Gifts to business client

Tax Topics
21

Hopefully this case is not typical of realtors. It sure is different from my clients.

22

This case is instructive of all things NOT to do:

  • don’t collect or provide proper documentation
  • lie (or at least obscure the truth) during initial conversations with the auditor
  • attempt to cover the above by embellishments not supported by facts
  • try to get personal expenses (or whatever they were) to be accepted as business expenses when you have no receipts, can’t explain how or why the expense related to your business, and the client isn’t a “client” (or anything else!)
  • through a total loss of credibility on a number of items, give the Judge every reason NOT to believe any future explanation about any dubious charge

There are other things, but I won’t go there.

This is not the way my realtors are trained by me, nor would I prepare a return for someone attempting to do what this person attempted.

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23

So sorry to bring this up. Have similar case where we offer $500 cash incentive to students for getting our services in helping them secure their enrollment to the college. We help them enroll to a college, and in return we get our commission from the college. To compensate those who trusted us as their education agent, we give them in return the incentive which runs to cad500 at the most. Should we be issuing T4As to them or as a simplicity now, we are recording it as a commission reduction because we tried asking the SIN of the student and definitely they didn’t like it.

24

Get the SIN first and make it a condition of receiving back the $500. Given that most students pay little, if any, tax it should generally be a non-issue to them.

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