The Tax Man Still Wins in Space

A judge has ruled that Cirque du Soleil founder Guy Laliberte can't claim a 2009 trip to the ISS as a business expense.

Laliberte claimed his trip to space was not a taxable benefit because he promoted Cirque du Soleil and the company’s recent entry into the Russian market with a new show during his time on the ISS. The Canada Revenue Agency challenged this narrative, prompting the Tax Court of Canada to weigh in. […] the Tax Court of Canada ruled that Laliberte’s trip was for “overwhelmingly” personal reasons and that only 10 per cent of the expenses, or $4.2 million, could be considered business related for Cirque du Soleil promotional activities and the One Drop Foundation. Catch the full article here: https://bit.ly/2FCnsS8

Space case.jpg

Is Your Business Subject to US Tax? - Part I

It has become increasingly common for Canadian businesses to sell products and services to the United States. While they file their Canadian income tax returns to report their income, they seldom consider if they are subject to US income and sales taxes. They may be very surprised that they are.

The three main sources of taxation in the United States that a Canadian business should be concerned with are US federal income tax, state income tax and state sales tax. In Part I of this two-part newsletter series we discuss US federal income tax. You can find the newsletter here: https://bit.ly/2TwiNUF.

Women, Wine & Wisdom

Last night at the Ottawa Board of Trade's Women, Wine & Wisdom event, 300 women leaders gathered together, heard messages of support, and shared stories of challenges and achievements.

It was an evening of thoughtful discussion about "thinking big" and we are so pleased to have been in attendance.

Thank you so much to the Ottawa Board of Trade, moderator Sueling Ching, guest speakers - Rima Aristocrat, Janice McDonald ICD.D, and Komal Minhas - and Brookstreet Hotel for a wonderful event!

WWW - Nov 2018.jpeg

Women Mean Business!

Each November we host "Women Mean Business", an event that brings together women of all ages, stages in life, and career paths. This year’s theme was “success” and we asked each of our guests to share their success like confetti! What does success mean to you?

A big thank-you goes to Living Science Wellness Centre for catering, Fran Green for donating a necklace, YOW Popcorn for the tastiest popcorn (and awesome HW branded bags), and The Cupcake Lounge Inc. for the delectable mini cupcakes.

Tax with a View

From October 27th to November 1st, Jacob Milosek, CPA, CA got the opportunity to take in all of the beautiful sights that the Fairmont Banff Springs had to offer. The only small catch was that he had to speak about personal and corporate income tax issues to a room of 80+ CPAs.

Missing from this picture are Jacob's co-presenters Kelly Kolke and Kurt Oelschlagel, FCPA who kept the crowd engaged with some pretty memorable jokes. Thank you to them and Chartered Professional Accountants of Canada (CPA Canada) for another successful course.

Jacob - Oct ITP 2018.JPG

14th Annual Special Olympics Breakfast

This past week, Hendry Warren attended the 14th Annual Special Olympics Ottawa Breakfast, presented by Kelly Santini LLP. The event stayed true to the theme, Champions Celebrating Champions, with a morning of brave speakers and inspirational stories. We cannot wait to attend again next year!

Thank you to Centre Shaw Centre for hosting!

Special Olympics Breakfast - 2018.jpg

Sharing Some Knowledge with the NPO Community

Last Thursday, Hendry Warren partner, Todd Hamilton, participated in a panel discussion hosted by NPO Group, a local Ottawa organization whose mission it is to gather and share information with the Not-For-Profit community. The event - titled Strategies to Reduce Financial Management Risk and Gain Peace of Mind - was certainly a success, with trusted advisors sharing their expertise, and lessons-learned, on the topic of risk management within the NPO sector.

Thank you so much to our hosts at RBC, and other panel participants, Neil McCormick, Richard MacNeill, and Chris Masbridge.

Todd - Expert Insights Oct 2018.jpg

Welcome to the Team, Muhamad!

Please join us in welcoming Muhamad Adatia to the Hendry Warren team. Muhamad joins us as an Assurance & Accounting Manager and is excited to help owner-managed businesses achieve their financial goals.

Muhamad enjoys using a collaborative approach to ensure that clients receive quality, accurate, and relevant information. His experience as a financial controller has given him first-hand knowledge of the operational side of organizations.

A graduate of the University of Ottawa’s Commerce program with a specialization in Accounting, Muhamad is a member of CPA Canada and CPA Ontario, and has successfully completed CPA Canada’s In-Depth Tax Course.

In addition to being a hockey enthusiast, Muhamad enjoys volunteering and has previously held positions in the community as Chair of the Aga Khan Economic Planning Board and was the Treasurer for CanUgan Disability Support.

Muhamad Adatia.jpg

November is Gearing up to be a Fan-Stache-tic Month

Welcome to Movember! For the second consecutive year, the Hendry Warren Super-Stash Brothers (and Sisters) have banded together to grow moustaches, as best we can, in support of men’s health. Our commitment is to raise awareness of and funds for prostate cancer, testicular cancer, mental health, and suicide prevention, in an attempt to prevent our brothers, fathers, sons, and friends from dying too young.

