Hi Everyone, I am totally lost with this reporting. My client has a straight forward (Self employed) business income of $36,671 and has no home office or any expense to offset the income. So I decided to use quick method to reduce his HST payable. Applicable rate is 8.8% for 13% HST rate so I have the following
(fees 36,671, HST payable 2,863 and Adjusted business income 33,908).
I don’t understand how he can still come up with tax due of $8,000
Yes, I read the CRA requirements. he can use the quick method. But what makes you think he’s not self employee? He works for an agency that pays him as a contractor. Although he could work from home and claim home office he leaves in shared apartment wih roommates so there is no basis for claiming home expenses. and because it’s a service, he has no other expenses to claim maybe phone or transportation but even so, CRA could easily deny those claims.
I am not really sure what you want for an answer; however, CPP x two for the business income plus the taxes owing on the 33,000 would be my guess. Have you looked at the t1summary?
Edit, the answers from everyone else did not show up until I posted this. Wierd
Yes the calculation is right I was shocked at first but realized later that the calculation was right, I just has to claim the employer contribution as expenses and go for a quick method.
[quote=“kytax2015, post:13, topic:1248, full:true”]
yeah there shouldn’t be any entry needed. It should be automatic done by software.
[/quote]Not sure about that
You don’t deduct the employer portion of CPP when the guy is self-employed. The tax credit shows up on Schedule 1 for 1/2 the CPP owing.
Line 9060 on the T2125 is for employees this fellow may employ NOT his own contributions.
The original amount due you were surprised about is correct.