The Pros and Cons of Speculation Tax

Unless you have been living under a rock we assume you’ve heard the speculation about Speculation Tax (see what we did there). The speculation tax is designed to help make the housing market of urban areas more affordable and available by encouraging homeowners to rent out their homes and not leave them vacant. The areas affected include Metro Vancouver, the Capital Regional District (excluding the Gulf islands and the Strait of Juan de Fuca), Kelowna, West Kelowna, Nanaimo-Lantzville, Abbotsford, Chilliwack and Mission.

Who this affects

The speculation tax while seemingly terrifying, because, you know it’s potentially going to mean you pay MORE TAX will actually only impact 1% of residents and homeowners with BC properties.

The types of homeowners that will be impacted are:

(https://workingforyou.gov.bc.ca/speculationtax/)

  1.     If you are a resident of BC who owns a home but you aren’t living in it you will be taxed 0.5% of the value of your home unless your home is worth less than $400,000.
  2.   Out of province homeowners who own a home in BC that they don’t live in or rent out for at least 6 months of the year will be taxed 1% of the value of the home.
  3.   Foreign owners who don’t pay taxes to BC and who don’t reside in the home or rent it out for a minimum of 6 months out of the year will be taxed at 2%.

The 3 types of people who fall into the speculation tax bracket will have to pay the tax, rent their home out, sell or simply move in full time.

Who is safe?

Approximately 99% of people not affected by this new tax. If you own a home and live there all year, if you rent your home for at least 6 months of the year, if you don’t even own a home and are renting or if you own a home outside if the areas that were mentioned above, this new tax won’t impact you. Additionally, if the following apply to you then you are exempt – you are in the hospital or going through medical care, if you are temporarily away from home because of work, if you are in long-term care or in a supportive care facility or if the homeowner is deceased.

Pros

The Speculation Tax is aiming to improve livability in popular BC areas by encouraging homeowners to rent out their properties creating more access to housing which is a really BIG positive.

There are also a lot of measures in place to help make the tax more bearable. If you are a BC resident you will be eligible for a tax credit, the maximum amount for this is $2000, and $2000 isn’t something to scoff at. If you own 2 homes the Speculation Tax will only be applied to one of your homes, which is also a bonus. The tax itself is also so easily avoidable if you just rent out your second home or even sell (which is extreme but an option nonetheless). You can also completely avoid the tax if your home is valued at less than $400,000.

Cons

Even though there are exemptions in place to protect residents these exemptions take 3 months to be approved so this can be a real set back for some people. There is also a lot of chatter about the tax impacting the value of recreational homes in the areas where it is enforced, which could have a negative impact on tourism.

Some people have been petitioning against the Tax due to all of these cons, which is really not helping the Tax move along smoothly. It’s almost like a tightrope walk at this point, no one really knows what’s going to happen in the future as so many people are all for the tax and so many are completely against it. While the tax has been approved and implemented who knows how long it will remain in place.

Avoid Disputed Invoices On Your Next Construction Job

Let’s be honest coming in under budget on a renovation or build is not as common as going over. Things happen that are often out of the control of the company that causes the client’s budget to be blown. Going over budget without properly managing your client’s expectations and understanding can leave you with disappointed clients, loss of revenue, reputation management issues, and in some cases legal issues. We see it all the time in the news where construction companies are under fire and bills are being disputed.

All of this can be mitigated and at most times avoided if you follow these three simple rules of thumb.

1) Communication Is Key

Be honest with your clients from the start. Set their expectations from day one. Let them know that you will do your best to stay within their budget but there are times when budgets are exceeded due to ABC. Give examples of past clients who have exceeded their budget and explain why so it’s really clear that this may happen to them.

Continue this open line of communication with your clients throughout the process. Let them know how things are going and prepare them for budget issues. They will be much more understanding when increases arise if you take this approach.

 

2) Get Everything In Writing

Whenever you make an order change make sure you do so in writing and the client signs off on the change. Articulate that you are doing this at their request to accommodate their needs and remind them that the change is likely to increase the cost of the project.

This will give you a legal advantage if the client tries to dispute the bill. It will also add to the clients understanding of the cost increase.

3) Know your numbers

At times going over budget is the fault of the construction company. If you don’t manage your numbers and keep your spending up to date you won’t know you are about to exceed the budget until it’s too late. This can lead to disputes with your client and ultimately to lost profits if they refuse to pay the excess.

