The Certified General Accountants Association of British Columbia (CGA-BC) is pleased to announce its Board of Governors for 2011:
Bruce Hurst, CFP, FCGA, has been elected Chair of the Board of Governors for 2011. (The previous title of President has been changed to Chair; the Executive Director is now the Chief Executive Officer.) Mr. Hurst is a Director and Senior Shareholder with the public practice firm of Reid Hurst Nagy Inc. in Richmond. He joined the Board in 2007 and resides in Surrey.
Joanne Pulis, CGA, of Richmond, along with Past-Presidents Gordon Clissold, FCGA, of Coquitlam, and Patrick Keller, BAppBA, FCGA, of Penticton, have retired as members of the Board.
Cindy Choi, BAccS, CGA, is First Vice-Chair. Ms. Choi is a Manager with Chan & Company, Certified General Accountant in Victoria and serves on the provincial government's Small Business Roundtable. In 2011 she will chair the Association’s Finance and Strategic Planning Committees. She joined the Board in 2007 and represents the Southern Vancouver Island region. Ms. Choi resides in Victoria.
John Pankratz, BBA, FCGA, is Past-Chair and Treasurer. Mr. Pankratz is a Partner in the public accounting firm of Friesen Pankratz & Associates LLP, where he is the lead engagement partner for roughly 150 corporate clients and 400 personal client accounts. In 2011 he will chair the Association’s Practice Review Committee. He joined the Board in 2006 and resides in Abbotsford.
Dr. Heather C. Banham, MBA, DBA, CGA, is Dean of Business Administration and Commercial Aviation at Okanagan College. She is newly elected to the Board for 2011 and represents the Kamloops/Okanagan region. She will also chair the Association’s Education Appeals Committee. Ms. Banham resides in Kelowna.
Connie Forrest, DiplT, CGA, joined the Board in 2007 and represents the Northern Vancouver Island region. In 2011 she will chair the Association’s Honours & Awards Committee. Ms. Forrest is an Associate with Jedroc Consulting Services Ltd. and she resides in Ladysmith.
Brian Friedrich, BA, MEd, CGA, is a Principal with Friedrich & Friedrich Corporation in Surrey. He joined the Board in 2008. Mr. Friedrich resides in Surrey.
Mary Galaugher, CGA, is Chief Financial Officer for the Real Estate Board of Greater Vancouver. She is newly elected to the Board for 2011 and will serve as a member of the Association’s Appeals and Education Appeals Committees. Ms. Galaugher resides in New Westminster.
Rose Henri, BAccS, CGA, is a Cost Analyst with AMEC Americas. She joined the Board in 2009 and represents the East/West Kootenays region. In 2011 she will serve on the Association’s Audit Committee. Ms. Henri resides in Castlegar.
Keon J. Kwan, BA, DiplT, CFP, CFE, CPA (VT), CGA, is the owner of Keon Kwan & Company, a public accounting firm in Burnaby. He is newly elected to the Board for 2011 and will chair the Association’s Audit Committee. Mr. Kwan resides in Burnaby.
Michael McAdam, CGA, is President and CEO of Teldon Media Group Inc., the largest privately held printer in Western Canada. He joined the Board in 2008. Mr. McAdam resides in Surrey.
Brigitte Mettler, BBA, CGA, is a Manager and Facilitator for the BC Medical Association’s Physician Information Technology Office. She joined the Board in 2007 and represents the Northern Central region. In 2011 she will sit as an alternate member of the Association’s Appeals Committee. Ms. Mettler resides in Smithers.
Candace Nancke, CGA, is the Managing Partner with the CGA public accounting firm Loren, Nancke & Company. She joined the Board in 2009. In 2011 she will chair the Association’s Discipline Committee and serve as the Board representative for the CGA-BC Educational Foundation. Ms. Nancke resides in Coquitlam.
David Sale, DiplT, MBA, CGA, is a faculty member at Kwantlen Polytechnic University’s School of Business. He first served on the Board from 2006 to 2008 and was re-elected in 2010. Mr. Sale resides in Surrey.
