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| 1 | --- |
| 2 | name: canada-bookkeeping |
| 3 | description: > |
| 4 | Use this skill whenever asked about Canadian bookkeeping for sole proprietors, partnerships, or private corporations. Trigger on phrases like "chart of accounts", "GIFI codes", "bookkeeping", "profit and loss", "balance sheet", "ASPE", "ASNPO", "CRA categories", "bank reconciliation", "expense categories", "revenue recognition", "depreciation", "CCA", "capital cost allowance", "GST/HST", "input tax credits", "T2125", "T2", "general ledger", "HST return", or any question about day-to-day transaction recording, financial statement preparation, or account coding for a Canadian business. |
| 5 | version: 1.0 |
| 6 | jurisdiction: CA |
| 7 | category: bookkeeping |
| 8 | depends_on: |
| 9 | - bookkeeping-workflow-base |
| 10 | --- |
| 11 | |
| 12 | # Canada Bookkeeping Skill v1.0 |
| 13 | |
| 14 | --- |
| 15 | |
| 16 | ## Section 1 -- Quick Reference |
| 17 | |
| 18 | | Field | Value | |
| 19 | |---|---| |
| 20 | | Country | Canada | |
| 21 | | Currency | CAD ($) only | |
| 22 | | Financial year | Corporations: any year-end; Sole proprietors: calendar year (Jan 1 – Dec 31) | |
| 23 | | Accounting standards | ASPE (Part II — private enterprises); ASNPO (Part III — not-for-profits); IFRS (Part I — public) | |
| 24 | | Governing body | Accounting Standards Board (AcSB) of CPA Canada | |
| 25 | | Tax authority | Canada Revenue Agency (CRA) | |
| 26 | | Key legislation | Income Tax Act (ITA); Excise Tax Act (GST/HST); Canada Business Corporations Act | |
| 27 | | GST/HST registration threshold | $30,000 in four consecutive quarters (small supplier threshold) | |
| 28 | | Record keeping requirement | 6 years from end of the last tax year to which records relate | |
| 29 | | GIFI codes | General Index of Financial Information — CRA's standardized code system for T2 filing | |
| 30 | |
| 31 | --- |
| 32 | |
| 33 | ## Section 2 -- Standard Chart of Accounts |
| 34 | |
| 35 | Canadian small businesses use 4-digit codes mapped to GIFI for T2/T2125 reporting. |
| 36 | |
| 37 | ### Assets (1000–1999) |
| 38 | |
| 39 | | Code | Account | GIFI | Type | |
| 40 | |---|---|---|---| |
| 41 | | 1000 | Cash — Operating Account | 1001 | Current asset | |
| 42 | | 1010 | Cash — Savings Account | 1001 | Current asset | |
| 43 | | 1020 | Petty Cash | 1001 | Current asset | |
| 44 | | 1050 | Short-Term Investments | 1180 | Current asset | |
| 45 | | 1100 | Accounts Receivable | 1060 | Current asset | |
| 46 | | 1110 | Allowance for Doubtful Accounts | 1061 | Contra asset | |
| 47 | | 1150 | GST/HST Receivable (ITC) | 1300 | Current asset | |
| 48 | | 1200 | Inventory | 1120 | Current asset | |
| 49 | | 1210 | Prepaid Expenses | 1300 | Current asset | |
| 50 | | 1220 | Prepaid Insurance | 1300 | Current asset | |
| 51 | | 1300 | Land | 1600 | Non-current asset | |
| 52 | | 1310 | Buildings | 1680 | Non-current asset | |
| 53 | | 1311 | Accumulated Amortization — Buildings | 1681 | Contra asset | |
| 54 | | 1320 | Machinery and Equipment | 1740 | Non-current asset | |
| 55 | | 1321 | Accumulated Amortization — Equipment | 1741 | Contra asset | |
