|
|
| *The Commerce Journal>>>Canada Taxes |
Canadian taxes...? |
My boyfriend gets paid cash from his construction job, and would like to pay his taxes for his income, however I am just curious what to expect. For one thing, we don't even know where to start. We could just go to the nearest H&R but it's really expensive for each T4 that he has to do. We are really stressed out about this because his boss does his own taxes meaning his workers have to deal with their taxes themselves. Does anyone out there know how to deal with paid cash income? Thanks! Many employer in the construction industry pay cash to the workers, treating them like independent contractors. By doing this, they can avoid complying with labour laws, avoid paying the employer's portion of CPP and EI, and avoid the various headache of doing source deductions from pay cheque. Also, many construction workers don't have valid social insurance numbers anyways to issue them T4s. The Canada Revenue Agency (CRA) applies the test of whether those workers are more akin to employees, rather than independent contractors. If they decide these workers are employees, then they would go after the employer for the CPP and EI not remitted, plus interest & penalties. If your boyfriend gets paid cash and not received a T4, it probably means that his boss is treating him like an independent contractor. There is a chance that your boyfriend, by reporting the cash income, would get his boss in trouble in the manner described above. However, with that said, if your boyfriend not reported the cash income, and he ever get audited by the CRA, and the CRA managed to find out about the unreported income (the CRA has their ways), then your boyfriend would be assessed large penalties and interests. Therefore, your boyfriend really should report those income. To report this non-T4'd cash income, your boyfriend needs to determine whether he is an employee, or an independent contractor. The main criterion is whether he has control over what he does, how much he does, and brings his own tools. See this guide for more details: http://www.cra-arc.gc.ca/e/pub/tg/rc4110... If based on those guideline, your boyfriend thinks he is an employee, then report the income on line 104 (other employment income) of the tax return. If he is an independent contractor, he can use form 2124 (statement of business expense). http://www.cra-arc.gc.ca/e/pbg/tf/t2124/... Put his own name on the business name line, and put the income on the 'sales, commissions or fees' line. As he is self-employed, he can deduct expenses listed on that form. The net income would then be entered on line 135 (business income) of the tax return. Follow instruction on the rest of the tax return to find out the amount of tax payable. I was an Aussie, working in Canada, and got paid cash too...so I'd like to know the answer too! I think you would report the income amount and put "0" for tax deducted, then you will have to pay whatever taxes on the income. Good for your boyfriend. However if he's getting paid cash then Revenue Canada has no way of catching him. If he does report his income, his employer may get in trouble because he is also resonsible to pay certain taxes on behalf of your bf. Get your bf to ask his boss if he is reporting the income that your bf is making because too often greedy bosses will do anything they can to screw the gov't. You still have to report the income even through no formal T4 slips are issued by his employer. Get a tax package from a local CRA office or online at http://www.cra-arc.gc.ca/formspubs/t1gen... Alternatively, you can do it online (and I think its much easier than the paper forms) by various online pay sites. Quick Tax Web costs $25 but you can get 25% off if you go through this link: http://www.manulife.ca/quicktax... . He should definitely report it. It might be a good idea for him to record all of the money he receives from his boss, so he'll be able to accurately report it. Immediately putting into into his bank account will also give him a paper trail. He should also keep track of his expenses related to work (he likely has tools, for example). Technically, if he is not an employee (which he still might be, if a ruling hasn't been done), his boss is supposed to complete a T5018, which reports the subcontract payments. If your bf earns over $30,000 GROSS per year, he needs to be a GST registrant, and charge his boss GST. If he is in that boat, then he needs to get registered for GST, and get his boss to pay the GST to him. It shouldn't cost the boss anything extra, as his boss would also be registered for GST, and can claim the money back as an ITC. If he doesn't report the income, CRA could assess him for tax evasion, and don't listen to people who think that cash in/cash out means CRA can't find you...even if there is no official paper trail (cash payments), they can do an assessment based on his lifestyle. Concerned citizens can also call CRA and report people they know/suspect aren't paying their taxes - another way people get caught. I'm not sure what your province is, but CRA publishes convictions for failing to file returns - Ontario's are at: http://www.cra-arc.gc.ca./news... Alot of CRA links related to business are here: http://www.cra-arc.gc.ca./tax/... Hi there, hope I can help. I've given you the website for CRA below so you can check and research what I'm going to say. First of all, if you live near a district taxation office, pop in and pick up their little booklet on being self employed, it's a great resource, also pick up the T2124 form and it's booklet. Also make sure you are actually self employed by looking at the flow chart. Failing that they can be mailed to you by calling the 800 959 8281 number. I've been doing income taxes for years and I'm glad you are looking into this before you start. We live in a self reporting system so all income must be reported on your income tax return, even cash income. If you have a computer, set up a simple spreadsheet and each week as your boyfriend is paid keep track of what's coming in, we can't always count on the employer to issue the right T slip at year end. Also, look at the booklet and it will tell you which expenses you should be tracking, record those as they happen, it's easier than going crazy at the end of the year sorting receipts. One easy way is to have 12 big manilla envelopes and label them Jan through Dec, as you get a receipt create a column for that on the outside of the envelope, mark it down then put it in the envelope. At the end of the year you only have to look at the outside of the envelopes to get the information....Keep one just for car expenses, record the starting odometer reading and the one on Dec 31, keep all receipts pertaining to the vehicle in it, CRA likes you to keep records for all the business trip mileage, then at year end it's a simple matter of personal km versus business km, all the other expenses are in the same percentage. If you have an in home office, do the same thing. It may get a little complicated if he makes over $30k as he may have to register for GST, cross that bridge when you get there....As for taxes and CPP, because his employer is classing him as self employed, he will end up remitting his and the employer CPP, right now at 4.5% times 2, there is a maximum for the year. You will want to set aside this money. I would use the deductions online program and figure out just how much tax will be needed on what is coming in on a bi weekly or monthly basis, for the first year you don't have to send in installments if you don't want to, you can pay it at tax time....however future years you will probably have to pay quarterly... Once you know how much tax (from the program on the payroll part of the website), put it in a savings account, that way when you are ready to file your return you can look at purchasing RRSP's to reduce the tax or you will have the money available to pay the piper. You don't need an accountant, you may need help though to get through at least your first year, ask around there are private individual tax preparers out there, make sure they know how to do self employed returns and you are right H&R is there. Good luck. http://www.cra-arc.gc.ca/menu-e.html... |
| Tags |
| Spain Taxes Singapore Taxes Mexico Taxes Ireland Taxes India Taxes Germany Taxes Canada Taxes Australia Taxes Small Business Renting & Real Estate |
| Related information |
I would recommend going to the Service Canada website. ... Could you post the Province you're in, and the form number you're looking at? It might help give some context. For me GST registrants are people who are in business and have regi... I'm not sure what your own currency is - is it US dollars? The Canadian dollar is really strong against the US dollar right now. According to xe.com, ... Unfortunately, if the nursing home is not a registered charity, then you cannot claim your donation for tax purposes. You can see if it is a registered charity on the CRA website: ... Assuming your employer makes all the right deductions, and you have filled in the TD1 (the tax forms they give you before you begin your job) correctly, you should not have to pay any more t... What you are missing is called your notice of assessment, sounds like for the 2005 year. There is certainly a way to get it in person if you have a district taxation office near you. Just ... All transactions (buys, sells, dividends etc) need to be converted to Canadian dollars for tax purposes. You can use monthly or yearly average rates. See Bank of Canada for rates. Track... It depends upon how much you make and your expenses. Here is a link about WIC which may help answer your question ... |
Commerce Categories--Copyright/IP Policy--Contact Webmaster |