Click the link below to follow along as as we attempt to reach our fund- (and hair-) raising goals! https://moteam.co/hw-super-stash-brothers

Movember 2018 - Nov 1st.jpg

Congratulations, Dawn!

Today, the population of Canada is around 36.95 million PLUS ONE! Our heartfelt congratulations on receiving your Canadian Citizenship, Dawn. We are truly lucky to have you as a member of #TeamCanada and #TeamHendryWarren!

Dawn.jpeg

Pay Bonuses on Time to Avoid Unpleasant Surprises

It is common practice for some private corporations to accrue a bonus to a shareholder, who is also an employee, at year end and then pay the bonus in the following fiscal year.  The expectation is that the corporation can claim the deduction in the year accrued and that the shareholder will report the employment income in the following year.

Consider the following example:

Muhamad is the sole shareholder of a private corporation whose fiscal year end is December 31, 2017.  The corporation’s initial 2017 taxable income is $750,000.  The corporation accrues a bonus to Muhamad of $250,000, claims the deduction and pays its corporate tax based upon $500,000 of taxable income.  The corporation must pay the bonus within 180 days of December 31, 2017, being June 29, 2018.  The bonus is taxed in Muhamad’s 2018 taxation year.

To achieve the corporate deduction, the bonus must be paid within a certain timeframe.  ITA 78(4)[1] requires the bonus to be paid within 180 days of the corporate year end.  But what constitutes payment?  Making a payment to the shareholder, as evidenced by a cancelled cheque or bank transfer, would clearly be a payment.  But oftentimes there are cash constraints on the corporation that may deprive it of the ability to make the payment.

In a 2012 technical interpretation[2], the Canada Revenue Agency (“CRA”) stated that remittance of the payroll withholdings on time would evidence payment of the bonus.  The technical interpretation did not go into any further detail as to what on time means.  Does it mean that the source deductions must be remitted to CRA within the 180 day time frame required by ITA 78(4) or does it mean the remittance can be made by the regular source deduction deadline in the following month[3]?

This has become a point of uncertainty.  Many corporations are taking the position that the source deductions can be remitted by the remittance deadline the following month.  During recent tax audits we have experienced CRA auditors taking the position that the withholdings should be remitted by the 180th day.

In the example above, the corporation’s 2017 income would be increased by $250,000 if the bonus was not paid within 180 days of year end.  While it would obtain a deduction in the following year when payment occurred, CRA would assess interest on the unpaid tax.  Assuming that the bonus was paid in 2018, Muhamad’s personal tax position would not be affected.

Given this uncertainty, we recommend that the deadlines for payment of bonuses be monitored very closely and that source deductions be paid within 180 days of the year end in which the bonus was accrued.



[1] Income Tax Act (Canada) (“ITA”)

[2] Technical interpretation 2012-0452531E5

[3] The 15th of the following month for regular remitters or an earlier date in the following month for accelerated remitters.

Another Year of Schmoozing for the Books!

Last Thursday, we schmoozed the night away at GenNEXT Ottawa’s 13th Annual Schmoozefest. The night was filled with great food, great company and great conversations. We had the chance to participate in the heart string wall initiative that served as an amazing visual reminder of the energy we can use to help solve Ottawa’s challenges through the GenNext Ottawa Giving Circles. Check out the heart strings time lapse video here: https://bit.ly/2q7vlV7

Schmooze 2018.jpeg

The 2018 Thanksgiving Food Drive was a Success!

The Ottawa Food Bank has one goal: Help people get beyond hunger. This Thanksgiving weekend, the teams at Hendry Warren LLP and Transactions Inc. wanted to help and so we banded together, reached out to friends and family, and collected as many non-perishable food items and baby & personal products we could. We’re proud to say that the teams were able to gather a whopping 3,395lbs of items for the Ottawa Food Bank this year!

A huge, giant thank-you goes out to our friends, without whom none of this would be possible: Italfoods Ottawa, La Bottega Nicastro, and McKeen Metro Glebe.

How Does Your Association Compare?

Association executives: Introducing #OAX2019, the Ottawa Association Exchange. A multimedia project that aims to provide the latest solutions to your unique challenges. Get involved by taking the survey here: https://bit.ly/2yePKLg.

Every survey respondent has the chance to win a free pass to Greenfield Services 2019 Engaging Associations Forum #EngageAssn or win 1 of 30 Starbucks gift cards.

How do your peers and competitors approach common problems? This question can be vital to informing the operational decisions of not-for-profit organizations. The OAX is an annual benchmarking of associations aiming to collect data on operational issues.

OTUS-OAX_FACEBOOK_V3_20181001.jpg

Congratulations to Robin & Kyle!

While we thought that Robin Lawrence's love of all things accounting was pretty special, we must admit that her love for her now-husband, Kyle Schneider, trumps that. This couldn't have been more obvious at their beautiful wedding ceremony this past Saturday.

Congratulations to the newlyweds!

📷: Isabelle Buckley Photography

Robin - wedding.jpg