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Last week, the CRA released the 2008 tax filing statistics as of May 28, 2008. The trend towards electronic filing continues although fewer taxpayers opted to use the TELEFILE system in 2008 as shown in the following table. 2008 2007 Change Total received 23,687,417 23,099,964 +2.5% NETFILE 4,150,737 3,957,938 +4.9% TELEFILE 478,023 505,966 -5.5% EFILE 9,014,295 8,259,416 +9.1% Paper 10,044,362 10,376,644 -3.2%
Last week, the CRA released figures for the average tax refund for the 2007 tax season. They touted the government's tax relief measures as the reason for the significant increase in refunds. But what do these large refunds mean for the average Canadian? It means that, on average, the government is withholding over $100 too much from the taxpayer's income each month. While some taxpayers consider this to be a form of forced savings (you don't miss what you don't see), is this really the best use of their money? Other potential (more beneficial) uses might be: If the taxpayer has credit card debt, pay down that debt by $100 every month (interest savings @19% interest: $104 in the first year); If the taxpayer has a mortgage, increase the monthly mortgage payment by $100 (potential savings on a $100,000 mortgage for 25 years @ 7%: $33,211 - plus the mortgage is paid off 6 1/2 years earlier); Deposit $100/month into an RRSP (potential accumulation over 20 years @9% income is over $64,000, not to mention the tax refunds generated by the RRSP deposits); If the taxpayer has no debt, and has maxed out RRSP contributions, invest the money at 4% interest (potential interest $26/year - less tax on the income of about $10, depending on the taxpayer's income level). The key is to get the employer to withhold less income tax from each paycheque. There are basic techniques that employees need to use to allow the employer to withhold less. Make sure that the TD1 Personal Tax Credits Return form is completed properly. All amounts to which the taxpayer is entitled should be claimed. If the taxpayer has any of the following deductions or credits, which are not accounted for on the TD1 form, then Form T1213 Request to Reduce Tax Deductions at Source should be completed and submitted to the employer. RRSP contributions Deductible Support Payments Employment Expenses Carrying Charges Charitable Donations Rental Losses Taxpayers should always remember this: a refund is not a good thing! Let us know how your clients feel about getting a tax refund - vote in our poll question below.
Andrew Brash, Knowledge Bureau Faculty made it to the summit of Mt. Everest last week, fulfilling a dream that was interrupted in 2006 when he saved a fellow mountain climber from certain death, thereby sacrificing his own ambition to make it to the top. We congratulate this true Canadian hero! So much of this climb was out of Andrew's control, from having to climb on the Nepal side, to waiting out the Olympic flame's controversial trip to the top. However, when it came down to it, Andrew said he would reach the summit of Mt. Everest on May 22 or 23. And he did. He and a small group, climbed through the night to arrive at the top of the world at 7am May 23! "It was a more difficult climb than I realized it would be and climbing all night borders on desperate (we left camp at 9 pm). The summit was cold and windy, as was most of the climb Ö" says Andrew. Since then, Andrew and his team began the descent with the eye on returning to family and friends back home. As of May 26, they have returned to and packed up base camp, then began the hike back toward the world they left two months ago. Andrew concludes this remarkable journey with his heroic act of compassion and humanity to flame his ultimate, triumphant achievement! Hear his adventures first hand! Book Andrew as a keynote speaker to hear his triumphs first hand. Contact The Knowledge Bureau now: 1-866-953-4769. The Knowledge Bureau was a proud sponsor of Andrew's successful return to Mt. Everest. You can review all his online entries for the whole 2008 Mt Everest experienced by visiting his website andrewbrash.com.
In a previous article we discussed that each of the five basic account types is either in a debit balance (assets and expenses typically), or in a credit balance (liabilities, equity and revenue typically). We also learned that as a result of the fundamental accounting equation, the total of all debit balances in the accounts at any one point in time must be equal to the total of all credit balances. How is this end result of these postings reported? The general ledger is used to produce several standard reports. The primary report, used by the bookkeeper in assessing the completeness and accuracy of the financial records for a business, is the trial balance report. A trial balance is a report reflecting all the account balances in a general ledger at a given point in time. It shows both the total of all debit balances and the total of all credit balances and is used for many purposes. Control ToolThe fact that the trial balance is in balance (that total debits equals total credits), indicates that all transactions recorded and reflected in the trial balance have been posted with some accuracy. While this fact indicates that debits equal credits (a good starting point!), note that it does not mean that all transactions were either classified or reported correctly. Error IdentificationAnother way in which a bookkeeper will employ a trial balance is to use it to identify obvious errors and/or accounts whose balances need to be investigated for possible adjustment. A review of the trial balance to identify such sources of potential adjustment requires that the bookkeeper use both common sense and a knowledge of the business itself ñ that is, that the bookkeeper ask the question, "Does this make sense?" Support for Financial Statements Finally, the trial balance will normally be used as the starting point in preparing the financial statements to be distributed to the owners/managers. The flow from the general ledger to the trial balance to the financial statements can be summarized as follows the bookkeeper summarizes the balances in the general ledger in a preliminary trial balance, obvious errors and/or accounts to be adjusted are identified, accounts to be analyzed further are identified, adjustments required are documented, recorded in the general journal and posted to the general ledger, a revised trial balance is produced, the income statement and balance sheet are prepared from the revised trial balance. Excerpted from Basic Bookkeeping for Business, one of the courses that comprise the Certified Bookkeeping Specialist program.
Andrew Brash Update Dear Andrew: CONGRATULATIONS!!! From all of your friends and associates at The Knowledge Bureau, we send you our happy cheers and heartfelt congratulations on reaching the Top of the World! Thank you for taking The Knowledge Bureau flag to the top of Mount Everest with you and know that we are so grateful that you are safe, sound and triumphant! Thousands of cheers and high fives to you! Sincerely,Evelyn Jacks, The Knowledge Bureau and your fellow speakers at The Distinguished Advisor Conference Andrew Brash, Knowledge Bureau Faculty member. The Knowledge Bureau is a proud sponsor of Andrew's return to Mt. Everest. You can review his online entries for the whole 2008 Mt Everest experience by visiting his website andrewbrash.com for live updates. Book Andrew as a keynote speaker to hear his triumphs first hand. Contact The Knowledge Bureau now: 1-866-953-4769.