| 56 | | 1330 | Furniture and Fixtures | 1740 | Non-current asset | |
| 57 | | 1331 | Accumulated Amortization — Furniture | 1741 | Contra asset | |
| 58 | | 1340 | Computer Hardware | 1740 | Non-current asset | |
| 59 | | 1341 | Accumulated Amortization — Computer | 1741 | Contra asset | |
| 60 | | 1350 | Motor Vehicles | 1740 | Non-current asset | |
| 61 | | 1351 | Accumulated Amortization — Vehicles | 1741 | Contra asset | |
| 62 | | 1360 | Leasehold Improvements | 1740 | Non-current asset | |
| 63 | | 1361 | Accumulated Amortization — Leasehold | 1741 | Contra asset | |
| 64 | | 1400 | Intangible Assets (Software, Patents) | 1700 | Non-current asset | |
| 65 | | 1401 | Accumulated Amortization — Intangibles | 1701 | Contra asset | |
| 66 | | 1500 | Goodwill | 1740 | Non-current asset | |
| 67 | |
| 68 | ### Liabilities (2000–2999) |
| 69 | |
| 70 | | Code | Account | GIFI | Type | |
| 71 | |---|---|---|---| |
| 72 | | 2000 | Accounts Payable | 2600 | Current liability | |
| 73 | | 2010 | Accrued Liabilities | 2620 | Current liability | |
| 74 | | 2050 | GST/HST Payable (Collected) | 2680 | Current liability | |
| 75 | | 2060 | GST/HST Net (Control) | 2680 | Current liability | |
| 76 | | 2100 | Income Tax Payable | 2700 | Current liability | |
| 77 | | 2110 | Payroll Liabilities — CPP | 2620 | Current liability | |
| 78 | | 2120 | Payroll Liabilities — EI | 2620 | Current liability | |
| 79 | | 2130 | Payroll Liabilities — Income Tax W/H | 2620 | Current liability | |
| 80 | | 2140 | Vacation Pay Payable | 2620 | Current liability | |
| 81 | | 2150 | Workers' Compensation Payable | 2620 | Current liability | |
| 82 | | 2200 | Credit Card Payable | 2600 | Current liability | |
| 83 | | 2300 | Current Portion of Long-Term Debt | 2700 | Current liability | |
| 84 | | 2400 | Bank Loan — Long-Term | 2780 | Non-current liability | |
| 85 | | 2410 | Mortgage Payable | 2780 | Non-current liability | |
| 86 | | 2500 | Shareholder Loan | 2780 | Non-current liability | |
| 87 | | 2600 | Deferred Revenue | 2640 | Current liability | |
| 88 | |
| 89 | ### Equity (3000–3999) |
| 90 | |
| 91 | | Code | Account | GIFI | Type | |
| 92 | |---|---|---|---| |
| 93 | | 3000 | Share Capital (Common Shares) | 3500 | Equity | |
| 94 | | 3010 | Share Capital (Preferred) | 3500 | Equity | |
| 95 | | 3100 | Retained Earnings | 3600 | Equity | |
| 96 | | 3200 | Owner's Equity / Capital (sole prop) | 3500 | Equity | |
| 97 | | 3210 | Owner's Drawings | 3500 | Equity | |
| 98 | | 3220 | Owner's Contributions | 3500 | Equity | |
| 99 | | 3300 | Dividends Declared | 3600 | Equity | |
| 100 | | 3400 | Current Year Net Income/Loss | 3680 | Equity | |
| 101 | |
| 102 | ### Revenue (4000–4999) |
| 103 | |
| 104 | | Code | Account | GIFI | Type | |
| 105 | |---|---|---|---| |
| 106 | | 4000 | Sales Revenue — Taxable (GST/HST) | 8000 | Revenue | |
| 107 | | 4010 | Sales Revenue — Zero-Rated | 8000 | Revenue | |
| 108 | | 4020 | Sales Revenue — Exempt | 8000 | Revenue | |
| 109 | | 4100 | Service Revenue | 8000 | Revenue | |
| 110 | | 4200 | Professional Fees Earned | 8000 | Revenue | |
| 111 | | 4300 | Rental Income | 8210 | Revenue | |
| 112 | | 4400 | Interest and Investment Income | 8090 | Revenue | |
