Welcome back to our blog series on business valuations. In each post we explore a fundamental valuation topic to help you better understand the steps we take to appraise your business. Most professionals will mention using an “EDBITDA multiplier” as a tool for determining the value of a business. Let’s break that down. EBITDA is…

In May, the Canada Revenue Agency (CRA) transitioned to online mail as the default method of delivering most business correspondence. The CRA’s implementation will proceed as follows: • May 12, 2025 – All new businesses and program account registrations • June 16, 2025 – Existing businesses registered with My Business Account or those that have…

For those of you who have spent any time within the walls of Pinnacle, you have probably heard us drop the “value” word. Often this is in the context of our billing practices as we apply a value-based model, rather than the tired billable hour. And other times, we are in front of a whiteboard…

  We often get asked by our clients whether they can gift property to their children – and if so, whether there are any tax considerations. The answer is not always what people expect to hear. Transactions at Fair Market Value If capital property (for example real estate or investments) is given as a gift,…

Introduction: In the small owner-managed business environment, the question of compensation is a recurring theme that often leaves entrepreneurs pondering the best compensation strategy. Clients frequently approach us with questions like, “How should I pay myself?” or “How should I compensate my employees?” While a conventional response might consider the tax aspects of dividends versus…

In recent months, the Federal and British Columbia governments have introduced legislative measures to discourage short-term rentals as part of broader attempts to free up units for long-term housing. Some of these measures may impact short-term rental unit owners from multiple perspectives. Potential impacts include income tax, GST, filing requirements, and other administrative compliance. Federal…

Self-employment offers a sense of freedom and autonomy unmatched by the standard employee-employer relationship. But this can come with the sacrifice of financial stability, especially at the start-up phase. Ineligibility for Employment Insurance (EI) coverage is one of those trade offs. Certain shareholders and proprietors fall outside the scope of insured individuals in the Federal…

When an individual runs a business in a corporation, they have the choice whether to pay themselves through wages or dividends. There are several considerations that factor into this decision, one of them being contributions to the Canada Pension Plan, or CPP. What’s the difference? When a shareholder is remunerated by wages, the process is…

The COVID-19 pandemic thrust many employers into uncharted territory – requiring rapid adoption of remote working technology and development of guidelines to maintain productivity while still preserving some sort of positive work culture amongst employees. Many businesses were quite successful in this transition and their employees may now have the ability to perform 100% of…

The British Columbia Pay Transparency Act was introduced in Bill 13 and passed on May 11, 2023. This Act places requirements on employers which are intended to close gender pay gaps and address workplace discrimination. There are a number of key obligations and dates contained in the Act: Pay Transparency Discussions Effective now, employers in…

Whether you and your partner file as common-law is more a matter of fact than it is a choice. The CRA considers an unmarried couple who have been living together in a conjugal relationship for 12 continuous months as common-law. There are several benefits to filing as common-law that can help reduce your combined tax…

Looking to do some good for the planet and save some corporate taxes while you’re at it? The Canadian Department of Finance has you covered. In August 2023, draft legislation was released regarding the Clean Technology Investment Tax Credit and the Carbon Capture, Utilization, and Storage Investment Tax Credit. Both of these programs provide refundable…

Business succession planning is a critical process for business owners in Canada. The process involves planning for the transfer of ownership and leadership of a business to another person or group of people, either within or outside the family. According to a study conducted by the Business Development Bank of Canada, 60% of small and…

As accountants in a region rich with tourism, we’re often asked by employers the tax impact of gratuities. For the recipient, it’s relatively straight forward. Tips are considered taxable income regardless of whether they’re listed on the employees T4 slip or not. For employers, it’s not quite as simple. The difference between controlled and direct…

Until recently, there were significant barriers to selling a business to the next generation within a family – parents and children were heavily penalized when transacting on a sale of shares of the business versus the same transaction with an arm’s-length party. Bill C-208 received Royal Assent on June 29, 2021. This bill generally removed…

We are often asked by our clients how they should treat the carrying costs of vacant or undeveloped land for tax purposes. We are hopeful this blog will assist people to understand the appropriate treatment. Background Owners of vacant land incur carrying costs associated with ownership. Examples of such costs include property taxes, general maintenance…

Canada’s Deputy Prime Minister and Finance Minister, Chrystia Freeland, delivered the 2023 Federal budget in the House of Commons on March 28, 2023. The budget calls for a deficit of $43 billion for 2022-23 and slightly lower deficits for each of 2023-24 and 2024-25. Business and Tax Highlights of the Budget include: Financial institutions can…

If you have an employee that is valuable to your company, you may want to give them a gift for a special occasion, such as their birthday or the birth of a child. But at what point does it become taxable to them? Cash gifts All cash gifts to employees are taxable no matter the…

