents, relating to the taxpayer.  These documents may include: invoices, bills from vendors, letters, employee records and documents and any correspondence with accountants and most advisors. If, upon review, you or your advisors realize that you have made an error, you should take immediate action to rectify that error. 

Business owners, managers and their advisors should be cooperative and maintain a respectful and professional manner throughout the audit process. Remember, the onus to support your claim is on you, the taxpayer, and that you are entitled to that claim.

Questions?  Ask your accountant.

US estate tax exposure for Canadians owning USA stocks.

AUG 3, 2018

Written by: Howard Karpes, CPA, CGA

What country would think it could tax the deceased citizen and resident of another country?  The United States of America, that’s who.

Arguably, what I am about to tell you is a very specific circumstance but, in my opinion, it is highly unusual.

If you own physical property (land & building) in any country when you die that country has the right to tax you on that property at the time of your passing. 

But what about stocks?  Do you own American stocks in your portfolio?  Do you own more than $60,000 USD in your stock portfolio? You might be in trouble.

Let us begin with the definition of US situs property.  It includes real property ie. land and building; and stocks in U.S. corporations (such as Apple, Exxon or Walmart).  This however does not include non-domestic stocks listed on the NYSE such as Royal Dutch Shell. Situs property also includes personal property located in the country (an expensive car would count). 

The US has an exemption available for anybody who owns US situs property less than $60,000, but once you own more than $60,000, it comes down to your worldwide estate value.  If you have more than $11.2 million USD in total assets, you would owe American estate taxes.

Yes, I know these are good problems to have; $11.2 million dollars in estate value is quite a bit.  But millionaires are a dime a dozen in Metro-Vancouver and Toronto.

This is a big deal.

So what is the strategy to avoid this tax? 

The simplest is to not own US domestic stock and/or property in excess of $60,000.  However, since this is generally not done in a diversified portfolio you probably need further strategies. 

Further Reading:

Canada USA tax treaty Article XXIX B Taxes Imposed by Reason of Death

Hospitality Staff: Tips and Taxes

JUN 6, 2018

Written by: Evelyn Suvajdzic

All servers in the restaurant industry take heed; the CRA wants to tax what you make in tips!  A recent article by Peter Shawn Taylor in “Pivot”, the Canadian CPA magazine, talks about a couple of audits the CRA has performed in P.E.I. and Ontario in the hospitality industry. 

According to the article, the CRA audited dozens of wait staff at Murphy Hospitality Group restaurants in P.E.I. earlier this year.  The CRA went back to 2014 looking for undeclared tips.  The premise is that servers only declare a portion of the tips they receive: it is suggested that this portion accounts for only 10% of what is actually received. 

In 2012 the CRA also audited four restaurants in Ontario and found $1.7 million in tips received that had not been declared, which averaged out to $12,000 in additional income per server.

With most patrons paying by credit and debit in recent years, it has become very easy for the CRA to request a tip report from the restaurant for every one of their servers.  The CRA can now compare that report to the tax returns of the servers and easily determine the accuracy of the servers income reporting. 

The time has come for all who earn tips to start correctly reporting that income on their tax returns! 

Paul S. Hewitt, CPA and Toronto based restaurant consultant states that restaurant owners should not get involved with collecting or managing tips.  In some establishments all of the tips are collected and then distributed among the servers and kitchen staff.  However, Mr. Hewitt suggests that, if this is done, owners run the risk of the CRA assessing this as income to the restaurant and, therefore, income to the employees from the restaurant.  This will increase the cost to the restaurant owner as they will have to match the employees CPP and EI contributions and include the income on the employees T4 slips each year.  With the new Employer Health Tax coming into effect July 1, 2019, owners certainly do not need any additional employee costs.

PayPal is forced to disclose to the Canada Revenue Agency

NOV 20, 2017

A court order is forcing PayPal to disclose sales made by business accounts between January 1, 2014 and November 10, 2017.

What does this mean?  If you have a professional accountant, probably nothing.  Because your professional accountant has been helping you minimize you tax bill legally; and not by failing to declare revenue earned through PayPal.

Saving For Your Children's Future

NOV 14, 2017

RESP’s – Are You Maximizing Your Child’s Education Savings?

We all know how expensive a post-secondary education can be and how important it is to start saving as early as possible. A Registered Education Savings Plan (RESP) can be extremely beneficial in giving your child the funds they need to start their post-secondary education off on the right foot. Also, when it comes to education savings, the government is there to help. Did you know that the provincial and federal governments will provide money for your child’s RESP in addition to the money you contribute each year?