| 113 | | 4500 | Other Income | 8230 | Revenue | |
| 114 | | 4600 | Gain on Disposal of Assets | 8210 | Revenue | |
| 115 | | 4900 | Sales Returns and Allowances | 8000 | Contra revenue | |
| 116 | | 4910 | Sales Discounts | 8000 | Contra revenue | |
| 117 | |
| 118 | ### Cost of Goods Sold (5000–5999) |
| 119 | |
| 120 | | Code | Account | GIFI | Type | |
| 121 | |---|---|---|---| |
| 122 | | 5000 | Purchases — Merchandise | 8300 | COGS | |
| 123 | | 5010 | Purchases — Raw Materials | 8300 | COGS | |
| 124 | | 5020 | Freight-In / Shipping Costs | 8300 | COGS | |
| 125 | | 5030 | Direct Labour | 8340 | COGS | |
| 126 | | 5040 | Subcontractor Costs | 8360 | COGS | |
| 127 | | 5100 | Opening Inventory Adjustment | 8300 | COGS | |
| 128 | | 5110 | Closing Inventory Adjustment | 8300 | COGS | |
| 129 | | 5200 | Manufacturing Overhead | 8320 | COGS | |
| 130 | |
| 131 | ### Operating Expenses (6000–6999) |
| 132 | |
| 133 | | Code | Account | GIFI | Type | |
| 134 | |---|---|---|---| |
| 135 | | 6000 | Rent | 8910 | Expense | |
| 136 | | 6010 | Property Tax | 8810 | Expense | |
| 137 | | 6020 | Utilities (Hydro, Gas, Water) | 8910 | Expense | |
| 138 | | 6030 | Insurance — Business | 8690 | Expense | |
| 139 | | 6040 | Repairs and Maintenance | 8960 | Expense | |
| 140 | | 6100 | Salaries and Wages | 8340 | Expense | |
| 141 | | 6110 | Employer CPP Contributions | 8360 | Expense | |
| 142 | | 6120 | Employer EI Premiums | 8360 | Expense | |
| 143 | | 6130 | Employee Benefits (Health, Dental) | 8340 | Expense | |
| 144 | | 6140 | Workers' Compensation | 8360 | Expense | |
| 145 | | 6200 | Advertising and Promotion | 8520 | Expense | |
| 146 | | 6210 | Meals and Entertainment (50% deductible) | 8523 | Expense | |
| 147 | | 6220 | Travel Expenses | 8520 | Expense | |
| 148 | | 6230 | Vehicle Expenses — Fuel | 8764 | Expense | |
| 149 | | 6240 | Vehicle Expenses — Insurance | 8764 | Expense | |
| 150 | | 6250 | Vehicle Expenses — Repairs | 8764 | Expense | |
| 151 | | 6260 | Vehicle Expenses — Lease Payments | 8764 | Expense | |
| 152 | | 6300 | Office Supplies and Expenses | 8810 | Expense | |
| 153 | | 6310 | Postage and Courier | 8810 | Expense | |
| 154 | | 6320 | Telephone and Internet | 8810 | Expense | |
| 155 | | 6330 | Software Subscriptions (SaaS) | 8810 | Expense | |
| 156 | | 6400 | Professional Fees — Accounting | 8860 | Expense | |
| 157 | | 6410 | Professional Fees — Legal | 8860 | Expense | |
| 158 | | 6420 | Professional Fees — Consulting | 8860 | Expense | |
| 159 | | 6500 | Bank Charges and Credit Card Fees | 8710 | Expense | |
| 160 | | 6510 | Interest Expense — Bank | 8710 | Expense | |
| 161 | | 6520 | Interest Expense — Other | 8710 | Expense | |
| 162 | | 6600 | Amortization (Book Depreciation) | 8670 | Expense | |
| 163 | | 6610 | Bad Debts | 8590 | Expense | |
| 164 | | 6700 | Business Tax and Licences | 8760 | Expense | |
| 165 | | 6800 | Miscellaneous / Sundry Expenses | 9990 | Expense | |
| 166 | |
| 167 | ### Other Income / Expenses (7000–7999) |
| 168 | |
| 169 | | Code | Account | GIFI | Type | |
| 170 | |---|---|---|---| |
| 171 | | 7000 | Interest Income | 8090 | Other income | |
| 172 | | 7010 | Dividend Income | 8090 | Other income | |
