How to Estimate Tax Savings from RRSP Contributions

If you want to know how much tax you’ll save from a Registered Retirement Savings Plan (“RRSP”) contribution, or determine what an “optimal” RRSP contribution might be, there’s a simple equation you can use to figure it out. Be warned that the equations described below only provide estimates of current-year tax savings, and do not […]

How to Calculate Your Effective Tax Rate

Although this guide was written with Canadian taxpayers in mind, the concepts below are applicable to taxpayers in other countries as well. What do you mean by “effective tax rate”? As far as how we apply the calculation below, your effective tax rate is the average tax you pay on every dollar of taxable income […]

Understanding the CRA Unreported Income Formula: Accounting for GST/HST and Changes in A/R

Why should a business owner be concerned about their account’s receivable balance during a tax audit? The answer to this question has to do with how the Canada Revenue Agency (“CRA”) normally calculates unreported income while performing a factual audit. CRA “Unreported Income” Formula In most scenarios, the CRA auditor starts collecting data for the […]

Completing a GST/HST Return with Spreadsheet-Based Method Data

When preparing returns from poor or damaged corporate records, several forms of data reconciliation are required. As previously described, the spreadsheet-based method is a useful tool for preparing certain data reconciliations. In its first form of reconciliation, the spreadsheet-based method focuses on the preparation of financial statements, specifically the income statement and balance sheet. Financial […]

Converting Corporate Bank Statements to Financial Statements: A last-resort, spreadsheet-based method

The purpose of this document is to illustrate a spreadsheet-based method to assist in compiling financial statements from corporate bank account data. Use of this method may be appropriate in cases where a corporation has fallen behind on its accounting responsibilities; is undergoing a corporate tax or trust exam audit with lost, incomplete or erroneous records; or when an inactive corporation has few transactions in a reporting period and requires financial statements in short order.