#Taxes in Canada

[jamieleicurt]

Deferred Tax Assets and Liabilities: What They Mean for Your Financial Statements

Hiring an expert to maintain financial records can help reduce taxation errors!

Taxes are a significant factor in determining a company's financial performance. The treatment of deferred tax liabilities (DTLs) and assets (DTAs) influences a company's financial statements, tax planning techniques, and compliance requirements.

This guide will cover the basics of deferred taxes, their representation in financial statements, and their significance in corporate tax planning.

What Are Deferred Tax Assets and Liabilities?It's crucial to understand what deferred tax assets and liabilities are before delving into how they affect financial statements and tax strategies.

Deferred Tax Asset (DTA)A deferred tax asset arises when a company has overpaid taxes or paid taxes in advance. In such situations, the taxables can be recovered in the future.

In essence, it shows the taxes that a business expects to save in the future as a result of short-term differences in the tax and accounting treatment of various items.

Deferred Tax Liability (DTL)A deferred tax liability arises when a business will eventually owe more taxes as a result of short-term differences between accounting and taxable income. To avoid DTL, consider hiring an accounting expert in Ontario who can identify any discrepancies and help counter them early.

A bookkeeping expert in Ontario can help ensure compliance with Canadian tax laws!

How Deferred Taxes Impact Financial Statements

Let's take a look at how a company's financial statements, especially the balance sheet and income statement, are impacted by deferred taxes. Balance Sheet Deferred tax assets and liabilities are usually categorized as non-current items on the balance sheet. They reflect future tax effects that reverse over more than one year.

Deferred Tax Asset: A business indicates that it will pay less tax in the future by recognizing a deferred tax asset. This reflects an anticipated decline in future tax obligations. Deferred Tax Liability: When a business records a deferred tax liability, it means that it will have to pay taxes when the short-term discrepancies go away. To avoid such situations, business owners can hire bookkeeping experts in Ontario to track tax flows for accuracy.

Income Statement The income statement is also impacted by deferred taxes, particularly in the area that deals with income tax expense. Deferred Tax Expense or Benefit: This is the change in the deferred tax assets or liabilities due to temporary differences and tax rate changes. If the amount of taxes rises, it results in a deferred tax expense. Conversely, if it falls, a deferred benefit is recognized. When companies adjust tax rates, significant changes in deferred taxes impact the reported net income.

Find out how deferred taxes and liabilities affect your company's financial statements!

The Role of Deferred Taxes in Corporate Tax Planning

Deferred tax assets and liabilities are important in corporate tax planning. They impact a company's overall tax liability, credits, and other strategic choices mentioned below.

1. Optimize Time of Deductions and Revenues Timing is one of the primary ways deferred taxes are used in tax planning. Businesses frequently attempt to postpone revenue recognition or hasten deductions, to control their current tax liability.

Companies produce short-term discrepancies to create DTAs or DTLs that enhance their cash flows. Additionally, there are professionals for personal tax services in Richmond Hill who can smooth out a company's tax payments.

2. Use Credits and Loss Carry ForwardsIn corporate tax planning, deferred tax assets associated with tax credits and net operating loss carry forwards are essential. A business may carry forward an operating loss to reduce future taxable income if it incurs one.

3.Changes in Tax Rates and Their Effects Both deferred tax assets and liabilities are significantly impacted by changes in tax rates. Deferred tax liabilities increase in value if tax rates are predicted to rise because future tax obligations are computed using the higher rate. On the other hand, lowering tax rates will reduce deferred tax liabilities and may lead to a reappraisal of deferred tax assets.

4.Mergers and Acquisitions

Deferred taxes are important when it comes to the negotiation of mergers and acquisitions. Businesses buy out people who have a lot of deferred tax assets to offset their future taxable income. However, this could result in a higher future tax burden for the buyer. Therefore, online businesses should consult professional services for virtual personal tax returns in Richmond Hill before acquiring any company.

 Consult experts to ensure compliance with taxation requirements!