| 173 | | 7100 | Loss on Disposal of Assets | 8210 | Other expense | |
| 174 | | 7200 | Foreign Exchange Gain/Loss | 8230 | Other income/expense | |
| 175 | |
| 176 | ### Tax (8000–8999) |
| 177 | |
| 178 | | Code | Account | GIFI | Type | |
| 179 | |---|---|---|---| |
| 180 | | 8000 | Income Tax Expense (Current) | 9060 | Tax | |
| 181 | | 8010 | Deferred Income Tax | 9060 | Tax | |
| 182 | |
| 183 | --- |
| 184 | |
| 185 | ## Section 3 -- Revenue Recognition |
| 186 | |
| 187 | ### ASPE Section 3400 Revenue |
| 188 | |
| 189 | Revenue is recognised when: |
| 190 | - Performance is achieved (goods delivered / services rendered) |
| 191 | - Collection is reasonably assured |
| 192 | - Amount is measurable |
| 193 | |
| 194 | | Revenue Type | Recognition Point | |
| 195 | |---|---| |
| 196 | | Sale of goods | Risks and rewards transferred, amount measurable, collection probable | |
| 197 | | Rendering of services | Percentage of completion, or completed contract if outcome uncertain | |
| 198 | | Interest income | Accrued over time on effective interest basis | |
| 199 | | Royalties | Accrued per agreement terms | |
| 200 | | Dividends | When right to receive established | |
| 201 | | Construction contracts | Percentage of completion (ASPE 3400) | |
| 202 | |
| 203 | ### Cash vs Accrual for Sole Proprietors |
| 204 | |
| 205 | | Method | CRA Requirement | |
| 206 | |---|---| |
| 207 | | Accrual | Default for all businesses | |
| 208 | | Cash (modified) | Permitted for farming, fishing, and commission-based sales agents only | |
| 209 | | Billed-basis | Permitted for professionals (accountants, lawyers, doctors, etc.) — WIP can be excluded from income | |
| 210 | |
| 211 | Most sole proprietors must use the accrual method — income when invoiced/earned, expenses when incurred. |
| 212 | |
| 213 | --- |
| 214 | |
| 215 | ## Section 4 -- Expense Classification |
| 216 | |
| 217 | ### T2125 Categories (Statement of Business Activities) |
| 218 | |
| 219 | | Line | Category | Description | Nominal Codes | |
| 220 | |---|---|---|---| |
| 221 | | 8521 | Advertising | Marketing, advertising, signage | 6200 | |
| 222 | | 8523 | Meals and entertainment | 50% deductible for tax | 6210 | |
| 223 | | 8590 | Bad debts | Written-off uncollectable accounts | 6610 | |
| 224 | | 8690 | Insurance | Business insurance premiums | 6030 | |
| 225 | | 8710 | Interest and bank charges | Loan interest, service charges | 6500–6520 | |
| 226 | | 8760 | Business taxes, licences, dues, memberships | Professional dues, municipal permits | 6700 | |
| 227 | | 8764 | Motor vehicle expenses (not CCA) | Fuel, insurance, repairs, lease | 6230–6260 | |
| 228 | | 8810 | Office expenses | Supplies, stationery, postage | 6300–6330 | |
| 229 | | 8860 | Professional fees | Accounting, legal, consulting | 6400–6420 | |
| 230 | | 8871 | Management and admin fees | Fees paid to related parties | 6420 | |
| 231 | | 8910 | Rent | Business premises rent | 6000 | |
| 232 | | 8960 | Repairs and maintenance | Building/equipment repairs | 6040 | |
| 233 | | 9180 | Property taxes | Municipal/provincial property tax | 6010 | |
| 234 | | 9200 | Travel | Airfare, hotels, transport | 6220 | |
| 235 | | 9270 | Utilities | Electricity, gas, water, phone | 6020, 6320 | |