Use a spreadsheet or bookkeeping software to manage your expenses. Update it regularly and ensure the client receives sufficient warning and communication if the build is costing more than expected.

If you need help managing the numbers on your next construction project contact Homeroom today.

Homeroom Client Of The Month: HÄLSA Spa

This month’s client of the month is Christian  James Mackenzie from HÄLSA Spa in Kits.

HÄLSA Spa opened in December 2014 to provide a sanctuary for Vancouverites looking to escape the hustle and bustle of everyday life.
Featuring 4 floatation therapy rooms, 2 custom infrared saunas, 3 Massage rooms, and a beautiful sky-lit relaxation lounge this spa has everything you need to relax and maintain a healthy mind and body.
We asked Christian a few questions about his business, and here’s what we learned

When did you open your business?

We opened in December of 2014 (3 years!)

What do you enjoy most about being a business owner?

Our business is really about providing sanctuary and relaxation to people – seeing stressed people come in and relaxed people leave always feels so gratifying!

What motivated you to start your own business?

Having had a number of businesses in the past, I wanted to start something that aligned with my values and contributed to the health and sanity of my community.

Top tip for anyone considering floatation therapy:

Try it! It really is unlike any other environment on Earth and there’s something so deeply nourishing about totally unplugging for 90 minutes, able to drift into total relaxation and calm.

The fave project/ job you were part of?

I LOVED the conceptual and design stages! Really thinking about how people would use the space and paying attention to all the little details that go into delivering exceptional experiences gets me excited!

Describe your ‘a-ha’ moment

A couple: About a month after signing the lease, coming into the space and seeing it totally gutted with 6 foot high piles of dirt on the floor for plumbing …… acutally, that was more of an “Uh oh!”.

A big “A Ha!” has been getting clearer about my strengths and gifts and recognizing where I really need help – enter Homeroom! 😉

What’s your #1 motivator?

Providing a time and space for people to unplug and recharge, to discover and foster their innate abilities to relax and let go, a place of true sanity in a world that sometimes feels pretty crazy.

What’s your vision for the business?

I’d like for more people to experience the space, and if Providence allows, to have more HÄLSAs that contribute to a greater appreciation for the importance of relaxation in our culture.

What advice do you have for other people who would like to start their own business?

Try and identify your strengths and weaknesses and surround yourself with authentic people that can support you!

How do you achieve a work/ life balance?

Still getting a feel for this… Now that we’ve sort of hit our stride and I’m learning to delegate more, I’m finding more personal time. Have also found Floating to be VERY helpful in alleviating stress and keeping me even and calm in all the inevitable ups and downs of a business.

Who could benefit from your services?

See above! 😉 Really, anyone that lives in the city or has any stress in their lives – basically, people with a pulse! The float environment is also conducive to creative insights so can help breakthrough any creative blocks.

It was great learning more about HÄLSA Spa and the benefits of floating. It’s definitely a place we hope to find ourselves after tax season!!

You can connect with HÄLSA Spa in Kitsilano on Facebook.

If you would like to be featured as our client of the month please let us know by contacting us.

Canada Day: Stat holiday pay. Are you eligible?

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And it smells groovy….

Fireworks, road trips, bubbles, smiles and fun. The long weekend is almost upon us with Canada Day celebrations at every corner.

So before you lock up the office to celebrate Canada’s big 150th this long weekend let’s figure out if you are eligible for statutory holiday pay.

In B.C., an employee is eligible if they’ve been employed for 30 calendar days before the stat holiday and have worked or earned wages on 15 of those 30 days. So if your employee, Susie, began work on June 1st and has worked 15 days since June 1st, she gets paid for Canada Day, whether she works on Canada Day or not.

Eligibility is determined by days worked, rather than hours, meaning it applies to both full-time and part-time employees, although the 15-day stipulation rules out most part-time employees.

At Homeroom, if we’re taking care of your payroll, it’s up to you to tell us which employees are eligible or not. This policy might vary from bookkeeper to bookkeeper, so make sure you know!

If you’re taking care of it yourself, here’s how you’d figure out Susie’s stat pay for Canada Day. Take the total hours she worked in the 30 days before the stat holiday and divide it by the number of days worked, then multiply by her rate of pay. Let’s say Susie worked 60 hours in 16 days and earns $25 per hour, she would be paid $93.75 on Canada Day (60/16 x 25 = 93.75).