The BC Government recently announced that effective January 1, 2022, employees covered by the Employment Standards Act are entitled to receive 5 paid sick days per employment year. This is in addition to the 3 unpaid sick days which were previously available. What employees are eligible? Any employee who has been employed for 90 consecutive…

Baker’s Law : Bad Clients Drive Out Good Clients Over the years, Pinnacle has developed a client ranking system. This system has proven invaluable in sustaining and enhancing our business culture. We hope we can help others by sharing a key piece of this system – client resonance. What is “Client Resonance”? Client resonance is…

Do you own a small business corporation in Canada? Do you and your family receive compensation from the corporation and have medical expenses? If the answer to both of these questions is yes, you may want to consider the benefits of a private health services plan (PHSP). Private Health Services Plan A Private Health Services…

If you own your home and decide to move out in order to rent it, the CRA considers you to have disposed and reacquired the property, with both transactions occurring at fair market value. This “deemed disposition” triggers a capital gain which is calculated by subtracting the adjusted cost base (ACB – usually the original…

Canada’s Deputy Prime Minister and Finance Minister, Chrystia Freeland, delivered the 2021 Federal budget in the House of Commons on April 19, 2021. This is the first budget tabled by the federal government in over two years. Highlights of the Budget include: The Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy (CERS) including…

The BC government has introduced a new incentive program for BC employers. The program offers employers a one-time tax credit, equal to 15% of the increase in remuneration from the base period to the qualifying period. There is no maximum credit amount and it is not affected by any other government support you may have…

Transactions involving cryptocurrency (“crypto”) have soared in popularity over the last decade. Guidance from taxation authorities has at times been unclear or non-existent. Guidance has also changed somewhat rapidly as crypto users have proliferated and transactions have become more complex. Despite its name, crypto is not actually treated as a currency for tax purposes in…

During each tax season, your tax preparer will ask you to gather all of your T-Slips in order to report the information on your tax return. But what are all of these slips and how are they different? All T-slips are filed by corporations, partnerships, sole proprietorships, and trusts to report funds that have been…

If you are an employee who worked from home due to the COVID-19 pandemic, you may be eligible to claim a deduction for home office expenses on your 2020 T1 Personal Income Tax Return. The CRA has introduced a new temporary flat rate method to make claiming the deduction even easier. Temporary Flat Rate Method…

The Double Taxation Problem When a Canadian resident individual dies and does not have a spouse to whom they can transfer their assets, the deceased taxpayer is deemed to have disposed of their assets at fair market value. This deemed disposition can be a particular problem when a taxpayer dies holding shares of a private…

If your company, proprietorship, or partnership is involved in the construction industry and makes payments to subcontractors for construction services, you have an obligation to report these payments to the CRA. This is the case even if the transaction is through barter or exchange.  Think of these as “T4’s” for your contractors. This reporting is…

As you probably know, beginning in January 2019, B.C.’s Medical Service Plan premiums are being transferred to businesses through a new payroll tax called the Employer Health Tax. It applies to regular employers with payroll above $500,000 and charitable and not-for-profit employers with payroll over $1,500,000. Pinnacle Professional Accounting has compiled the most relevant information…

Do you need to register? If your company’s total payroll for 2018 was less than $500,000 and you anticipate that amount to remain under $500,000 for 2019, no action is required. If your total payroll was over $500,000 but less than $600,000 and the same is anticipated for 2019, you will need to register for…

Many small businesses don’t realize they can save time and money by using the Quick Method of Accounting for GST/HST. The purpose of this method is to eliminate the need to calculate Input Tax Credits (ITCs) by simply remitting a portion of gross revenue. The Quick Method is available for most small businesses that have…

What is the GST New Housing Rebate? When an individual purchases or constructs a new home, or substantially renovates an existing home, the individual pays GST on the purchase price or on the costs of renovation. The GST New Housing Rebate provides a refund to the individual for a portion of the GST paid. The…

Earlier this year, Finance Minister Bill Morneau announced a new federal income tax initiative whereby the government would be working to “close tax loopholes” and amend existing rules related to the use of private corporations for tax planning in Canada. In July of this year, a number of specific proposals were brought forward. At that…

CCA: What is it, and should I claim it? When reporting income on your annual tax return, it is always advantageous in the short term to claim as many deductions as possible in order to reduce your taxable income, and in turn, your balance of taxes payable. However, there are some things to consider when…

For corporate fiscal years ending after March 20, 2017, there are new rules to be aware of related to the small business deduction. Small business deduction The small business deduction is a tax rate reduction available to Canadian-controlled private corporations (“CCPCs”) in Canada on active business income. Generally speaking, these CCPCs have a reduction of…