The Canada Learning Bond

The Canada Learning Bond is available for children from low-income families born in 2004 or later and provides an initial payment of $500 in a Registered Education Savings Plan (RESP) for a child’s post-secondary education. Additionally the child could receive $100 for each year of eligibility, up to the year they turn 15, for a maximum of $2,000.

Personal contributions to an RESP are not required to receive the Canada Learning Bond.

The Canada Education Savings Grant

The Canada Education Savings Grant is money the Government of Canada adds to contributions made in an RESP for the post-secondary education of a child, aged 17 or under. For every $10 saved, the Government will add between $2 and $4 for a child’s education, depending on the family’s income and how much is saved every year.

With the Canada Education Savings Grant your child could receive up to $500 per year and, depending on your net family income, an extra $50-100 per year with the Additional Canada Education Savings Grant. For more information on eligibility and how to apply visit the Government of Canada website at:

Eligible children could also receive an additional $1,200 through the BC Training and Education Savings Grant. For more information on eligibility and how to apply visit the Government of British Columbia website at:

Buying vs Leasing

NOV 6, 2017

Written by: Evelyn Suvajdzic

Clients often ask me if they should lease or buy a vehicle.   Invariably the question is brought on by a lease dealer stating that, for a little money down and low monthly payments, you can drive a brand new vehicle for a couple of years.  Once the lease term is up you have the option to buy out the lease or turn in the vehicle and lease a new one.

Leasing is more profitable to dealerships therefore; many sales people mislead consumers into believing that a lease is their best option. 

The question to lease or buy depends on your personal priorities.  From a financial planning aspect the best route is to pay cash for all items.  The idea in creating financial wealth is to have as little debt as possible and, if you do have debt, for as short a term as possible. 

A loan is generally a better option than leasing if you intend to keep the vehicle for more than three years.  If you plan to trade frequently or are looking at a loaded vehicle, leasing may make more sense. 

Here are some things to consider when purchasing:

  •        Don’t be in a rush to purchase something.  You should always allow yourself at least a month to shop.
  •        Put as much cash down as possible and get your loan pre-approved so you know how much you can spend before you go looking.
  •        Gather as much information as you can about which type of vehicle suits your needs as well as the operating expense and maintenance costs involved.
  •        You’ll get a better deal in March or April after new models are out.
  •        Check out the used car deals after someone else’s lease is over.

Here are some things to consider when leasing:

  •        Look for the lowest total cash outlay (down payment plus monthly payments).
  •        Try to find a lease with a low interest rate; it could save hundreds of dollars.
  •        Leave the lowest possible down payment, this is especially useful if you do not have funds available for the down payment required for purchasing and financing by loan.
  •        Obsolete assets can be a drain on your financial picture.  If your assets have a useful life of three years or less, leasing may be a more suitable option.

Beware of Hackers

OCT 23, 2017

Written by: Evelyn Suvajdzic

Do you think your computer system is secure?  The international Monetary Fund’s system was breached last June; theirs is one of the most secure systems on the globe.  Lockheed Martin, the defense and security company has also come under cyber-attack.  Spyware, malware and hacking are the most common threats to our corporate structures says Adriana Gliga-Belavic, director of information security at PricewaterhouseCoopers LLP.  “They’ll put an email together that installs spyware in your system.  Then custom-built applications can look through it, identify sensitive information, package it and send it out of an environment” she says.

Many Canadian companies are choosing to believe that their company is not at risk or that cyber-crime does not happen in Canada.  The reality is however that if someone wants to gain access to your system to “steal” information, or just to cause you grief, they will find a way, even through firewalls and strict access controls.

Everyone in your company needs to be educated not to open emails from unknown sources.  There should also be a plan in place so that, in the event you are hacked, everyone knows what actions to take in order to minimize the damage.

Don’t think this is important?  Just stop and think about what would happen if your client’s sensitive information was used to steal their identity?  With the new anti-spamming laws and PIPEDA, the fall out to your company could be very expensive.

Another potential threat exists when employees leave your company.  If you limit their access to information that they do not need to perform their job, you may avoid potential problems when they leave.  With increased use of cell phones and tablets there is a risk of information ending up in a vulnerable spot.  Your company should have policies and procedures in place to combat the loss or misuse of sensitive information.