Now let’s say that Susie is a keener and she agrees to work on Canada Day. Eligible employees are paid time-and-a-half for the first 12 hours on a stat holiday. This is in addition to the stat pay that we calculated in the previous paragraph.

However, all this changes if your employee worked less than 15 days since June 1st. In that case, they’re not eligible for stat holiday pay and if they work a stat holiday, they’re paid as if it were a regular work day.

In B.C., there are 10 stat holidays: New Years Day, Family Day, Good Friday, Victoria Day, Canada Day, B.C. Day, Labour Day, Thanksgiving Day, Remembrance Day, and Christmas Day. As an employer, you can choose to give more, such as, Easter Monday or Boxing Day, and can work out a custom agreement with your employees for these days.

Tax Installment Series: Paying your income tax by installments

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Tax installments never looked cuter…

Whether you spell it “instalment” or “installment”, it comes down to this: If you have ever been hit with a large tax bill on April 30th, you’ve probably considered changing your plans the following year and making either regular or occasional installment payments, to avoid the same shock happening the following year.

As part of our new blog series, we will look at paying your net tax owing by installments and answer these two common questions such as:

  • what items to consider when deciding if you have to pay by tax installments and why you should pay by tax installments
  • when do you have to pay your 2018 installments and how to calculate your installment payment

Get ready for cool and informative weekly posts on one of our most asked questions, especially during tax time. Amazing conversation starter alert.

#FridayFeeling: How are we doing at the busiest time of year?

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While many tax firms slave away, droopy-shouldered and sad-faced, to meet their deadlines by working late nights, skipping meals, and glaring at their computer screens until their eyes cry, the Homeroom team is chill. Zero stress, no overtime hours, and everyone’s happy! And we’re hitting goals. So, what’s the secret to work-time bliss? 

 

“Want chocolate?” the Solution Seeker Alan bounced out of the office kitchen area grinning, holding a thin, rectangular package in his hands.

We all motioned, ” YES!”

“It’s green!” noticed the Gatekeeper Anja as she hesitantly broke off a piece and popped it into her mouth.

“It tastes like white chocolate,” added the Task Buster Michelle. She stopped and chewed slowly, looking half scared and half amused, seemingly concentrating on the flavours of the melting chocolate.

“It’s matcha. It means green tea,” confirmed Alan, who’s had green chocolate before and approves of its healthier-than-most-chocolate benefits. “Oh, wait! The package says there’s also white chocolate in there.”

“I knew it!” Michelle jumped to her feet. “I know my chocolate!”

The Lady in Charge Teya took a bite. Her face scrunched up. “Green chocolate? I can taste very little chocolate in here….”

 

It’s April, and this is our  busiest time of the year. For real, though.

 

It’s 3pm. The Gatekeeper Anja has one more hour left to go. (She is not keeping track but this blog assignment begs keen observation skills!) She had graduated from slight head banging to outsinging the radio that is blasting fun throwback beats from behind, like N’Sync’s “Bye, Bye, Bye” and K-Ci and JoJo’s “Crazy.”

Anja is working at a leisurely pace to finish up next week’s tasks. Yes, she is ahead and loving it. She stops to gulp down some fresh H2O, laughs about nothing, and continues to work. No, she is not stressed. She is happy.

Her phone shakes the desk gently and rings a chirpy tune to notify the team: It’s time to stretch.

As we get into our regular circular stretch formation, and open chests to the ceiling, Homeroom client Monique Harris, owner of Moksha Yoga East Vancouver, walks in. She pauses at the door with a smile: “Wow! It’s like I walked into my studio”.

The Number Cruncher Allysia stretches her legs to the water machine to fill up. The Lone Wolf Kevin has  just returned from his lunch break. He’s on track and feeling good. He stops to chat with Allysia about the sixth ROE he had to do this week.

Teya is powering though Homeroom E-Returns behind her stand-up desk. “I’m on a roll!” She even has time to leave early to pick up her son Jules from school. Thanks to our secure online tax submissions, there hasn’t been many tax appointments. More free time for clients, and speedier filings for us!

Life at the office is good.

So, how are we able to reach a stress-free, no overtime, goal smashing work pace? Because in the midst of a busy, fast-paced day, we don’t forget to stop and taste the chocolate!

 

 

 

Does the idea of dropping-off your taxes give you the smileys?

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As part of our fun and timely tax-filing blog series, we looked at the in-person tax appointment and the Homeroom E-Return as two great ways to get’er done. But not everybody has the luxury of sitting through their tax-filing or lounging on their bed and snapping pictures of their tax documentation and submitting electronically, especially with Netflix in the way.

