We all get bombarded with so much mail and email that it can be difficult to sort the important from the unimportant. Documents that are important for tax purposes arrive throughout the year, or months in advance of tax time, so we wanted to give you a guide on what small business documents are important and some tips for keeping them safe.
KEEPING THE DOCUMENTS SAFE
Digital
Google Drive, Dropbox, and iCloud are great places to safely store your documents in the cloud. Try Hubdoc or Receipt Bank for even more secure online storage, with the added benefit of integration with your business bookkeeping. Ask us about how to get a free Receipt Bank account!
Analog
Use a file folder system that works for you. Organize in chronological order. Make separate folders for bank statements, corporate documents and receipts. Pick up a True North document bag from us, and use it in your vehicle for that paperwork you pick up on the go, but need to keep it safe.
PRIOR YEAR TAX RETURNS
Your accountant will always give these to you, so keep them safe. If you do your own taxes, save a PDF in a safe place. If you ever need to change accountants, any new accountant will require last year’s tax return. It also has your schedule of instalments on it, which is useful throughout the year.
NOTICE OF ASSESSMENT (OR “NOA”)
A few weeks after your tax return is filed, you will receive your Notice of Assessment. Keep this in a folder with all your other tax documents for the following year. The NOA should have a Payment Voucher included, which is required to make tax payments at the bank. Banks will only accept the original vouchers now. The NOA will also have your RRSP contribution limit on it.
CORPORATE ANNUAL RETURN
Every year, around the anniversary of your incorporation date (if you have a corporation), you will receive a notice to file your Corporate Annual Return. This is not a tax filing, so most accountants will not automatically take care of this for you. You are responsible for going to the Alberta Registries every year and paying the $84 to file the Corporate Annual Return. If you fail to file for 30 months, they dissolve your corporation, assuming it is inactive. Most people pay their lawyer to keep the minute books, and the lawyer handles this filing. True North also provides this service.
PROPERTY TRANSACTIONS
Whether its a principal residence, vacation, or investment property, keep all your documents when you purchase or sell a property.
STOCKS & INVESTMENTS
Summary of realized gains and losses
This is important if you trade stocks. Your financial institution can provide you with a summary of all share transactions, investment fees and gains and losses for the year.
Investment Statements
These show your year-end balances, but more importantly, they show how much you paid in investment management fees, which is a deduction.
Loan Statements
If you borrowed money to invest, you can deduct the interest, so keep all your loan statements.
Complete Losses
Do you have an investment that has gone to zero and want to claim the loss? There needs to be some sort of crystallization event in order to claim the loss. For example, bankruptcy notice, share repurchase, or share cancellation notice.
PROFESSIONAL AND UNION DUES
Keep the invoices and proof of payment for professional dues and union dues. Also keep proof of any professional development hours you accumulate during the year.
MORTGAGE STATEMENT
This is important for your home office. The biggest part of your home office deduction is the interest portion of your mortgage payments, however the principal portion is not deductible. The Mortgage Statement is sent out by your bank in January each year and shows your January 1, 2017 mortgage balance, December 31, 2017 mortgage balance, and your total mortgage payments for the year. It will break down how much interest and how much principal you paid.
OFFICIAL DONATION TAX RECEIPTS
The official donation tax receipts need to be signed. But you can accumulate donation receipts for five years, so dig for old unused receipts.
RRSP CONTRIBUTION SLIPS
Always check your balance before you invest - and don’t over-contribute to your RRSP! Your bank will give you these slips after the transaction is complete.
TUITION AND STUDENT LOANS
Keep your T2202A forms and any bills that might be eligible for tuition. If you have student loans, keep your annual statements showing the interest paid.
DAYCARE, DAYHOME & NANNY BILLS
These costs are great deductions for tax purposes, so keep these. Remember, it’s not deductible if you pay your nanny under the table. Read more about this in our blog about childcare.
HEALTH INSURANCE AND MEDICAL EXPENSES
For most people, the largest medical expense is their insurance premiums, so keep this statement. For all other medical expenses, only the portion that is not covered by insurance is deductible. There is a minimum threshold on medical expenses, which is the lower of 3% of your net income or $2,268. For example, if your income is over $75,600, your threshold is $2,268. Say your insurance premiums are $1,500, and you have an additional $2,000 in medical expenses for total medical expenses of $3,500. Subtract your minimum threshold of $2,268 from the $3,500, to get your eligible medical expense claim of $1,232. If your total medical expenses are less than your threshold, you are not eligible to claim medical.
SEPARATION, DIVORCE AND SUPPORT AGREEMENTS
Keep the original signed copies of all of these agreements.
T2201: DISABILITY TAX CREDIT CERTIFICATE
This form must be completed and signed by a medical practitioner. Then you need to send it to the CRA and get it approved before you can claim the Disability Tax Credit. Keep this safe!
MOVING EXPENSES
If you moved cities for work, you may be eligible to claim moving expenses that your employer did not cover. Keep all these travel and moving expenses.
FOREIGN INCOME
Any statements that show investment, pension or rental income earned outside of Canada.
T SLIPS
These are the less obvious T slips that might not be available on your CRA My Account:
T3 and T5 slips - These show investment income and income from a trust
T4RSP - Income withdrawn from RRSP
T4PS - Employee Profit Sharing Plan Allocations
T5013 - Statement of Partnership Income
T5018 - Statement of Contract Payments (Construction Only)
T2200 - Employment Expenses
T2202A - Tuition Expenses
Be sure to keep these T slips safe. Failure to report income can result in significant penalties. The largest penalties we see our clients get are when they forget to provide us with a T4RSP or a T4PS slip.
We’re Chartered Professional Accountants (CPAs) and are here to help. If you have an questions about critical documents, feel free to give us a call. We can provide you with a list of what you’ll need and tips on how to organize them. We provide bookkeeping and tax services to small business owners in Okotoks and Calgary, including everything from deductions, write offs, expenses, tax returns, GST filing and more.
Read more about Bookkeeping topics that may be helpful to you and your small business.
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