Stephen Spector, BA, MA, FCGA, is the proprietor of Spector and Associates in North Vancouver as well as a Lecturer at Simon Fraser University. He was the Association’s President in 2009. He joined the Board in 1998 and represents the Lower Mainland region. In 2011 he will chair the Association’s Appeals Committee. Mr. Spector resides in North Vancouver.
C.Y. (Cheng-Yan) Tay, BBA, CGA, is Director of Finance and Administration with PDG Investments in Vancouver. He joined the Board in 2008. In 2011 he will serve on the Association’s Appeals Committee. Mr. Tay resides in Vancouver.
Guy Heywood, BA, MBA, was appointed Lay Board Member on May 2, 2008 by the provincial government. Mr. Heywood has the responsibility of serving the public's interest on the CGA-BC Board. He is Vice-President, Corporate Development for Magnolia Capital Corporation and a City of North Vancouver councillor.
Gordon Ruth, BA, FCGA, is CGA-BC’s Chief Executive Officer and serves as Secretary of the Board. Mr. Ruth resides in Burnaby.
There are 15 elected members of the Board. These include one each representing the Lower Mainland region, the Southern Vancouver Island region, the Northern Vancouver Island region, the Northern Central region, the Kamloops/Okanagan region and the East/West Kootenays region. The Lower Mainland region also provides for nine additional members of the Board to represent the membership at large (unless noted otherwise, the elected governors above represent the membership at large). In addition, there is one Lay Board member who represents the public and is appointed by the provincial government.
CGA-BC Staff: ‘Presenting’ a Generous Lot
Standing in Debbie Davis’ office in the last week before the Christmas break was a difficult performance, one that required the balance and care of a Cirque du Soleil acrobat dancing in a minefield.
“I’m sorry there’s nowhere to sit…or stand,” said CGA-BC’s Human Resources Manager. It was true, floor space was at a premium. But she needn’t have apologized. There was no room in her inn because every bit of floor, chair and table was filled with brightly packaged gifts for a family in need. There were professionally wrapped designer clothes, 20 lb bags of sugar and everything in between. Debbie’s office looked like downtown Whoville after the Grinch had that rapid heart expansion surgery and gave back all his misbegotten loot.
“We’ve taken part in the Salvation Army’s Adopt a Family for Christmas program for over 10 years, but I’ve never seen the staff be so generous,” said Debbie. “It’s really wonderful.”
This year the recipient family consists of both parents and five children who have recently immigrated from one of the most desperate and corrupt nations on earth: The Democratic Republic of the Congo.
Meet the Next Premier of B.C., January 18
CGA-BC members are invited to the Future Premier Panel, an exclusive BC Chamber of Commerce event with the five Liberal leadership candidates.
Join George Abbott, Christy Clarke, Mike de Jong, Kevin Falcon and Moira Stilwell for an engaging panel discussion and question & answer session.
One of these five leadership candidates will be the next Premier of British Columbia. Do you know their positions on the business issues that will affect the entire province?
Click here for More Information and Event Registration. Please note: Special rates apply for tables of eight.
Tuesday, January 18, 2011
Terminal City Club - 837 West Hastings Street, Vancouver
7:30 - 8:00 am: Continental Breakfast & Registration
8:00 am: Program Begins
The leadership candidates will be addressing the priority areas of the BC Chamber: ensuring a vibrant resource sector, competitive taxation and regulation, reform of local government, skills and labour shortage and transportation.
Following the panel discussion there will be a moderated Q&A session led by Anne McMullin, President & General Manager of the North Vancouver Chamber of Commerce.
Join us for this CGA-BC-sponsored event.
CGA-Canada President: Canada's Entrepreneurs Need Tax Rules Simplified
Based on an article by Daniel Pi for the Vancouver Board of Trade
When a single sentence of tax regulations runs three pages long, you know the tax system is out of hand.
Simplifying corporate taxes is the most important thing the Canadian government can do to ensure a strong climate of entrepreneurship in the country. So said Anthony Ariganello, President and CEO of the Certified General Accountants Association of Canada (CGA-Canada), to the Vancouver Board of Trade last month.
Ariganello urged government to tackle issues affecting small and medium-sized business owners and entrepreneurs so they can continue to help Canada’s economic recovery and develop to their full potential.
