Presentation from the 2015 Tax Workshop by Selena Nisbet

1. Galloway Botteselle & Company
Taxes -Taxes -
from resident tofrom resident to
practitionerpractitioner
Presented by:
Selena Nisbet
February 25, 2015

2. Galloway Botteselle & Company
OutlineOutline
• What can I deduct?What can I deduct?
• Home office, meals, autoHome office, meals, auto
expensesexpenses
• Keeping good recordsKeeping good records
• Tax installmentsTax installments
• Resident in different provincesResident in different provinces
• IncorporationIncorporation

3. Galloway Botteselle & Company
Why is this important?Why is this important?
• Physicians are in the top tenthPhysicians are in the top tenth
percentile of income earners inpercentile of income earners in
CanadaCanada
• Structuring yourself properly canStructuring yourself properly can
have huge effect on taxeshave huge effect on taxes
• Goal is to minimize taxes andGoal is to minimize taxes and
increase after-tax incomeincrease after-tax income

4. Galloway Botteselle & Company
ResidentsResidents
• Deductions are limitedDeductions are limited
• BCMA, CoPSBCMA, CoPS
• CMPA now allowedCMPA now allowed
• MovingMoving
• Automobile (if required by employer)Automobile (if required by employer)
• CreditsCredits
• TuitionTuition
• Student loan interestStudent loan interest

5. Galloway Botteselle & Company
Deductible expense vs.Deductible expense vs.
tax credittax credit
• DeductibleDeductible
expensesexpenses
• Professional exp.Professional exp.
• RRSPRRSP
• Child CareChild Care
• MovingMoving
• Tax savings isTax savings is
based on your taxbased on your tax
bracketbracket
• Tax CreditsTax Credits
• TuitionTuition
• Student loanStudent loan
interestinterest-5 yr CF-5 yr CF
• DonationsDonations-5 yr CF-5 yr CF
• MedicalMedical
expensesexpenses
• Bus passesBus passes
• Tax savings isTax savings is
the same (20%)the same (20%)
in all tax bracketsin all tax brackets

6. Galloway Botteselle & Company
Personal tax rates-2014Personal tax rates-2014

7. Galloway Botteselle & Company
When to claimWhen to claim
• Tuition fees-ASAPTuition fees-ASAP
• Student loan interest-ASAPStudent loan interest-ASAP
• RRSP-$10k contributionRRSP-$10k contribution
• Income-$65k. Tax savings is $2,970Income-$65k. Tax savings is $2,970
• Income-$150k. Tax savings is $4,580Income-$150k. Tax savings is $4,580
• Return for 1 year is over 47%Return for 1 year is over 47%

8. Galloway Botteselle & Company
Self-employedSelf-employed
• Moonlighting while a resident, orMoonlighting while a resident, or
• After residency is completedAfter residency is completed
• Rules are the sameRules are the same
• Must report:Must report:
• Self-employed incomeSelf-employed income
• Can deduct related expensesCan deduct related expenses

9. Galloway Botteselle & Company
Can I deduct _____?Can I deduct _____?
Yes, if...Yes, if...
• Expenses areExpenses are
incurred to earnincurred to earn
incomeincome
• Expenses areExpenses are
reasonable inreasonable in
amountamount
• Allowed by theAllowed by the
Income Tax ActIncome Tax Act
Not, if...Not, if...
• Personal or livingPersonal or living
expensesexpenses
• CapitalCapital
expendituresexpenditures
• Denied byDenied by
Income Tax ActIncome Tax Act

10. Galloway Botteselle & Company
Business expenseBusiness expense
summarysummary
• Accounting and legal feesAccounting and legal fees
• Advertising and promotionAdvertising and promotion
• Meals and entertainmentMeals and entertainment
• Annual license fees and professionalAnnual license fees and professional
duesdues
• Bank chargesBank charges
• InsuranceInsurance
• liabilityliability
• officeoffice
• business overheadbusiness overhead

11. Galloway Botteselle & Company
Business expenseBusiness expense
summarysummary
• Interest on loans and leaseInterest on loans and lease
paymentspayments
• Convention expenses (2 per year)Convention expenses (2 per year)
• Maintenance & repair of officeMaintenance & repair of office
equipmentequipment
• Professional developmentProfessional development

12. Galloway Botteselle & Company
Business expenseBusiness expense
summarysummary
• Office expensesOffice expenses
• Postage, stationery, supplies, etc.Postage, stationery, supplies, etc.
• Salaries and employee benefitsSalaries and employee benefits
• Telephone (business portion)Telephone (business portion)
• Travel expensesTravel expenses

13. Galloway Botteselle & Company
Business expenseBusiness expense
summarysummary
• Expenses incurred as a residentExpenses incurred as a resident
• Medical libraryMedical library
• Exams (as tuition now)Exams (as tuition now)
• Computer and other assetsComputer and other assets
• 100% deduction ended Jan 31, 2011100% deduction ended Jan 31, 2011

14. Galloway Botteselle & Company
Automobile expensesAutomobile expenses
• Determine business portion of autoDetermine business portion of auto
expenses.expenses.
• Keep a travel logKeep a travel log
• Automobile operating expensesAutomobile operating expenses
include:include:
• fuel, maintenance and repairs,fuel, maintenance and repairs,
insurance, loan interestinsurance, loan interest
• ParkingParking

15. Galloway Botteselle & Company
Automobile expensesAutomobile expenses
• Alternative methodAlternative method
• Auto allowanceAuto allowance
• Travel log still requiredTravel log still required
• 2015 rates2015 rates
• $.54 for 1$.54 for 1stst
5000 km5000 km
• $.48 for > 5000 km$.48 for > 5000 km
• Increase of $.01 over 2012Increase of $.01 over 2012

16. Galloway Botteselle & Company
Entertainment expensesEntertainment expenses
• Only deduct 50% ofOnly deduct 50% of
meals/entertainmentmeals/entertainment
• Record client names on receiptsRecord client names on receipts

17. Galloway Botteselle & Company
Can I deduct for aCan I deduct for a
“home office”“home office”
• Meet one of two tests…Meet one of two tests…
• principal place of businessprincipal place of business
oror
• used on a regular basis to meetused on a regular basis to meet
clientsclients
• Business portion is deductibleBusiness portion is deductible
• % of rent , mortgage interest,% of rent , mortgage interest,
taxes, utilities etc.taxes, utilities etc.