 

Compliance and Reporting Requirements

Deferred tax assets and liabilities  also impact financial reporting and tax compliance. Businesses must make sure that their deferred tax calculations adhere to Canadian tax laws as well as generally accepted accounting principles (GAAP) or international financial reporting standards (IFRS). GAAP and IFRS Requirements Companies must include the changes in deferred tax assets and liabilities in their financial statements in accordance with GAAP and IFRS. These standards also require businesses to assess the likelihood of realizing their deferred tax assets. Companies should consider hiring accounting experts in Ontario who are well-versed in Canadian laws for assistance, as non-compliance can lead to significant financial penalties.

Tax Filings and Disclosures In order to comply with tax laws, businesses must reconcile the short-term discrepancies that result in deferred tax assets and liabilities on their tax returns. The type and amounts of deferred tax items and any valuation allowances must be explained in detail in financial statements.

Get Professional Tax Return Services In Richmond Hill!

Image Filename: woman-office Image Alt Text: A picture showing a woman wearing a white shirt making notes while sitting in a clustered office Image Caption: Discover the role of deferred taxes in corporate tax planning!

For companies wishing to effectively conduct corporate tax planning and ensure adherence to their laws, Accounting Plus Financial Services Inc. provides professional corporate and personal tax services.

Their team of accounting experts in Ontario offers virtual personal tax returns and specialized e-commerce bookkeeping solutions. They can help ensure compliance with Canadian tax laws while optimizing your financial statements.

Contact them for any queries!

About The Author

Davis Malcolm is a senior accountant with expertise in personal and corporate tax returns services. With over two decades of experience, he helps businesses optimize their financial statements.

[mostlysignssomeportents]

Canada sues Google

If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

https://pluralistic.net/2024/12/03/clementsy/#can-tech

For a country obsessed with defining itself as "not America," Canada sure likes to copy US policies, especially the really, really terrible policies – especially the really, really, really terrible digital policies.

In Canada's defense: these terrible US policies are high priority for the US Trade Representative, who leans on Canadian lawmakers to ensure that any time America decides to collectively jump off the Empire State Building, Canadian politicians throw us all off the CN Tower. And to Canada's enduring shame, the USTR never has to look very hard to find a lickspittle who's happy to sell Canadians out.

Take anti-circumvention. In 1998, Bill Clinton signed the Digital Millennium Copyright Act, a gnarly hairball of copyright law whose Section 1201 bans reverse-engineering for any purpose. Under DMCA 1201, "access controls" for copyrighted works are elevated to sacred status, and it's a felony (punishable by a five-year prison sentence and a $500k fine) to help someone bypass these access controls.

That's pretty esoteric, even today, and in 1998, it was nearly incomprehensible, except to a small group of extremely alarmed experts who ran around trying to explain to lawmakers why they should not vote for this thing. But by the time Tony Clement and James Moore (Conservative ministers in the Harper regime) introduced a law to import America's stupidest tech idea and paste it into Canada's lawbooks in 2012, the evidence against anti-circumvention was plain for anyone to see.

Under America's anti-circumvention law, any company that added an "access control" to its products instantly felonised any modification to that product. For example, it's not illegal to refill an ink cartridge, but it is illegal to bypass the access control that gets the cartridge to recognise that it's full and start working again. It's not illegal for a Canadian software developer to sell a Canadian Iphone owner an app without cutting Apple in for a 30% of the sale, but it is illegal to mod that Iphone so that it can run apps without downloading them from the App Store first. It's not illegal for a Canadian mechanic to fix a Canadian's car, but it is illegal for that mechanic to bypass the access controls that prevent third-party mechanics from decrypting the error codes the car generates.

