provided, and HST number, where applicable. Many health professionals are having their professional corporation (PC) own/lease and maintain their vehicle. This is beneficial because the PC buys or leases, maintains, fuels and insures the vehicle – but this luxury is a taxa-ble benefit for the person that drives it. Taxable benefit means the govern-ment taxes you personally for this perk. One easy way the government de-termines the taxable benefit amount is by using the stand-by charge for-mula. This is calculated as a two per cent per month charge of the original cost of the company vehicle. Here is an example: the purchase price, inclusive of taxes, of a BMW X3 in 2015 was $59,000. So, two per cent of $59,000 is $1,180 per month or $14,160 per year. This means if the car you drive is owned by the professional corporation and you do not use it at www.canadianchiropractor.ca Your vehicle least 50 per cent of the time for busi-ness, then $14,160 will be added as taxable income to your tax return. So if, you earned $50,000, the govern-ment will tax you as if you earned $64,160 that year. This is why it is vital for you to keep a car diary and a kilometres log along with purchase receipts, in order to justify that you use your vehicle for business at least 50 per cent of the time. Using the above example, if I demonstrated using my corporate car for business 60 per cent of the time then my personal taxable benefit would only be 40 per cent of $14,160 or $5,664. One caveat though – on a company vehicle, personal use cannot exceed 1,666 kilometres per month or 20,004 kilometres per year. Educate yourself Remember, accountants and lawyers do not know everything when it comes to your business. I make sure I read as much as I can about tax laws (I read the Excise Tax Act which is 392 pages) so that I am armed with knowledge when I meet with my accountants. I find when I do this they make less mistakes because they realize I will hold them responsible. Be prepared. Professional associa-tions and even governing bodies likely won’t know the answers to all your income tax questions. This is because they typically do not want to give you the wrong advice, or they simply don’t know the answers to your questions. In fact, the growing trend for govern-ing bodies is to distance themselves from business-related queries. For ex-ample, last year the Canadian Physio-therapy Association (CPA) issued a statement to their members asking them not to question the CPA on the topic of independent contractors. In-stead, they suggested their members contact their lawyers. I am happy to provide you with a sample of both an employee and IC contract. Simply email me at exstore@ usa.com or visit www.businessbuild-ingdoctor.com May 2017 Canadian Chiropractor 19
Chiropractic + Naturopathic Doctor May 2017: Page 19