“We want governments to bring the same level of urgency, imagination and courage to this challenge that they brought to solving the recent global financial crisis,” Ariganello said at the event sponsored by the CGA-Canada, CGA-BC, Johnstone’s Benefits, and Industrial Alliance Pacific Insurance.
In addition to simplifying tax rules, Ariganello said the keys areas that need improvement are reducing red tape and eliminating interprovincial trade barriers. In particular, he called for an independent review of the Canadian tax system and for all levels of government to work together to co-ordinate sound and simpler regulations for business owners. He also encouraged the federal government to adopt open trade legislation and form a tribunal to solve any trade barriers between provincial borders.
Also speaking at the event was Eamonn Siggins, Chief Executive of The Institute of Certified Public Accountants in Ireland.
Siggins, who arrived in Vancouver at the height of the Irish budget crisis and joked that he might not be going home any time soon, announced the country’s recovery will hinge on the work of its spirited entrepreneurs.
While Ireland has been at the centre of worldwide media coverage for its banking crisis, the country continues to be an attractive destination for businesses, Siggins maintained.
“Ireland is still the ninth best place in the world for doing business. We have critical mass in a number of key high tech sectors,” he said.
Compared with the rest of the European Union, Ireland, he said, is the most entrepreneurial, nearly twice the European average. However, like Canada, the country can do more to foster the entrepreneurial spirit. The banking crisis means access to credit is the single largest challenge now facing entrepreneurs, both start-ups and proven, durable companies. Siggins said government red tape has to be cut and collaboration between bureaucracy and business owners has to be improved.
Siggins worried that European Union governments and bankers coming to Ireland’s rescue would insist the island nation raise its corporate tax rates, harming foreign investment and potentially costing local jobs with multinational manufacturers based in Ireland.
“If Ireland does not foster entrepreneurship, our recovery will not happen,” Siggins said, but added, “Ireland will recover and our recovery will have to be export led.”
In the short term, Siggins suggested that its main export product may once again be the nation’s young and talented men and women seeking opportunities in better economies, such as Canada’s.
Consumer Taxation Branch Information Updates
December 16, 2010
Bulletin GEN 003, Appeals of Tax Assessments, Disallowed Refunds or Other Determinations, has been updated to include the appeal process for the Consumption Tax Rebate and Transition Act.
December 7, 2010
Questions about the transition from the Hotel Room Tax to the HST are answered at Notice 2010-015, Notice to Hotel Room Tax Operators - Transition to the Harmonized Sales Tax.
Bulletin MFT-CT 007, Refunds for Deputy Collectors and Retail Dealers, is a new bulletin that explains the requirements for claiming a refund of security paid for fuel sellers who are not required to file regular motor fuel tax or carbon tax returns.
Bulletin MFT 002, Motor Fuel Tax Refunds for Purchasers, is a new bulletin that explains the circumstances where purchasers of fuel may be eligible for a refund of motor fuel tax and how to claim a refund.
Small Businesses Stronger Following Downturn But Still Need Help, International Survey Finds
SME sector ‘not out of the woods yet,’ says CGA-Canada’s Anthony Ariganello as between a third and one half of all small businesses worldwide don’t have adequate reserves to survive another financial crisis.
From a December 7, 2010 media release by ACCA, CGA-Canada and CNDCEC.
A worrying number of small businesses believe they do not have enough cash reserves to survive another economic downturn, according to a study by Forbes Insights in association with ACCA (the Association of Chartered Certified Accountants), Certified General Accountants Association of Canada (CGA-Canada) and CNDCEC, the professional body for certified accountants in Italy.
The study was based on a survey of more than 1,750 small- and medium-sized enterprises (SMEs) in Canada, China, Italy, Singapore, South Africa, and the UK, with 30 per cent of the sample composed of micro-businesses employ
StatsCan Introduces Retail Services Price Index
This article originally appeared in the December 15, 2010 issue of BIV Online.
Statistics Canada has launched a new Retail Services Price Index (RSPI), a tool used to measure movements in the price of retail services.
According to data released Wednesday, the RSPI was up 0.4 per cent in the first quarter of 2010, marking the eighth-consecutive quarterly advance.
