ThinkTalk Newsletter - Mar 2023

ThinkTalk - Mar 2023 Newsletter

March 31, 2023

Hello!

Happy Spring Season to all of you! The sun may not be out in its glory yet, but even a peek these days gives us hope for warmer days coming up. 😀

Reminder to reach out to your contact at Think Accounting to provide your 2022 personal tax documents (do not reply to this newsletter email).
Beyond April 10th, we will prepare the returns on first-come first-served basis and cannot guarantee an on-time filing.
If any of the key details changed for you in 2022 (such as Address, Marital Status, SIN, Kids, etc.), please notify us when submitting your documents.

If you haven’t read it yet, in this blog post, we covered the new UHT return requirement for this year.
On March 28th, CRA announced that although the filing deadline is still April 30th, 2023, they will not be charging late-filing interest or penalty as long as the return is filed or payment is made by October 31, 2023.
This has effectively pushed forward the deadline to October 31, 2023.
However, the penalty is still quite extreme at a minimum of $5,000 for individuals and $10,000 for corporations for late filing. We would not be surprised if CRA relaxes this leading up to the deadline as well, but don’t count on it yet!

If you think you may be subject to UHT, reach out to your contact here at Think!

Expansion of the Canada Dental Benefit, which will be reduced for families with income over $70,000 and eliminated at income of $90,000 or more.
Expansion of File My Return program focused on automatic personal tax return filing for low and fixed-income individuals.
Significant investment in cleantech through green investment credits.
RESP – an increase of the maximum payment in the first 13 weeks from $5,000 to $8,000 for full-time students and $2,500 to $4,000 for part-time students.
Amendment to Bill C-208 making the “control” and “employment” requirements more specific to ensure that the intergenerational business transfer is genuine.
A one-time Grocery Rebate through the GST credit system of approx. $234 for an individual and $306 plus $81/child for a two-parent family.
Higher “Alternative Minimum Tax (AMT)”, targeting high-income individuals and increasing the minimum tax they are required to pay when, for e.g. someone claims lifetime capital gains exemption on sale of their business.

The Age of AI has Begun - blog post by Bill Gates. (Link)
The prescribed rate on loans to family members will rise to 5% in the second quarter of 2023, up from 4% in the current quarter. (Link)
Canada relaxes rules on foreigners to buy homes and invest in commercial real estate (Link)
After the SVB collapse, and basically a US govt. bailout, Canadian banks call to increase the deposit insurance limit from the current $100,000. (Link)
Tweetstorm - How to double the value of your business. (Link)

You should pay yourself a market-based salary for what you ‘do’ in the business, and dividends as a profit distribution for ‘owning’ the business.
10% pre-tax profit should be the new breakeven. 15%+ means you have a pretty good business.
Develop a ‘salary cap’ for your staff by working backward from the target of 10-15% pretax profit.
Your core capital target: 2 months of operating expenses and nothing drawn on line of credit.
Put away taxes in a separate account throughout the year, instead of scrambling at the end of the year.
When hiring, evaluate talent based on productivity, not on years of experience.
Develop daily, weekly, and monthly reports to keep any eye on micro and macro of your business.
Project your cash flow over a 2-week period so you can plan for shortfalls.
Increase your business value through: sticky customers, talented staff, documented processes, high core capital, and intellectual property.
Forecast is more important than Budget. Budget is a license to spend. Forecast is a path to profitability.

Do you have a book recommendation for next month? Let us know!

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