We told Clement and Moore about this, and they ignored us. Literally: when they consulted on their proposal in 2010, we filed 6,138 comments explaining why this was a bad idea, while only 53 parties wrote in to support it. Moore publicly announced that he was discarding the objections, on the grounds that they had come from "babyish" "radical extremists":

https://www.cbc.ca/news/science/copyright-debate-turns-ugly-1.898216

For more than a decade, we've had Clement and Moore's Made-in-America law tied to our ankles. Even when Canada copies some good ideas from the US (by passing a Right to Repair law), or even some very good ideas of its own (passing an interoperability law), Canadians can't use those new rights without risking prosecution under Clement and Moore's poisoned gift to the nation:

https://pluralistic.net/2024/11/15/radical-extremists/#sex-pest

"Not America" is a pretty thin basis for a political identity anyway. There's nothing wrong with copying America's good ideas (like Right to Repair). Indeed, when it comes to tech regulation, the US has had some bangers lately, like prosecuting US tech giants for violating competition law. Given that Canada overhauled its competition law this year, the country's well-poised to tackle America's tech giants.

Which is exactly what's happening! Canada's Competition Bureau just filed a lawsuit against Google over its ad-tech monopoly, which isn't merely a big old Privacy Chernobyl, but is also a massively fraudulent enterprise that rips off both advertisers and publishers:

https://www.reuters.com/technology/canadas-antitrust-watchdog-sues-google-alleging-anti-competitive-conduct-2024-11-28/

The ad-tech industry scoops up about 51 cents out of every dollar (in the pre-digital advertising world the net take by ad agencies was more like 15%). Fucking up Google's ad-tech rip off is a much better way to Canada's press paid than the link tax the country instituted in 2023:

https://www.eff.org/deeplinks/2023/05/save-news-we-must-ban-surveillance-advertising

After all, what tech steals from the news isn't content (helping people find the news and giving them a forum to discuss it is good) – tech steals news's money. Ad-tech is a giant ripoff. So is the app tax – the 30% Canadian newspapers have to kick up to the Google and Apple crime families every time a subscriber renews their subscriptions in an app. Using Canadian law to force tech to stop stealing the press's money is a way better policy than forcing tech to profit-share with the news. For tech to profit-share with the news, it has to be profitable, meaning that a profit-sharing press benefits from tech's most rapacious and extractive conduct, and rather than serving as watchdogs, they're at risk of being cheerleaders.

Smashing tech power is a better policy than forcing tech to share its stolen loot with newspapers. For one thing, it gets government out of the business of deciding what is and isn't a legit news entity. Maybe you're OK with Trudeau making that call (though I'm not), but how will you feel when PM Polievre decides that Great Replacement-pushing, conspiracy-addled far right rags should receive a subsidy?

Taking on Google is a slam-dunk, not least because the US DoJ just got through prosecuting the exact same case, meaning that Canadian competition enforcers can do some good copying of their American counterparts – like, copying the exhibits, confidential memos, and successful arguments the DoJ brought before the court:

https://www.justice.gov/opa/pr/justice-department-sues-google-monopolizing-digital-advertising-technologies

Indeed, this already a winning formula! Because Big Tech commits the same crimes in every jurisdiction, trustbusters are doing a brisk business by copying each others' cases. The UK Digital Markets Unit released a big, deep market study into Apple's app market monopoly, which the EU Commission used as a roadmap to bring a successful case. Then, competition enforcers in Japan and South Korea recycled the exhibits and arguments from the EU's case to bring their own successful prosecutions:

https://pluralistic.net/2024/04/10/an-injury-to-one/#is-an-injury-to-all

Canada copying the DoJ's ad-tech case is a genius move – it's the kind of south-of-the-border import that Canadians need. Though, of course, it's a long shot that the Trump regime will produce much more worth copying. Instead, Trump has vowed to slap a 25% tariff on Canadian goods as of January 20.

Which is bad news for Canada's export sector, but it definitely means that Canada no longer has to worry about keeping the US Trade Rep happy. Repealing Clement and Moore's Bill C-11 should be Parliament's first order of business. Tariff or no tariff, Canadian tech entrepreneurs could easily export software-based repair diagnostic tools, Iphone jailbreaking tooks, alternative firmware for tractors and medical implants, and alternative app stores for games consoles, phones and tablets. So long as they can accept a US payment, they can sell to US customers. This is a much bigger opportunity than, say, selling cheap medicine to Americans trying to escape Big Pharma's predation.