The index defines the price of a retail service as a margin price, which is the difference between the average purchase price and the average selling price of the retail product being measured.
In the first quarter of 2010, miscellaneous store retailers accounted for the largest increase in retail margins.
The margin for those retailers increased 2.7 per cent in the first quarter of 2010 when compared with the fourth quarter of 2009, and 7.6 per cent year-over-year.
The national statistical agency said the gain was primarily due to a 3.9 per cent margin advance among office supply retailers and stationery and gifts stores.
It also noted a 2.1 per cent increase among electronics and appliance store retailers in the first quarter of 2010 compared with the previous quarter.
But the index also uses data to weigh the relative importance of each retail sector.
Food and beverage, gas stations and general merchandise stores are ranked the most important among the different indices.
In the first quarter of 2010, food and beverage stores saw a 0.1 per cent decline in their margins while gas stations saw a 0.2 per cent increase compared with the fourth quarter of 2009.
Statistics Canada said the index could be joined with other business service indexes to provide better estimates for output, productivity and inflation.
Natural Resources to Lead B.C. Growth in 2011: RBC
Natural resources are going to be the driving force behind B.C.’s economy next year, according to an RBC Economics report published December 15.
Craig Wright, RBC’s senior vice-president and chief economist, said an improved outlook for some of the key commodities produced in B.C. will continue to support overall growth.
But the end of government stimulus programs and a cooling housing market could restrain growth somewhat, Wright added.
“2011 will see a maturing of the recovery in British Columbia and the conclusion of some of the measures, such as increased infrastructure spending, which had been put into place to combat the recession,” Wright said.
RBC predicts the province’s real GDP will grow 2.9 per cent next year, down from 3.1 per cent this year, and employment will rise only 1.9 per cent in 2011 compared with 2.1 per cent this year.
That translates into 20,000 fewer new jobs next year.
Despite strength in metals and minerals, Wright doesn’t believe forest product producers are likely to enjoy a major turnaround next year as improvements to the U.S. housing market continue to lag.
Still, the province’s mining sector is enjoying what some have called a “renaissance,” built on soaring commodity prices, a flurry of takeovers and investments and a slate of new mines expected to begin production in a few years.
High-income Households Comfortable With Debt: PwC
From the December 20 issue of BIV Online.
Concerns by Canada’s top banker over household debt levels is not shared by higher-income Canadians.
Earlier today, Mark Carney, Governor of the Bank of Canada, reiterated his concerns that Canadian household debt is rising faster than household income with debt levels now above those of U.S. households.
A PwC consumer lending survey, however, found 67 per cent of Canadians with household incomes of $100,000 or more remain comfortable with their existing debt levels.
Even with relatively high consumer debt levels, 78 per cent of respondents said they think they have the capacity to borrow more.
Nevertheless, households seem to be taking Carney’s warnings to heart. About 64 per cent said they plan on decreasing their debt over the next 12 months, more out of prudence than fear. Only nine per cent said they were cutting their debt out of fear of losing their job.
Debt reduction is most likely to impact major household purchases. To reduce their debt, households were willing to delay purchasing a new car (64 per cent), new electronics (59 per cent) or purchase a new or larger home (56 per cent).
CGA-BC to Recognize B.C.'s Best at Successful You Awards
CGA-BC and Small Business BC invite you to enter and attend the 8th Annual Successful You Awards. The Successful You Awards contest is open to nominations. Your company or one of your clients could be recognized as B.C.’s best in one of four award categories. Use your network to get votes and then follow the contest as finalists are announced. CGA-BC is sponsor of the Best Business Concept Award. The contest is open to any B.C.-based business with fewer than 50 employees, and the deadline for nominations is December 15. See eligibility information and the nomination form.
The other award categories are:
Join us at the Small Business BC Successful You Award Ceremony on March 29, 2011 as the winner in each category is revealed and celebrated. Over 400 guests including entrepreneurs, contest nominees and finalists, industry professionals, government delegates, award sponsors and media will be in attendance. Tickets are on sale.
- Best Company
- Best Employer
- Best Green Business.