If you do experience a security breach, you need to contact a lawyer. 

Business Start-Ups and Failure

OCT 10, 2017

Written by: Evelyn Suvajdzic

There are more and more Canadians starting their own business and it is thought that as many as 3.2 million are thinking of starting a business.  An Ipsos-Reid survey showed that 2.8 million existing small and medium-sized business owners feel that money is definitely a motive for many aspiring entrepreneurs.  Another major draw is having more control in their lives.  Many entrepreneurs find out the hard way that running their own business is not as easy as it may seem, and that a seemingly successful idea can end up in financial ruin.  So let’s review some common areas that are often overlooked by management.


A poorly managed or missing information system can spell ruin.  Your system should generate daily and monthly reports on your business transactions.  This will assist you in making decisions regarding which areas it would be most beneficial to spend your money on.  Monitor your inventory levels by conducting periodic inventory counts and comparing the actual numbers to what you think you have on hand.  This should be completed by staff members who are not responsible for the inventory.  Regular counts will ensure that you have the product you need to keep shipments going out as promised.  Customers that get what they want when it is promised to them are happy and will return. They may also refer business to you.  By doing regular inventory counts you will also be able to pinpoint obsolete or slow moving products.  If you have an over abundance of these products they can tie up precious cash.  Keep records of customer complaints, disputed invoices and credit notes with detailed explanations for each.


Another critical area where cash flow problems arise is accounts receivable.  Slow collections can lead to invoices that are never paid which will directly affect your bottom line.  It does not matter how much you sell, if you do not collect on your sales, your business will fail.  It may sound extreme, but every dollar you do not collect reduces the amount of cash available to purchase new inventory or grow your business and also leaves you with write offs that affect your company’s bottom line.  If you pay commissions on gross sales, imagine how much you are paying out on uncollected accounts.  Accounts receivable should be reviewed on a weekly basis.  Sales commissions should be based on collected sales and overdue accounts should be dealt with immediately. 


Just like with individual finances, if your company is spending more money than it is making, it is only a matter of time before financial failure is a certainty.  In order to be cost efficient, ensure that there is a formal expense approval system in place for all staff and supervisors, and that it is adhered to.  Only business related expenses should be allowed and expenses such as cell phones, advertising and entertainment should be strictly budgeted.  Comparisons should be made on a monthly basis between actual and budgeted amounts.  Expenses for assets should be reviewed to ensure they are necessary and that funds are in place to support the outlays.  Has the expense been addressed in your budget and do you have the cash flow to support it?


Is your business reliant on a handful of clients or is your customer base diversified.  Having your revenue coming from a small base could set your company up to fail.  If you only have 5 clients and one leaves, 20 percent of your business is gone.  Would your company survive such a scenario?  Actively work to diversify your client base and develop a good business relationship with your key customers to ensure that they are satisfied and have no reason to take their business elsewhere.


Entrepreneurs are generally optimistic, they have the vision and drive to develop and grow their businesses.  However, they often lack the financial ability necessary to manage cash flow and, as a result, profitability suffers.  Do not try to be all things in your business.  Develop professional relationships that give you the tools necessary to succeed.  This will allow you to concentrate on what you do best.  Work with your accountant to determine what resources you have available for financial office staff and what you need.  Your advisors should work closely with you to develop a plan that fits your needs financially as well as operationally. 


Keep an eye on your debt levels, whenever I research a public company to invest in on any stock market I always look at debt.  How much debt do they have and how are they servicing their debt.  These are the very questions you need to address in your business.  Debt may have been necessary at the start of the business however; you must manage your business to ensure you develop a plan to repay debt out of the cash flow of the business.  Look for ways to find extra cash; can you refinance at a lower interest rate and reduce your interest costs and repayment time?  Review assets for old or obsolete items that you may be able to sell.  Look for ways to reduce your expenses and review staffing requirements to determine if you have the right number of employees to sustain the business.


Review accounts payable and receivable terms, if your customers terms are net 30 days your vendors should be the same length of time or longer.  At month end your receivables balance should be larger than your payables balance.  The greater the margin is between the two, the better off your company is financially.  Make sure your receivables are current and that you are collecting as quickly as possible. This will ensure that you have the funds necessary for day to day operations and that you are not relying on debt to continue running your business.    