| 236 | | 9936 | Capital cost allowance (CCA) | Tax depreciation (not book) | See Section 5 | |
| 237 | |
| 238 | ### Non-Deductible Expenses (CRA) |
| 239 | |
| 240 | - Personal expenses and owner's drawings |
| 241 | - 50% of meals and entertainment (only 50% deductible) |
| 242 | - Club membership dues (golf, fitness) — not deductible since 1972 |
| 243 | - Political contributions — claim as federal/provincial tax credit instead |
| 244 | - Fines and penalties imposed by law |
| 245 | - Capital expenditures (must claim CCA) |
| 246 | - Life insurance premiums (unless collateral for loan) |
| 247 | - Accrued bonuses not paid within 180 days of year-end |
| 248 | |
| 249 | --- |
| 250 | |
| 251 | ## Section 5 -- Asset vs Expense Thresholds |
| 252 | |
| 253 | ### Capital Cost Allowance (CCA) — Key Classes |
| 254 | |
| 255 | | Class | Rate | Method | Typical Assets | |
| 256 | |---|---|---|---| |
| 257 | | 1 | 4% | Declining balance | Commercial buildings (post-1987) | |
| 258 | | 1 (M&P) | 10% | Declining balance | Manufacturing buildings | |
| 259 | | 8 | 20% | Declining balance | Office furniture, equipment, tools ≥ $500 | |
| 260 | | 10 | 30% | Declining balance | Motor vehicles (cost ≤ $38,000 + tax in 2025) | |
| 261 | | 10.1 | 30% | Declining balance | Passenger vehicles > $38,000 limit (separate class per vehicle) | |
| 262 | | 12 | 100% | Full write-off | Small tools < $500, computer software (not systems) | |
| 263 | | 13 | Lease term | Straight-line | Leasehold improvements | |
| 264 | | 14.1 | 5% | Declining balance | Goodwill and other eligible capital property | |
| 265 | | 43 | 30% | Declining balance | Manufacturing and processing machinery (post-2025) | |
| 266 | | 50 | 55% | Declining balance | Computer hardware and systems software | |
| 267 | | 53 | 50% | Declining balance | M&P machinery (acquired 2016–2025) | |
| 268 | | 54 | 30% | Declining balance | Zero-emission passenger vehicles | |
| 269 | | 55 | 40% | Declining balance | Zero-emission non-passenger vehicles | |
| 270 | |
| 271 | ### Accelerated Investment Incentive (from 2025) |
| 272 | |
| 273 | For eligible property acquired after 2024 and available for use before 2030: first-year CCA = up to 3× the normal half-year amount (effectively suspending the half-year rule and tripling first-year deduction). |
| 274 | |
| 275 | ### Practical Thresholds |
| 276 | |
| 277 | | Threshold | Treatment | |
| 278 | |---|---| |
| 279 | | < $500 | Expense immediately (supplies); or Class 12 at 100% | |
| 280 | | $500 – above | Capitalize: Class 8 (20%) or appropriate class | |
| 281 | | Current expense test | Repair vs improvement — repairs maintain; improvements extend/enhance | |
| 282 | |
| 283 | ### Book Amortization vs Tax CCA |
| 284 | |
| 285 | Book amortization (ASPE Section 3061) uses straight-line over useful life. CCA is a separate tax schedule. They rarely match — the difference creates a deferred tax timing difference. |
| 286 | |
| 287 | --- |
| 288 | |
| 289 | ## Section 6 -- P&L Format |
| 290 | |
| 291 | ### Income Statement (ASPE Multi-Step) |
| 292 | |
| 293 | ``` |
| 294 | INCOME STATEMENT |
| 295 | For the year ended [date] |
| 296 | $ $ |
| 297 | Revenue xxx |