If You Prepare T-1 Returns for a Fee, You Need to Register With CGA-BC
If you are a CGA preparing individual T-1 tax returns, with or without schedules, and charge a fee for this service, you are required to register this limited practice with the Association. See the CGA-BC website for details on registration requirements.
Where to Order the CICA Handbooks
The fundamental resource for professional accountants is the CICA Handbook – Accounting and the CICA Handbook – Assurance. Every member needs to own a current version of both Handbooks, especially in light of the substantial changes made to Canadian accounting standards and more changes to arrive over the next few years.
The next time you order the Handbook, do not visit the familiar Knotia site, as this has now become an online research platform, instead, see the CAstore.
Charitable Donations: Give But Don’t Get Taken
For many of us, the holidays are the season of giving. The Charities Listing on the CRA's website can help get you the information you need about registered charities, and help ensure that your generosity goes to people in need.
Use it to:
See the CRA’s Giving to Charity page.
- confirm charities' registration status;
- locate charities in your neighbourhood;
- learn about charities' activities and programs; and
- review charities' financial information.
7 Tips to Avoid Holiday Financial Stress
From a December 8, 2010 CGA-Alberta media release.
With the magic of Christmas, it is easy to get carried away and overspend. After all the presents are exchanged and parties are done, you should be left with lasting memories, not scrambling to pay off your purchases. Following the advice of these financial experts will ensure you have an enjoyable and fun holiday season - one that you won't be paying off well into the New Year.
Tip 1: Make a list - and check it twice.
Setting a budget before you start shopping is one of the best ways to manage your spending. "First, start by making a list of who you plan to buy for and how much you want to spend," said Manfred Grunling, CGA. "Add up all the amounts and there is your spending budget. If the amount is more than you originally thought, you may want to reconsider what to spend on each gift or individual," he said. And don't forget the small things. The cost of wrapping paper, bows and gift bags may not seem expensive, but do add up.
Tip 2: Don't be naughty - Resist Impulse
Once you have made your list - stick to it! Impulse buying and deviating from your list are the fastest ways to lose control over of finances. "Retailers spend hundreds of millions of dollars on advertising knowing they will make you spend more than you need to," said Jeff O'Rourke, CGA. "Once they have your money, those retailers aren't concerned that you ran your credit card to the limit or have depleted your savings," he said.
Tip 3: Be nice to your wallet
"A great tip to avoid overspending is to only withdraw the cash you need from your account before you go shopping, and leave your credit cards at home," said Grunling. It's harder to part with cash than to swipe a card.
"Window shop online and price out your gifts," advises Adrian Chang, CGA. "At the mall, stick to your list, and when you have used up your budget, head home." And as lovely as it is to shop with friends and family - avoid heading to the mall with shopaholics. Their bad spending habits may rub off. Plan to meet for coffee after you finish your shopping; your wallet will thank you for it.
Tip 4: It's ok to be a tiny bit like Scrooge
There are many stressors that come with the season - but money shouldn't be one of them. Hold on to your money, and don't succumb to the pressure to spend, spend, spend. With a bit of creativity, you can turn the holiday season away from stress and frustration to fun and relaxation.
If you are on a tight budget, consider making gifts for your family and friends. "Some of the greatest gifts I ever received were those that were made for me," said Doug Appleyard, CGA. "If you like photography, take some unique pictures and put them in a frame. If you bake, give cookies as gifts," he said.
"Your kids are experts in making special gifts," adds Grunling. "These heartfelt crafts and the memories that go along with making them will last for years to come. For Christmas dinners, consider starting a tradition of sharing a special dish. Whether it's that superb salad or the perfect pie, sharing the cooking duties takes a lot of pressure off the hosting household," he said.
Tip 5: Leave the plastic to Santa and his toys
Realistically, credit card use during the Christmas season is unavoidable for most shoppers. Spend wisely and know the consequences.
"Using your credit card and not paying the balance when the bill comes increases the cost of the gift," said O'Rourke. "A purchase of $1,000 on a credit card with an annual interest rate of 19.5% and a payment of $100 a month after the purchase results in approximately $100 of interest, increasing the cost of the gift to $1100!"
