Have you thought about restructuring your company? Or have you heard the term “restructuring” and wondered what it was, or if it was applicable to your business?
At some point, whether your business is facing challenges or not, many companies consider restructuring in order to improve their performance within their industry, save taxes and meet their goals. Many entrepreneurs also restructure their business early on when their small business begins to be profitable.
Simply put, restructuring refers to the management process of reorganizing a company in order to make it more profitable, often by reducing or deferring overall taxes. This can involve restructuring legal, ownership, operational, financial structure, or other aspects of a company. It is sometimes also described as “repositioning”, “corporate restructuring”, “financial restructuring” or “tax reorganizing”.
Cahill CPA has dealt with a number of restructuring situations due to changes in ownership (ex. bringing in new owners or changing owners entirely), mismanagement issues, response to a major crisis, and financial difficulties. Many reorganizations or restructuring are initiated for tax reasons, which may include:
- Accessing corporate losses
- Crystallizing the capital gains exemption
- Purifying the corporation to retain its eligibility as a qualifying small business corporation for capital gains exemption purposes
- Departure of one of several shareholders
- Break up of the corporation among several shareholders
Restructuring is often misunderstood and thought of as a negative thing; however, it is more often than not, a very positive opportunity for companies. In this quickly changing economy, businesses often need to make big changes in order to stay ahead in their industry and reach their full potential. In fact, our clients sometimes ask us about the possibility of restructuring before they are in a difficult position, and we are able to discuss the pros and cons of such a move. When done correctly, restructuring can deliver the intended outcomes and increase value for your company.
Further reading on this topic:
Cahill CPA is located in North Vancouver, and is a family-run practice of chartered professional accountants. If you are looking for an accountant who will work for your business, contact us to set up a meeting! www.cahillpro.com/contact
Beginning in January 2017, an annual "Empty Homes Tax" will be applied annually to homes that are deemed to be empty in the city of Vancouver. Many people will not have to worry about this tax, as it will not apply to those owners who reside in their homes full-time or who have long-term renters. To see if this tax applies to you, the City of Vancouver has created a simple questionnaire:
There are many exemptions to this tax, however in some cases, owners must submit evidence to the city in order for them to be exempt. For example, if you are currently undergoing large renovations and are not living in your home, your property has been subject to rental restrictions recently, or ownership of the property has recently changed, you will need to provide specific evidence to the city promptly.
Other cases that are eligible for exemption, granted the correct information is provided, include:
- Your home is being used for a minimum of six months of the year for work purposes within the City of Vancouver, but you claim your principal residence elsewhere.
- You or your tenant is receiving long-term, in-patient medical or supportive care.
- The owner is deceased and a grant of probate or administration is pending.
- Your property is under a court order prohibiting occupancy.
- The property's use is limited to vehicle parking, or the shape, size, or other aspect of the property precludes the ability to construct a residential building.
The City of Vancouver website provides this list, along with all the necessary information to submit evidence for exemption, on their website.
If you are concerned about how this will affect you and your current property, our team at Cahill Professional Accountants will be happy to answer any questions you might have.
A client requested some information on this topic recently and I wanted to make a post to describe the important difference between the Disability Supports Deduction and the Disability Tax Credit. These are the types of questions that us Chartered Accountants like to get from our clients as it reminds us to keep current on new and emerging tax issues, and also provides the opportunity to share the information with you through this blog.
The Disability Supports Deduction is designed to provide relief for individuals who incurred medical expenses to enable them to perform the duties at work, to carry on a business, or to attend a post secondary school. The expenses includes but are not limited to the following:
- sign-language interpretation services or real time captioning services
- teletypewriter or similar device
- Braille printers
- electronic speech synthesizer
- voice recognition software
- tutoring services
- attendant care
These expenses are claimed as a deduction to income rather than a tax credit. The expenses generally have to be approved by a medical doctor. An important point to remember is that the deduction can only be made by the person with the disability. This is an important difference from the Disability Tax Credit that allows the credit to be transferred to another individual’s return.
For more information on this or any other tax deduction or credit, feel free to drop me an e-mail at . Otherwise you can call our office anytime at 778-340-0800. Be sure to check out our website: www.cahillpro.com
The much loved (and hated) Provincial Sales Tax is coming back to British Columbia on April 1st, 2013. We have been receiving many questions from our clients regarding whether the same rules for the PST will be in effect. Although the regulations have not been released yet – It has been advised that basically the same goods and services will be subject to tax. However, the Provincial Government still has the ability to change the legislation as they see fit – for the better or the worse!
I recently attended a seminar hosted by The British Columbia Sheet Metal Association for the re-implementation of the PST in BC. Here are some of the basic highlights:
- General rate: 7%
- Liquor: 10%
- Accommodations: 8%
- Vehicles & Boats: 7 – 12%
What will be taxable under PST?
- Purchase or lease of new and used goods in BC
- Goods brought, sent or delivered into BC (for use in BC)
- Purchases of: Software, accomodations, legal services, telecommunication services.
All of the exemptions under the previous PST will be re-implemented
- All food for human consumption
- Dry cleaning & tailoring
- Newspapers & magazine
- Purchases of goods for resale
PST will not apply to most services including transportation services, personal services and most professional services.
There are special considerations for certain industries such as construction and manufacturing that should be looked into before the implementation date of April 1st, 2013. This is important if your company manufactures goods for resale, or deals with construction contracts.
Feel free to contact us anytime to discuss what options your company has, and how you can make this transition as easy and cost efficient as possible.