This week, we cover the Homeroom’s drop-off option for the swamped and the practical. Simply, drop and go. Leave the rest to us.

 

Here are some pros and cons (Yes!! and Oh, Poo!) of dropping-off your taxes at our office:

 

“I’m a busy lady. If I was a fictional character, I would be The White Rabbit from Alice’s Adventures in Wonderland. Wigged out, clutching a watch, and late”

 

YES!!

Homeroom’s drop-off option allows you to pop by our office anytime during our business hours to drop-off your tax documentation. The Homeroom’s lively team will offer you a cup of water to catch your breath while we get some of your personal information eg: Address, SIN #, and make sure nothing has changed since last year if you are an existing client. Then we will send you on your merry way to catch that appointment you’re running late for 🙂

OH, POO!

You could have saved yourself loads of time by requesting the Homeroom E-Return. Simply, snap pictures or scan your tax paperwork to us from wherever, whenever. It’s never too late to submit to us electronically. Unless it’s AFTER April 30th……

 

“Tech is wack. I need to see to whom I am handing off my precious tax docs. Even if it is the second priciest option you offer. Things get lost in the interwebs, and I do not want to see my  T4 sold on Craigslist to the highest bidder.”

 

YES!!

We hear you. Drop off your tax paperwork at our office to ensure it is personally received by our staff. Got separation anxiety? Stay as we label your folder and neatly put it away into the “to be filed” section in the back. We will offer encouraging words like, “It is in safe hands” and, “We will courier or mail your folder back as soon as we file your tax return.”

 

OH, POO!

You could have kept all your documentation and securely submitted all your tax documentation to us electronically from wherever by requesting the Homeroom E-Return. We would ensure all your files have been received and would have scheduled a phone call if your tax situation proved hairy. Next time, next time!

 

“I’m a babe-on-the-go. I’d rather drop and run. There’s always someone waiting for me, talking to me…looking at me..”

 

YES!!

Our drop-off option allows you to quickly submit all your tax docs to us in person. It is deal for anyone who prefers to personally hand-off their taxes but has no time to watch their taxes get filed.

OH, POO!

By requesting the Homeroom E-Return, you could have submitted all your tax docs electronically while having lunch at your fave cafe. Now you have to run and the idea of messing up your hair is giving you the freaks…

You are welcome to drop off your taxes at our office Monday to Friday, 9am to 5pm.

 

We will be closed on Friday, April 14th for Easter long weekend.

Happy Easter!

Is the Homeroom E-Return the ideal tax-filing option for YOU?

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The scrap piece of paper floating above the Number Cruncher Allysia’s head comes from a family of reused receipts, serving as the ideal platform for chicken scratch.

When filing a tax return using a new method can sometimes be mysterious and daunting.

Ask yourself these simple questions when trying to determine if the Homeroom E-Return is the best method for you to use when filing your income taxes.

Q. Do you like to roll to the beat of your own drum and do things on your schedule?

YES!!

The Homeroom E-Return allows you to file from wherever, whenever. All you need is a steady Wi-Fi connection and a laptop or phone. Simply, request the E-Return here and we will email you the instructions on how to securely submit your tax documentation through our online portal.

NO! 

LIAR!! Nobody seriously enjoys planning their day around other people!! We get it though, change is tough and taking your schedule into your own hands can feel weird and selfish. But it’s not!! Be a rebel! Learn to do you for a change!

OH POO!

We know that by submitting online you won’t have a reason to pop into our fabulous office space on West Broadway to get the scoop on the Lady in Charge Teya’s recent wedding or to join in on the fun and casual daily stretches. But it’s going to be ok, we will find new ways to entertain and update you that you can enjoy on your own schedule 😉

 

Q. Do you like to have a clear expectation of what your tax return will cost?

YES!!

Homeroom lists all of their prices upfront and will confirm in advance which option applies to you so that you can make an informed decision prior to submitting all of your documents (see the  Homeroom rate here). All of our rates are based on our E-Return structure.

Many well know tax agencies have their basic price listed then sting you for every additional piece of paper you hand over.

NO!!

I hate to say this twice in one post but seriously, LIAR!! If you really want to feel like the cost of your return is a mystery then, by all means, let us know and we can block out the amount in all our correspondence up until the invoice. We don’t want you to feel like you are missing out on some tax time payment roulette.

