Although the month of March is synonymous with March break and the beginning of spring, we can’t forget that fiscal obligations are knocking at the door! Yes, it's tax season for millions of Canadians and, therefore, for thousands of mental health professionals.
If you wish to optimise your time and your tax return, it is strongly suggested that you maintain your accounts on a monthly or quarterly basis to keep them up to date. This requires rigour, but avoids creating a tedious task and reduces the risk of forgetting transactions.
To do this in Psylio, go to the finances tab and click on finances. Here you can add all the transactions related to your private practice, compiling both your income and expenses.
It is important to note that the Canadian tax system is based on self-assessment, meaning that it is your responsibility to declare your income and deduct expenditures. You must prepare what is referred to as an income statement to show the revenue generated by your professional practice and expenses, such as insurance, contributions, licences, and so on. This way, if you arrive prepared with an income statement to give to your accountant, they will be able to work on analysis and optimisation instead of having to enter each of your invoices manually. This saves time for both you and your accountant!
As a Psylio user, you can use the platform to generate a global report of all your transactions, including income and expenses, within the dates of your choice. To do so, go to the finances tab, then to reports.
Here is a checklist with examples of deductible expenses for self-employed persons:
- Mobile phone usage fees;
- Automobile expenses for business travel (gas, insurance, licence, etc.);
- Interest and bank charges;
- Office expenses (stationery, internet, software fees, etc.);
- Cost of equipment like a computer (this expense is depreciable);
- Costs of using a personal residence if certain criteria are met.
And we can’t forget consumer taxes (GST and QST), which apply to some professionals. However, it is important to consider the nature of your service and whether it is tax-exempt, zero-rated or taxable. For this, I suggest you consult an accountant or a tax specialist.
To generate a tax report in Psylio, go to the finances tab, then to reports. Select the taxes tab. Simply enter the start and end dates of the report.
Tax preparation does not end once you have determined your net self-employed income. There are a variety of deductions and tax credits available to everyone.
Here is a list of items you should prepare for your taxes:
- RRSP contribution receipt;
- Childcare expense receipts;
- Student loan interest;
- Medical expenses not covered by insurance (drugs, dentist, physiotherapy and many others);
- Charitable donation receipts.
What is the deadline for filing my tax return?
There are a few important dates to remember. The deadline for filing your income tax return is on April 30 of each year. There is an exception for self-employed individuals, who have until June 15 to file their return. However, the deadline for payment is April 30 for everyone. So, if you file your return and pay your balance on June 15, you will still incur interest from May 1 to June 15, but you will avoid the late filing penalty.
Why do we start the tax period in March? Because institutions, employers, trusts and other providers of funds have until February 28 to file the various information slips, like the popular T4 for employees. In short, taxpayers have all the information they need to file their taxes in March.
What other tips should I know?
If your annual net self-employed income is higher than the cost of providing for your personal needs (mortgage, groceries, entertainment, daycare, pets, etc.), it is strongly suggested that you consider incorporating your practice. However, it is important to know whether your professional association allows you to practice as an incorporated company, so don't hesitate to ask them for information.
Lastly, you always have the option of filing your own tax return. However, as a self-employed person, I advise you to consult an accountant to optimise your business expenses. In addition, they can help you prepare by providing you with a list of items to submit.
The key is choosing the right professional to accompany you!
Kévin is a tax specialist and chartered professional accountant at Axiome CPA. His mission is to assist and advise business owners in their financial structuring. He specialises in tax planning and optimisation for small and medium-sized businesses as well as in business succession and start-ups.
Caring Technology Implementation Specialist, Psychoeducator, M.Ed.
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