When it comes time to send us your year-end files, it can sometimes feel like an overwhelming task to ensure that you have included everything needed. In an effort to simplify this process, we have compiled a list of things to remember. Make sure the bookkeeping is complete up to the year-end date This is…

Pinnacle guarantees to deliver your completed corporate yearend financial statements and tax return within 21 working days of receiving your documents. Why do we do this and how do we do it? Why Do We Do It? From the client’s perspective, studies show you appreciate quick turnaround of your work. As a business owner, you rely…

How to get $1,200 from the BC Government for your child’s education In order to help families save for their children’s education, The B.C Government is offering to contribute $1,200 to a Registered Education Savings Plan (RESP) through the B.C. Training and Education Savings Grant (BCTESG). The best part is, if you shop around, you…

Can’t I Just Call Them “Casual Labour”? Businesses in Canada are subject to a statutory requirement to withhold income tax, Canada Pension Plan (CPP) and Employment Insurance (EI) premiums from their employees.  This places an administrative burden on employers that many will seek to avoid whenever possible.  This blog discusses the nature of casual employment…

If you have a balance owing on your personal tax return, there is an easy way to pay – Online!   In order to make a payment, please locate your bank below and follow the steps. You may need to first sign up for online banking – contact your bank for help with this. If your…

Review of your Tax Return by the Canada Revenue Agency Nobody likes receiving a letter in the mail from CRA.  And when that letter tells you that your return is being reviewed – well, yuck…. Each year, CRA selects tens of thousands of income tax returns for review as part of their Processing Review (PR)…

If you are like a third of Canadians and are unsure of how Tax Free Savings Accounts (TFSAs) work, this article will help clarify what they are, contribution limits, benefits, and how to use your TFSA. What is a TFSA? A Tax-Free Savings Account (TFSA) is a registered, general-purpose savings vehicle that allows Canadians to…

A presentation by the United States Surety Information Office (www.suretyinfo.org) indicates that the rate of failure of contracting businesses was 20-30% between 2002 and 2012. Given such a high failure rate, it is worth examining the root causes of failure in order to understand how to minimize the chance of failure. It turns out that…

With the ratio of household debt to disposable income climbing to a staggering 163% as of late, personal budgeting is of increasing importance to the financial health of Canadians. Creating a budget is one thing, but sticking to it is another story altogether. Here are some simple steps that will help develop, and more importantly,…

Are you a business owner that is ready to incorporate? If you aren’t sure, take a gander at our blog entitled “Should I Incorporate My Business?” (Should I Incorporate my Business?).  If you know you’re ready, there’s something you need to consider which you might not have thought about – the transfer of your business from…

The Issue Payroll is a significant expense for most of our clients and, not surprisingly, they are often looking to reduce the financial burden represented by payroll obligations.  One way to do this is to convert employees to self-employed independent contractors (ICs).  Care must be taken when doing so, however, as expensive consequences can result…

Many contractors face bonding requirements in the form of bid bonds and performance bonds. The companies that provide these bonds want assurance that they are taking acceptable risks when providing bonds. Risk assessment includes a regular review of a contractor’s financial statements and operations. Here are the key items to consider when preparing financial reports…

“Living Out Allowances” or “Subsistence Expenses” are a great way to get funds out of a corporation and into the shareholder’s hands on a tax free basis.  A number of our clients work in the resource sector – support services for mining, forestry, oil & gas, etc.  These clients can spend lots of time away…

Another personal tax filing deadline has come and gone. Now is the time when you receive an unexpected letter from the Canada Revenue Agency (CRA), notifying you that they will be conducting a review of some of your expenses. The CRA reviews or audits hundreds of thousands of Canadians’ tax returns in a given year,…

As a non-resident investor in Canadian real property, you are required to advise the Canada Revenue Agency (CRA) within 10 days of selling your investment. Normally, this takes the form of an application for a Clearance Certificate since the person who bought the property from you is required to withhold tax and you want to minimize…

When the PMO announced the new family income splitting initiative there was a lot of excitement among families. You’ve probably heard a fair share of criticism as well (which is to be expected when there’s politics involved). But what’s really going on with the family income tax splitting? Is it going to benefit you? Maybe. Here…

I have a client who for years has held the Annual General Meeting for her corporation on Maui. She and her husband are the sole directors of the corporation (although I’m not sure her husband even knows where the office is, but that’s another matter). Every year she asks me the same question……”Can I write…

We are often asked by clients whether they should own rental properties personally or own them through a corporation. Our advice is usually to own properties personally when rental income is nominal and when there are only a small number of properties. The advice usually changes as more properties are added to the rental pool…

Many small businesses face a common dilemma regarding financial reporting. They want to minimize tax, which means reporting low income. But they also want to keep their banker happy, which means reporting high income. I often need to counsel clients that they can’t have it both ways. Or can they? Construction contractors can have it…