Life will be clear and easy and you won’t get to tell your friends about how terrible tax time is and make excuses for not filing your return!

Q. Do you care about the environment and love sloths?

YES!!

Save paper and leave more trees for the sloths by using our super cool online Homeroom E-Return option. All forms are electronically signable. No printer or scanner required. Do it all from your phone! No need to print countless pages of your tax return. We will securely email you your final copy, with an option to print if you reeeeally wish. Additionally, by not leaving your house you will also be saving gas making the world a cleaner, healthier, forever home for us all.

NO!!

Ok seriously! What kind of monster doesn’t like sloths?????????????????? We have nothing left to say!

OH, POO!

Yes, your friends might call you a hippy for caring about the environment but you are strong, you’ll survive this mocking by knowing that the entire Homeroom team thinks you are an environmental hero.

Request the Homeroom E-Return here, or stay tuned for next week’s blog post that will feature the in-person tax appointment.

When you owe the CRA money, but your cash flow is low

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Once upon a time, this cup much like a bank account was filled to the brim, and a juicy olive accompanied the penniless toothpick that now quietly rests on the desk….

There is nothing quite like receiving the little brown envelope from the Canada Revenue Agency (CRA) reminding you that you have tax debt. It makes you realize this empty cup is a depressingly on-point indication of your current financial situation.

Instead of sitting around feeling sorry for yourself here is what you should do:

  • Make a payment arrangement: Call the CRA and set up an agreement to make smaller payments over time until your debt and applicable interest is paid. Ignoring the CRA will only amp up any financial and/ or legal consequences. IMPORTANT: The CRA may also charge interest compounded daily at the prescribed rate on any amount owing until your balance is paid in full.
    • Here are three ways you can work with CRA to set up a payment agreement today. Remember, no one likes to be ignored so pick up the phone NOW.
  • Considering bankruptcy? This is not a decision you should make lightly as it follows you for life. If this is an option you are considering, go to the Office of the Superintendent of Bankruptcy for more information and to discuss options before committing to this solution.
  • Are You Business owner? You might qualify for taxpayer relief from penalties and interest charges and reduce the total amount you or your business owes. See  Taxpayer relief provisions if your business qualifies.
  • Financial hardship provisions: Does your debt repayment make it hard for you to pay for food, utilities, housing, and other life essentials? You may qualify for help under the financial hardship provisions.
    • It is your responsibility to contact the CRA if repaying your debt is causing you financial hardship. The CRA will take your situation into account when reviewing your request. For more information and to see if you qualify, call 1-866-864-5823.

To ensure you don’t end up in the same situation next year we recommend talking to a tax consultant right away so that you can plan accordingly.

 

What if you don’t have all your tax slips?

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Have you received all your income slips and do you have all your income tax information neatly clipped in a smooth-surfaced Manila folder ready to go for tax season? (Bonus points for dressing up your tax folder in self-affirming stickers that scream “AWESOME!!” or, “YOU ARE A STAR”).

If you are frustratingly shaking your head or wondering what we are talking about then read on:

Tax slips are provided by your employer, payer or administrator and are referred to when filing your tax return.

You should receive most of your slips and receipts by the end of February. However, T3 (Statement of Trust Income Allocations and Designations), and T5013 (Statement of Partnership Income) slips do not have to be sent before the end of March.

Still, by the time March rolls in, you might find yourself seething at the sight of your mail carrier, who’s brought you EVERYTHING—even Bob’s mail, and you don’t even KNOW a Bob—but your precious tax slips.

Take a moment to:

  1. Breathe
  2. Repeat this mantra: I will not go to jail, I will not go to jail, I will not go to jail
  3. Read this blog post about how to fetch your slips
  4. File your taxes before the deadline EVEN if you don’t obtain all of your slips in time!

Here are three ways to get a copy of your tax slips for the current year:

  1. Contact your employer, or the issuer of the slip, verify that they have the correct contact and mailing information for you and then request a new copy. Many times they will be able to email this to you.
  2. Complete a T1013 form. This allows a third-party (your accountant..us!) to view your tax information online. We issue this form to all our clients to make tax season as painless as possible.
  3. Register for the CRA My Account for Individual this will allow you to view your tax information online and retrieve missing information.

 

Obtaining a slip for prior years

If you need a T-slip for a prior year, you can get a copy by:

Ta-Da!! The CRA opens its online filing services February 20. Homeroom starts filing March 1!

You got this!!

Request the Homeroom E-return today here. We’ll take care of the rest!