What's more, there's no reason this couldn't be policy under Polievre and the Tories. After all, they're supposed to be the party of "respect for private property." What could be more respectful of private property than letting the owners of computers, phones, cars, tractors, printers, medical implants, smart speakers and anything else with a microchip decide for themselves how they want to it work? What could be more respectful of copyright than arranging things so that Canadian copyright holders – like a games studio or an app company – can sell their copyrighted works to Canadian buyers, without forcing the data and the payment to make a round trip through Silicon Valley and come back 30% lighter?

Canadian politicians have bound the Canadian public and Canadian industry to onerous and expensive obligations under treaties like the USMCA (AKA NAFTA2), on promise of tariff-free access to American markets. With that access gone, why on Earth would we continue to voluntarily hobble ourselves?

[dip-the-pip]

wonder if they file their taxes as a civil partnership

[tomorrowusa]

« Trump says trade wars are easy to win. In this regard, he apparently doesn’t even understand what winning means. The supposition that such a war can be won is a delusion. A trade war may serve Trump’s political ambitions by appealing to supporters ignorant of economics and easily bamboozled by anything wrapped in the flag, but the idea of a win-win trade war is the height of folly so far as economic rationality is concerned—not to mention its further suppression of economic liberties already being crushed by taxes and regulations. In fact, the only way to win a trade war is not to fight one. »

— Economist Robert Higgs, quoted in a post by Senior Fellow Emeritus Mark J. Perry of the conservative American Enterprise Institute in 2018.

While I don't agree with the AEI on a lot of things, they are on the mark when talking about trade wars. It will be interesting to see whether conservative economists who haven't gone MAGA will be speaking out over Trump's destructive trade war.

Trump has been getting orgasms over trade wars since his first term.

Trump doubles down: ‘Trade wars are good, and easy to win’

[political-us]

[mistyheartrbs]

something else i thought was really interesting about i saw the tv glow was the way that there's never really talk about like...the pink opaque as fiction/the pink opaque as a creative work - which makes perfect sense since within the movie as a fable, the pink opaque is a metaphor and is moreover more real than "reality," but on the fandom-engagement level it stood out to me!

i'm again speaking from experiences about a generation removed from the 90s/early aughts era and i think there's very much something to be said of modern fandom and the way it's moved into this weird space of desiring validation/"canonicity" from showrunners, much to do with the ease of accessibility to those people. two kids in the jersey suburbs in the 1990s wouldn't be able to just reach out to the pink opaque writers the way that a contemporary audience can dm/reply to/etc. showrunners on social media etc now. but even so, it's a glaring sort of absence - when we see the pink opaque opening theme, the character names show up where you'd expect actor names (and where actor names do show up in the buffy theme, which was a major inspiration). we don't know how long it's been on the air or who created it or where "the county" even is (because it doesn't matter, because the suburbs are the same everywhere forever)

we know it's at least a pseudo-popular series - it runs for five seasons, and merch exists (the episode guide maddy has in the beginning) - but because the film is essentially a two-hander we don't see a wider world engaging with it. because isn't that how it always is? the story is what you make it.

and the streaming version in the third act pushes this even further - it's a different show entirely, again because isttvg is a fable, it's not a literal movie, and it pushes you against a literalist reading. it's different because owen/isabel is miserable and can't even take solace in this thing she loved anymore. it's different because if you watch something alone it's a world away from watching it with your friend. it's different because somebody ripped out its heart.

[democracyunderground]

Many don’t realize just how much the U.S. imports from Canada. Total imports reached $429.6 billion in 2023.