As an accountant and personal finance geek there are some things that people do and say about money that drive me crazy. That’s because often times people’s actions and thoughts on money issues make absolutely no sense mathematically. Examples include being happy about getting an income tax refund, carrying a balance on their credit card,…

April 30 is like Christmas Day for many accountants. It means that the weeks of working late nights and weekends are behind us and we are now free to finally enjoy spring. Many non-accountants are usually happy as well because they receive a refund once their tax returns are filed. However, an income tax refund…

Pinnacle PAC knows that leaders are readers. The Pinnacle Team endeavors to constantly nurture our minds, expand and enhance our services, and remain thought and practice leaders in the accounting industry. We have assembled an ever-growing list of books that we feel are worthy of your time and attention. 1. The Emyth Revisited – by…

If you are a doctor, dentist, or other professional and are considering purchasing a practice, you are likely contemplating a purchase of shares. And you should read this blog. There are a number of ways to structure a purchase of shares, but in this blog I will discuss three options:  Purchase the shares of the…

Thinking about your CPP? Mainstream media outlets have run many stories in recent years telling of the large number of Canadians that will reach retirement age in the near future. Many of our clients fit into this category and we are often asked when they should start taking CPP.  A quick recap of the issue…

I have a Bookkeeper! Do I really need an Accountant? Two of the most frequent questions we are asked are: Explain the difference between a bookkeeper and an accountant. If I have one do I need the other? (The answer is usually yes.) They are great questions. Because we work so closely together, the boundaries…

We are often asked by clients whether they should lease or purchase their vehicles (either outright or using a loan). We have tried to distill the decision down to a few rules of thumb. In general, leasing is more expensive than buying because the leasing company accepts a portion of the depreciation risk. The advantages…

One of our major areas of expertise is the construction industry. Many of our clients operate successfully in this industry, and we help provide tools for them to succeed. Construction companies have some unique challenges and opportunities – from a tax perspective as well as from a general business perspective. In this industry, it is…

How Much Is My Business Worth? As a small business owner, you probably wonder from time-to-time how much the business you’ve built is worth. There is no easy or straight-forward answer to the question “How much is my business worth?” It may be worth more to you than it would be to someone else –…

Is your corporation a personal services business? If you are the sole individual working in your corporation, you may be carrying on a personal services business (“PSB”). More and more small corporations are being labeled as personal services businesses by Canada Revenue Agency (“CRA”). The results of this can be disastrous. Personal service business What…

Being close to the border, we get lots of calls from Americans who plan to do business in Canada.  Here are some of the basic issues you need to understand. Canada – US Tax Treaty A tax treaty exists between our two countries to address tax issues.  The treaty defines, among other things, the jurisdiction…

Cash flow is the movement of money into and out of a business or project. Cash flow is imperative to the success of any business. However, many small businesses owners don’t fully understand how important it is to estimate, track, and analyze cash flows. If cash flow is not managed correctly, a company may run…

Automobile expense rules can be really complicated, especially for company owned vehicles because of the limitations on depreciation, lease and interest expenses and the need to think about taxable benefits that might accrue to the driver of the vehicle. Automobile expenses tend to require lots of administration and present significant tax risk because CRA views…

You may be the envy of your neighbours as you spend your endless summer days working on your chip shot instead of chipping away at the ice on your driveway, but did you know that by flying south for the winter you may be increasing your income tax compliance obligations? Residency You are a resident…

Are you considering renting out a portion of your home? There may be some tax implications to consider – both for now and in the future. Principal residence exemption Often, when you sell your “principal residence” there is no resulting tax implication. This is because of the principal residence exemption, which allows an adjustment to the…

We often get asked about how to deal with home office expenses for your incorporated business. While there are a few different options, here’s the best way we’ve found to do it. If you have a separate and distinct part of your home you have devoted exclusively to business use, you can deduct home office…

Most small business owners eventually face the question of whether or not to incorporate their business by creating a limited liability company or “corporation”. Owners of small business corporations enjoy preferential tax treatment in Canada in the form of lower corporate tax rates, tax-free status on sale of small business shares and access to certain…

Your Value Proposition What sets you apart from your competition? We recently held an offsite retreat and one of the objectives was to try to better understand our “value proposition”.  By understanding our value proposition, we can refine our service delivery and personal accountabilities to make our organization more valuable to its customers. Michael Lanning,…

The Pinnacle Team recently did a self-assessment to find out the strengths and weaknesses of our team dynamic.  The exercise was inspired by Patrick Lencioni’s book – The Five Dysfunctions of a Team. In his book, the author describes the five attributes that characterize a highly functioning team.  He also provides an assessment tool for…