| 298 | Cost of goods sold (xxx) |
| 299 | ──── |
| 300 | Gross profit xxx |
| 301 | |
| 302 | Operating expenses: |
| 303 | Salaries and wages (xxx) |
| 304 | Rent (xxx) |
| 305 | Advertising (xxx) |
| 306 | Office expenses (xxx) |
| 307 | Professional fees (xxx) |
| 308 | Insurance (xxx) |
| 309 | Utilities (xxx) |
| 310 | Amortization (xxx) |
| 311 | Vehicle expenses (xxx) |
| 312 | Other operating expenses (xxx) |
| 313 | (xxx) |
| 314 | ──── |
| 315 | Operating income xxx |
| 316 | |
| 317 | Other income (expenses): |
| 318 | Interest income xxx |
| 319 | Interest expense (xxx) |
| 320 | Gain (loss) on disposal of assets xxx |
| 321 | Foreign exchange gain (loss) xxx |
| 322 | xxx |
| 323 | ──── |
| 324 | Income before income taxes xxx |
| 325 | Provision for income taxes (xxx) |
| 326 | ──── |
| 327 | Net income xxx |
| 328 | ════ |
| 329 | ``` |
| 330 | |
| 331 | --- |
| 332 | |
| 333 | ## Section 7 -- Balance Sheet Format |
| 334 | |
| 335 | ### Statement of Financial Position (ASPE — Vertical / Report Form) |
| 336 | |
| 337 | ``` |
| 338 | BALANCE SHEET |
| 339 | As at [date] |
| 340 | $ $ |
| 341 | ASSETS |
| 342 | Current assets: |
| 343 | Cash xxx |
| 344 | Accounts receivable xxx |
| 345 | Allowance for doubtful accounts (xxx) |
| 346 | Inventory xxx |
| 347 | Prepaid expenses xxx |
| 348 | GST/HST receivable xxx |
| 349 | ──── |
| 350 | Total current assets xxx |
| 351 | |
| 352 | Capital assets: |
| 353 | Land xxx |
| 354 | Buildings (net of amortization) xxx |
| 355 | Equipment (net of amortization) xxx |
| 356 | Vehicles (net of amortization) xxx |
| 357 | Leasehold improvements (net) xxx |
| 358 | Computer hardware (net) xxx |
| 359 | xxx |
| 360 | Intangible assets (net) xxx |
| 361 | Goodwill (net) xxx |
| 362 | ──── |
| 363 | TOTAL ASSETS xxx |
| 364 | ════ |
| 365 | |
| 366 | LIABILITIES |
| 367 | Current liabilities: |
| 368 | Accounts payable xxx |
| 369 | Accrued liabilities xxx |
| 370 | GST/HST payable xxx |
| 371 | Income taxes payable xxx |
| 372 | Current portion of long-term debt xxx |
| 373 | Deferred revenue xxx |
| 374 | ──── |
| 375 | Total current liabilities xxx |
| 376 | |
| 377 | Long-term liabilities: |
| 378 | Bank loan xxx |
| 379 | Mortgage payable xxx |
| 380 | Shareholder loan xxx |
| 381 | ──── |
| 382 | Total long-term liabilities xxx |
| 383 | ──── |
| 384 | TOTAL LIABILITIES xxx |
| 385 | |
| 386 | SHAREHOLDERS' EQUITY |
| 387 | Share capital xxx |
| 388 | Retained earnings xxx |
| 389 | ──── |
| 390 | TOTAL SHAREHOLDERS' EQUITY xxx |
| 391 | ──── |
| 392 | TOTAL LIABILITIES AND EQUITY xxx |
| 393 | ════ |
| 394 | ``` |
| 395 | |
| 396 | --- |
| 397 | |
| 398 | ## Section 8 -- Bank Reconciliation Patterns |
| 399 | |
| 400 | ### Common Canadian Bank Formats |
| 401 | |
| 402 | | Bank | Export Format | Key Fields | |
| 403 | |---|---|---| |
| 404 | | RBC Royal Bank | CSV, OFX, QFX | Account Type, Date, Description 1, Description 2, CAD, USD | |
| 405 | | TD Canada Trust | CSV, OFX, QIF | Date, Transaction Description, Withdrawals, Deposits, Balance | |
| 406 | | BMO | CSV, OFX | Date, Description, Amount, Balance | |
| 407 | | Scotiabank | CSV, OFX | Date, Description, Debit, Credit, Balance | |