18. Galloway Botteselle & Company
Bookkeeping andBookkeeping and
accountingaccounting
• Keep accurate recordsKeep accurate records
• Required for preparing tax return andRequired for preparing tax return and
for CRAfor CRA
• Options for keeping trackOptions for keeping track
• QuickBooks, Simply AccountingQuickBooks, Simply Accounting
• ExcelExcel
• Envelope methodEnvelope method

19. Galloway Botteselle & Company
Accrual vs. cashAccrual vs. cash
accountingaccounting
• Cash AccountingCash Accounting
• record expenses and revenue at therecord expenses and revenue at the
time $$ is paid or receivedtime $$ is paid or received
• AccrualAccrual
• Record expenses when incurred andRecord expenses when incurred and
revenue when earned no matterrevenue when earned no matter
when the $$ is paid or receivedwhen the $$ is paid or received

20. Galloway Botteselle & Company
Tax installmentsTax installments
• Are a prepayment of current yearAre a prepayment of current year
taxestaxes
• If required:If required:
• March 15March 15
• June 15June 15
• September 15September 15
• December 15December 15

21. Galloway Botteselle & Company
Tax installmentsTax installments
• When are installments required?When are installments required?
• When tax owing in the prior year isWhen tax owing in the prior year is
greater than $3,000greater than $3,000
• Only requires about $21,000 ofOnly requires about $21,000 of
taxable incometaxable income
• Interest charged if not made (notInterest charged if not made (not
deductible)deductible)

22. Galloway Botteselle & Company
10 / 40 / 50 rule10 / 40 / 50 rule
10% of your fee goes to10% of your fee goes to
expensesexpenses
40% goes to taxes and CPP40% goes to taxes and CPP
50% is left for you50% is left for you

23. Galloway Botteselle & Company
InstalmentsInstalments
Set aside 40% for taxesSet aside 40% for taxes
every time you receiveevery time you receive
incomeincome

24. Galloway Botteselle & Company
Where to file your returnWhere to file your return
• Based on residency on Dec 31Based on residency on Dec 31stst
• Taxes on employment income paidTaxes on employment income paid
in province of residence on Dec 31in province of residence on Dec 31
• Taxes on self-employed earningsTaxes on self-employed earnings
may be paid in province wheremay be paid in province where
earnedearned
• Income earned out of country?Income earned out of country?

25. Galloway Botteselle & Company
MiscellaneousMiscellaneous
• Travel for job interviews (notTravel for job interviews (not
deductible)deductible)
• Multiple jobsMultiple jobs
• Married/common law - whatMarried/common law - what
changes?changes?
• NannyNanny
• CRA a good resource: www.cra-CRA a good resource: www.cra-
arc.gc.caarc.gc.ca

26. Galloway Botteselle & Company
IncorporationIncorporation

27. Galloway Botteselle & Company
Incorporation:Incorporation:
• An incorporated business is:An incorporated business is:
• A separate legal entityA separate legal entity
• You are an employee of yourYou are an employee of your
companycompany
• Will receive a T4 slipWill receive a T4 slip
• Corporation pays a lower rate of taxCorporation pays a lower rate of tax
than personallythan personally

28. Galloway Botteselle & Company
Personal tax rates-2014Personal tax rates-2014

29. Galloway Botteselle & Company
Corporate tax rates-2014Corporate tax rates-2014

30. Galloway Botteselle & Company
When should youWhen should you
incorporate?incorporate?
If:If:
•You can leave at least $30-40k/yr inYou can leave at least $30-40k/yr in
the company, orthe company, or
•You can income split with familyYou can income split with family
members, ormembers, or
•Liability is an issueLiability is an issue
•SR&ED may be an optionSR&ED may be an option

31. Galloway Botteselle & Company
Tax free savings accountTax free savings account
When to useWhen to use
• Short term investmentsShort term investments
• With incorporationWith incorporation
• Benefits are reducedBenefits are reduced
• $5k in TFSA vs $7,700 in corporation$5k in TFSA vs $7,700 in corporation

32. Galloway Botteselle & Company
SummarySummary
• Keep proper track of expensesKeep proper track of expenses
• Make required instalmentsMake required instalments
• Incorporate if beneficialIncorporate if beneficial
• RememberRemember
• ItIt’’s not what you earn, its not what you earn, it’’s what yous what you
keep.keep.

33. Galloway Botteselle & Company
QuestionsQuestions

34. Galloway Botteselle & Company
GALLOWAYGALLOWAY
BOTTESELLE &BOTTESELLE &
COMPANYCOMPANY
300-2000 West 12300-2000 West 12thth
AvenueAvenue
Vancouver, BC V6J 2G2Vancouver, BC V6J 2G2
604-736-6581604-736-6581
snisbet@gbco.casnisbet@gbco.ca
www.gbco.cawww.gbco.ca