Charging $1 to your credit card is $1 less you have to spend in the future. "Ask yourself, what do I sacrifice if I purchase this gift? A spa day, new clothes, or something severe like a mortgage payment?" advises Cynthia Bakker, a CGA student in the Program of Professional Studies.
Tip 6: Plan for a prosperous New Year
If you find you cannot avoid using the credit card, you need to make a plan to get rid of the debt quick to avoid paying high interest charges. "Remember, your credit card limit is not your maximum budget," said Bakker. To pay off debt, Bakker suggests a written plan. "A written plan to get rid of debt will make you more motivated to execute the plan," she said. "It also helps to tell someone about the plan, holding you more accountable." Leave room in your budget to set aside cash to put toward your debt.
"To avoid paying high interest charges, set up internet access to your credit card accounts and monitor daily to keep on top of your balance," advises Chang. "Pay off full credit balances each month, and schedule payments electronically to avoid missed or overdue payments," he said. "If a payment is missed, pay off the entire accumulated balance including purchases after the statement date to avoid additional interest charges."
Tip 7: 12 months before Christmas...
With each expense this Christmas season, keep a detailed record so you have a reference for preparing your next Christmas budget. "With Christmas fresh in your mind, setting a budget for the 2011 holiday season gives you realistic expectations and 11 months to save," said Appleyard. "Remember, your budget should include not only the gifts you intend to buy, but also entertaining, travel or parties," he said.
"Set an amount you want to spend for next Christmas, and divide by the number of pay periods between now and December. The total is the amount you need to save from each pay cheque," Appleyard added. "This amount has to fit in with all your other expenses throughout the year. Can you afford it? If not, relook at your budget. The best way to save is to set up an automated deduction from your pay cheque into a Christmas savings fund."
Public Practice News
IRS Sets Out New Tax Preparer Registration Rules
The Internal Revenue Service (IRS) is making a fundamental change to how the agency will regulate the tax return preparation industry in the United States. The new requirements for all paid tax preparers take effect on January 1, 2011 and will roll out in three phases:
Apply for or renew their Preparer Tax Identification Number (PTIN).
Pass a competency exam. If you register and get your new PTIN before the competency exam is available-scheduled for mid-2011-you will have until the end of 2013 to take and pass the exam.
Complete Continuing Education Credits. The start date for this requirement has yet to be determined.
For foreign tax preparers, the IRS has provided a two-part process to obtain a PTIN:
Because of the time required to comply with this two-step process, especially the additional documentation requirements, the IRS is allowing foreign preparers additional time to comply. CGA-BC practitioners are encouraged to begin phase 1 now as you must allow two months or more for completion of this two-step process.
- Apply online or in paper form for a PTIN
- Submit Form 8946 and additional documentation requested.
Comments Requested for Standards for Compilations in Canada
The Auditing and Assurance Standards Board (AASB) has issued an Invitation to Comment, encouraging Canadian stakeholders to provide input on the Exposure Draft of the proposed International Standard on Related Services (ISRS) 4410 (Revised), Compilation Engagements, which was recently issued by the International Auditing and Assurance Standards Board (IAASB).
Although the AASB is not proposing to adopt ISRS 4410 (Revised) at this time, it will be monitoring the IAASB's discussions and decisions regarding development of proposed ISRS 4410 (Revised). The IAASB has concluded that ISRS 4410 is outdated and in need of revision to better assist practitioners in providing services to small and medium-sized entities that increasingly are not required to have their financial statements audited.
There are six key areas of difference between the proposed ISRS 4410 (Revised) and the CICA Handbook - Assurance, Section 9200, as follows:
Send your response to the two questions listed in the Invitation to Comment to Tina Peters, CGA, Director, Public Practice Services, by January 15, 2011.
- Identification of the purpose (use of the financial statements)
- Identification of the applicable financial reporting framework
- Acknowledgment of management of its responsibilities
- Applicability of quality control standards
- Increased documentation
- Change in practitioner's compilation report.
Colin Hansen States Conditions for B.C. to Agree to National Securities Regulator
B.C. is the only province west of Ontario to come out in favour of a national securities regulator. But even that support is conditional. A key B.C. stipulation for B.C. Finance Minister Colin Hansen is a decentralized headquarters. Ontario, he said, could be the formal headquarters, but regional offices would be given national responsibility for certain slices of capital markets – including basing the regulation of venture capital in British Columbia.