The top imports include: * Mineral Fuels and Oils: $131.91 billion (largest category) * Vehicles: $56.35 billion * Machinery and Nuclear Reactors: $31.86 billion * Plastics: $13.67 billion * Wood Products: $11.45 billion * Aluminum: $11.22 billion * Electrical and Electronic Equipment: $9.85 billion

Now imagine if all of this stuff has a 25% tariff and the cost is passed along to YOU, the consumer.

We tried to warn ya’ll.

[mummer]

they should let you choose whether or not you’re willing to pay for military spending with your taxes. how wide is the gulf between being drafted and having your money forcibly diverted to fund military operations. you should be able to be a conscientious objector to both. Vonnegut voice I have also told them not to work for companies which make massacre machinery and to express contempt for people who think we need machinery like that.

[ashadowofburnedoutstardust]

If you are American and unaware Canada is currently preparing for war

It's probably about time you guys stop making jokes and start taking this shit fucking seriously

[allthecanadianpolitics]

The House of Commons has passed legislation that will remove the federal sale tax for two months from a range of items, including childrens' toys, books, restaurant meals and takeout, as well as beer and wine. As expected, the NDP helped the minority Liberals push the exemption through Thursday night. The Conservatives voted against the bill, calling the measure a "temporary two-month tax trick," as did the Bloc Québécois. The bill, which the Liberals and NDP agreed to fast-track through the usual procedural steps, now goes to the Senate.  Once passed, the legislation will provide a GST rebate beginning Dec. 14. The tax vacation will remain in effect until Feb.15, 2025.

Continue Reading

Tagging: @newsfromstolenland

[siryouarebeingmocked]

Because immature insults and not letting people even finish what they're saying before you strawman them is a sign you're logical and objective.

And totally not a child going "gimme!"

And as someone pointed out in the other thread, a lot of people are sad because 20% of their paycheck goes to taxes.

[daftpatience]

hey!! tax deadlines for my fellow Canadians

Filing dates for 2023 taxes Feb 29 2024: Deadline to contribute to an RRSP, a PRPP, or an SPP Apr 30, 2024 : Deadline to file your taxes Jun 15, 2024: Deadline to file your taxes if you or your spouse or common-law partner are self-employed

Payment date for 2023 taxes Apr 30, 2024: Deadline to pay your taxes

[mayakern]

I live in a pretty remote part of northern Ontario. I ordered a sweater on Saturday and it got here today, 3 business days later. Soooo happy about your Canadian fulfillment centre, it used to take over a week for things to arrive. Also the sweater is cute af and now I can go order it in the other 2 colours ❤️❤️

ahh that makes me so happy to hear and i'm so glad you like the sweater! 🥰🥰

honestly opening the fulfillment center in canada has been a really weird experiment, bc almost immediately after we opened it our canadian orders dropped significantly. so i'm not sure if people are confused about how to order from canada or if some of y'all just really like paying import duties 🤷‍♀️

[thoughtportal]

Protect the Porkies Win!

[flying-cat]

what is the obsession with made in usa shit it's literally going to be more expensive and with the fucking problem of nobody being able to afford anything I DON'T THINK WE NEED MORE EXPENSIVE RIGHT NOW

[brainrottedirken]

I HAVE TAKEN OVER NORTHERN CANADA, FEAR ME PUNY HUMANS, FOR I AM ZIIIIIIIIMMMMMMMMMMM!!!!!!!

MWAHAHAHAHAHAHAHAHAHAHAHAHAHAHHAHAHAHAHAHAA

AAAAAAHAHHAHAHAHAHAHAHAHHAHAHAHAHAHAHAHAHAHAHHAAHHAHAHAHAHAHAHAHHAAAAAAAHHHHH!!!!!!

*As his evil laugh echoes, Barbie Girl by Aqua plays 100x bass boosted on a giant pink speaker as the cries of thousands of disgruntled office workers are muffled in the background*

FILE YOUR TAXES FASTER, HUMAN SLAVES!!!!!

*what he doesn't realize is that he's only taken over a northern Canadian tax office*