If your company is in trouble seek outside advice.  An accountant or consultant will have a different perspective as well as a fresh outlook.  Have them work with you to find specific solutions that fit your needs.

CPA Level Bookkeeping

SEP 13, 2017

Written by: Evelyn Suvajdzic

In our quest to provide proven business solutions to make life easier for our clients, I would like to share a recent read from the September issue of BC Business regarding the advantages of CPA-level bookkeeping.

Using a CPA-level bookkeeper can add to your peace of mind where your business is concerned as well as provide a certain level of clarity and financial intelligence. 

There is always the question of whether adding a specific service will be cost effective.  Many times I have been asked the question, should a business hire a CPA-level bookkeeper or not?  Any business that has gone through a payroll or PST audit and found they had been recording transactions incorrectly and now owe much more than it would have cost for a professional bookkeeper would say, “Hire the professionals”. 

If you are thinking any of the following thoughts, it is time to seek assistance from a professional:

  1. I am feeling overwhelmed and my receipts just keep piling up
  2. I really do not know who owes me money
  3. Is my payroll correct?

The advantages a CPA-level bookkeeper can provide include:

  • Peace of mind that your financial records are correct
  • Assurance that all government agency reports have been prepared and filed
  • A clear understanding of your financial position using data, ratios and experience

What you should look for in a bookkeeper:

  • A professional with sound financial experience
  • Make sure you feel comfortable with them
  • Ask questions to determine their level of competence.  You could ask questions such as: "You made an error and recorded a sale twice, once as an accounts receivable sale and again, when the customer paid, as a sales deposit.  How would you fix this error using a journal entry?" (answer: debit sales and credit accounts receivable)
  • Ask them to explain to you the differences between a Balance Sheet, Income Statement and a Cash-Flow Statement.  If they leave you more confused than when you started, they do not fully understand these reports themselves or the importance of them. 

Using a CPA-Level bookkeeper can give you the insight to optimize your business operations and identify your next big opportunity.

Tax Planning Using Private Corporations

AUG 22, 2017

Written by: Rose Ottesen

Recently the government issued a new paper titled “Tax Planning Using Private Corporations”.  The government feels that, in some cases, private corporations are used in order to take advantage of tax planning strategies and loopholes that are generally only available to high income earners.  They focused on three specific areas:

1-      Income Sprinkling

2-      Holding a passive investment portfolio inside a private corporation, and

3-      Converting a private corporation’s regular income into capital gains

What is considered a high income earner in Canada?  Should this be calculated on household net income or on net worth?  This is not as easy as you would think to determine and it varies across the country.  A 2015 article, published in the Globe and Mail, commented on an interview with Peter Mansbridge in which Justin Trudeau quantified the middle class as having $90,000 in household income for a family of four.

How will this affect our clients?

1 – Income Sprinkling – this is the most common tax planning strategy that will affect business owners from the lower, middle and upper classes.  The government paper proposes that wages and dividends, to a spouse and/or children, will be taxed at the highest rates unless they have significant involvement in the business or have invested capital.  Starting your own business is risky and there are no guarantees.  The government is choosing to ignore the fact that your entire family takes on the risk of your business failures and successes.  Many families have to live without a fixed pay cheque when businesses start up, and employees get paid before business owners.

2 – Holding a passive investment portfolio inside a private corporation – the corporate tax rate is much lower than personal tax rates.  A business owner that leaves funds inside a corporation and invests would have more initial funds to invest than the average person who has to pay higher tax rates on their wages; therefore they would reap higher rewards.  Corporations pay a higher tax rate on the passive income earned from these investments and eventually those earnings will be paid out as wages and taxed at the personal income tax rate.  There is no way to avoid paying higher tax rates; rather there is merely the ability to put it off.  Again, what if this is a corporate strategy to always have a “cushion” available to ensure that wages are paid or that expensive equipment can be replaced in order to maintain the smooth operation of the business?  How will corporations be allowed to accumulate operating capital in the future?

3 – Converting a private corporation’s regular income into capital gains – this must be structured in a specific manner and can be done only under limited circumstances.  This would not likely affect the majority of our clients.

“Tax Planning Using Private Corporations” covers some technical tax planning but I am not sure that it has been given the appropriate technical analysis regarding what such changes would bring.  I think that our tax system is due for some improvements however not in areas that would stifle Canada’s small business owners.

The Government is accepting comments on the proposals included in this paper until October 2, 2017.  Comments may be sent to