| 408 | | CIBC | CSV, QFX | Date, Description, Withdrawals, Deposits, Balance | |
| 409 | | Desjardins | CSV, OFX | Date, Description, Montant/Amount, Balance | |
| 410 | | National Bank | CSV | Date, Description, Debit, Credit, Balance | |
| 411 | |
| 412 | ### Common Transaction Descriptions |
| 413 | |
| 414 | | Pattern | Likely Classification | |
| 415 | |---|---| |
| 416 | | E-TRANSFER, INTERAC | Income or personal — check direction and counterparty | |
| 417 | | PAD (Pre-Authorized Debit) | Regular expense (insurance, loan, subscription) | |
| 418 | | PAP (Pre-Authorized Payment) | Regular expense (utility, rent) | |
| 419 | | POS, VISA, MC, DEBIT | Card expense — check merchant name | |
| 420 | | CRA FED TAX, CRA GST/HST | Tax payment — not operating expense | |
| 421 | | PAYROLL, ADP, CERIDIAN | Wages / payroll processing | |
| 422 | | SHOPIFY PAYOUT, STRIPE CA | Platform income — match to invoices | |
| 423 | | BILL PAYMENT, BPMT | Expense — utility or service provider | |
| 424 | | NSF FEE, SERVICE CHARGE | Bank charges (6500) | |
| 425 | | INTEREST | Income (if credit) or expense (if debit) | |
| 426 | | MORTGAGE PMT | Split: principal (2410 reduction) + interest (6510) | |
| 427 | |
| 428 | --- |
| 429 | |
| 430 | ## Section 9 -- Micro-Entity / Small Business Simplifications |
| 431 | |
| 432 | ### CRA Small Business Concessions |
| 433 | |
| 434 | | Concession | Eligibility | Detail | |
| 435 | |---|---|---| |
| 436 | | Quick Method (GST/HST) | Taxable revenue ≤ $400,000 | Remit flat percentage of revenue; keep the difference | |
| 437 | | Instalment threshold | Tax owing < $3,000 (individuals) or < $3,000 (corporations) | No quarterly instalments required | |
| 438 | | Simplified ITC claims | Annual taxable revenue ≤ $500,000 | Can claim ITCs without full documentation for purchases under $30 | |
| 439 | | GIFI-Short | Revenue and assets each < $1 million | ~100 common codes instead of full GIFI list | |
| 440 | | T2 Short Return | Various small corporation criteria | Reduced filing requirements | |
| 441 | | Filing deadline | Sole prop: June 15 (return); April 30 (payment) | 2-month extension for filing but not paying | |
| 442 | |
| 443 | ### ASPE vs IFRS Choice |
| 444 | |
| 445 | | Factor | ASPE (Private Enterprises) | IFRS (Public / Large) | |
| 446 | |---|---|---| |
| 447 | | Who | Any private company | Publicly accountable entities | |
| 448 | | Complexity | Simplified (no fair value for most items) | Full fair value, complex disclosures | |
| 449 | | Goodwill | Amortize over ≤ 40 years | Annual impairment test (no amortization) | |
| 450 | | Leases | Operating vs finance classification | IFRS 16: all on balance sheet | |
| 451 | | Financial instruments | Cost/amortized cost (default) | FVTPL or FVOCI or amortized cost | |
| 452 | | Cost | Lower professional fees | Higher — more disclosures | |
| 453 | |
| 454 | ### Compilation Engagement (NTR) |
| 455 | |
| 456 | Most small Canadian businesses engage a CPA for a "compilation" (Notice to Reader) — the CPA compiles financial statements from client-provided information without performing audit or review procedures. No assurance is expressed. |
| 457 | |
| 458 | --- |
| 459 | |
| 460 | ## Section 10 -- Interaction with Tax Skills |