“Anybody that feels that all of the executive functions of a corporation or organization need to be located under one roof is not living in the 21st century,” said Mr. Hansen.
See the full Globe and Mail article.
Member Benefits - Interview and Resume Service
Vancouver Resume Writing & Interview Coaching Services has partnered with CGA-BC to offer all members, students, and staff a 20% discount on résumé writing and interview coaching services.
This is your opportunity to talk one-on-one with a former executive recruiter with proven experience in reviewing and analyzing résumés, identifying the skills and core competencies employers crave, and extracting essential information about past employment history and performance—all vital, expert abilities you need to tap if you are to put your best foot forward!
Partnering with an expert recruiter and well-known Vancouver résumé writer with diverse crossfunctional knowledge in the various ways Fortune 500 companies and small owner managed businesses conduct their hiring process, could make all the difference for your résumé writing project, your interview coaching workshop and ultimately your career!
Graystone on Tax
HST and Your Accounting Firm
We have identified certain items regarding the new Harmonized Sales Tax that may require some attention by accountants and their accounting firms:
The HST generally applies to the same base of taxable goods and services as the GST and all GST registrants are automatically registered for HST, using the same business number. Businesses will continue to collect GST on taxable supplies of goods and services made in provinces other than the participating provinces.
- Performance of services outside of B.C. or for clients located outside of B.C.
- Transitional issues regarding time charges before and after June 30, 2010
- Temporary recapture of input tax credits (“ITCs”) requirement.
The current participating provinces include: New Brunswick, Nova Scotia, and Newfoundland
and Labrador, Ontario and British Columbia. The HST rate for Ontario, New Brunswick and Newfoundland and Labrador is 13 per cent; Nova Scotia’s HST is 15 per cent.
Place of supply rules
The place of supply rules, contained in the Excise Tax Act (ETA) and its regulations, determine whether a supply is made in Canada and in which province, with specific rules applying depending on the nature of the supply. If the supply is regarded as made in a non-participating province, the supplier will not be required to collect the provincial component of the HST, but rather will only collect GST.
General rules for services
Under the new rules for supplies of services, the greatest emphasis is placed on the location of
the recipient of the supply (your client). In the normal course of business, if the business
address in Canada is obtained, the services will be considered as being made in that particular
province. If for some reason the business address is not obtained, the place of supply rules
become much more complex and you should consult with an advisor.
Example: An accounting firm in B.C. is hired to perform services for a company with a business
address in Calgary, Alberta. As the accounting firm (supplier) obtained the recipient’s Alberta
business address, the service is subject to GST at a rate of 5 per cent.
Temporary Recapture of ITCs
B.C. will temporarily restrict ITCs on certain items for large businesses (see below) and financial
institutions. The restriction will only apply to the provincial portion of the HST on “specified
property and services” that are used or brought into B.C.
Generally, a large business is referred to as a business that has taxable supplies, including
zero-rated supplies, worth more than $10 million annually. In calculating the $10 million
threshold, intercompany sales would be included. Therefore, if an accounting firm has multiple
offices, any sales charged to the other offices would be included in the calculation.
In general, specified property and services include:
- Specified energy –electricity, gas, etc
- Specified telecommunication services include cell phones, faxes, cable
The following are not included:
- Internet access
- Toll-free numbers
- Web access
- Telecom equipment rental.
A proxy method is available if the specified telecommunication costs and the non-specified
telecommunication costs are all on the same invoice and they are difficult to separate. In the
proxy method, 95 per cent of the costs are deemed to be attributable to specified
- Specified meals and entertainment that are currently subject to an ITC repayment
- Specified road vehicles weighing less than 3,000 kg. If a large business pays an allowance or a reimbursement for specified property or services to an employee or a partner, the large business would be required to recapture the provincial component of those ITCs. If your accounting firm is a “large business” you will need to update your accounting systems (e.g., new general ledger accounts, update employee expense templates, etc.) to account for the restricted ITCs.