| 461 | |
| 462 | ### Corporate Income Tax (T2 Return) |
| 463 | |
| 464 | - Financial statements mapped via GIFI codes to T2 |
| 465 | - Schedule 1: Net Income Reconciliation (add back: amortization, meals 50%, non-deductible items; deduct: CCA, eligible capital deductions) |
| 466 | - Schedule 8: CCA calculation (separate from book amortization) |
| 467 | - Schedule 125: Income Statement Information (GIFI) |
| 468 | - Schedule 100: Balance Sheet Information (GIFI) |
| 469 | - Active business income ≤ $500,000: small business deduction (combined federal/provincial ~12.2% varies by province) |
| 470 | - Investment income: taxed at ~50%, refundable upon dividend distribution (RDTOH) |
| 471 | |
| 472 | ### GST/HST Return |
| 473 | |
| 474 | | Line | Description | CoA Mapping | |
| 475 | |---|---|---| |
| 476 | | 101 | GST/HST collected (or collectible) | 2050 | |
| 477 | | 105 | Total GST/HST and adjustments | 2050 + adjustments | |
| 478 | | 106 | Input Tax Credits (ITCs) | 1150 | |
| 479 | | 108 | Total ITCs and adjustments | 1150 + adjustments | |
| 480 | | 109 | Net tax (remit or refund) | 2060 | |
| 481 | |
| 482 | ### Payroll Remittances |
| 483 | |
| 484 | | Item | Rate (2025) | Employer Portion | |
| 485 | |---|---|---| |
| 486 | | CPP (employee) | 5.95% on pensionable earnings $3,500–$71,300 | Employer matches 1:1 | |
| 487 | | CPP2 (second ceiling) | 4.0% on $71,300–$81,200 | Employer matches 1:1 | |
| 488 | | EI (employee) | 1.64% on insurable earnings up to $65,700 | Employer pays 1.4× employee amount | |
| 489 | | Federal income tax | Per tax tables (withholding) | Employer remits to CRA | |
| 490 | |
| 491 | ### Provincial Considerations |
| 492 | |
| 493 | - Quebec: separate QST (9.975%) and QPP (instead of CPP); file with Revenu Québec |
| 494 | - PST provinces (BC, SK, MB): PST is not an input tax credit — it becomes part of the asset/expense cost |
| 495 | - HST provinces (ON, NB, NS, NL, PE): combined rate; single return to CRA |
| 496 | - Alberta: GST only (5%), no provincial sales tax |
| 497 | |
| 498 | --- |
| 499 | |
| 500 | ## Disclaimer |
| 501 | |
| 502 | This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional (such as a CPA, CA, or equivalent licensed practitioner in your jurisdiction) before filing or acting upon. |
| 503 |
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Verification status
Research-verified
Drafted from authoritative sources (tax authority sites, Big-4 summaries). Awaiting credentialed sign-off.
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About
Use this skill whenever asked about Canadian bookkeeping for sole proprietors, partnerships, or private corporations. Trigger on phrases like "chart of accounts", "GIFI codes", "bookkeeping", "profit and loss", "balance sheet", "ASPE", "ASNPO", "CRA categories", "bank reconciliation", "expense categories", "revenue recognition", "depreciation", "CCA", "capital cost allowance", "GST/HST", "input tax credits", "T2125", "T2", "general ledger", "HST return", or any question about day-to-day transaction recording, financial statement preparation, or account coding for a Canadian business.
CAty-2025
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