Cryptocurrency: Income Tax Considerations

Was 2021 the year you became interested in cryptocurrency? Did you buy and sell to see if you could make some money? Perhaps you decided that mining cryptocurrency would be a good side gig. If you have been involved in cryptocurrency transactions, it is likely these could be taxable transactions.

Transactions involving cryptocurrency that result in income will result in either business income or capital gains, depending on the circumstances.

  • If you are holding cryptocurrencies as an investment (buy, hold, sell), you record and track the cost when you purchase them and calculate a capital gain when you sell. Remember that the cost has to be converted to Canadian dollars at the time of purchase and sale.
  • If you are in the business of buying and selling, or if you are mining cryptocurrency, you will report earnings as business income. If you are holding cryptocurrencies at the end of the tax year, it will be recorded as inventory. You can either value the inventory at the original cost or at the fair market value at the end of the year. Once you select an inventory method, that will be your method going forward.

If you have costs associated with your cryptocurrency business, such as computer hardware used in mining, you should also track those costs and plan to claim them against the related income.

The Canada Revenue Agency’s guidance on cryptocurrency continues to evolve. Please reach out to your trusted tax advisor to discuss your situation in detail and ensure you are appropriately reporting income relating to cryptocurrency transactions.

Personal Income Tax Season Has Arrived!

For new and existing personal income tax clients, here are some reminders and new information regarding GSE’s personal income tax preparation process.

1. We continue to operate in accordance with the ever-changing Public Health Guidelines as well as our own COVID-19 office policies. We continue to provide multiple methods to accommodate the receipt of your income tax documents in a secure and safe manner.

a) Secure online Portal – Please upload supporting documents via our Secure client portal. We prefer PDF files and recommend the use of an app such as Microsoft Lens (available in your favourite app store) to help you convert image files to a PDF. When in doubt, submit what you have and we’ll reach out if the format is not compatible.

OR

b) ST THOMAS – Access to the office is by appointment only. Please drop off supporting documents to the secure drop box at the front of the County of Elgin building. This drop-box is emptied daily and allows us to have fewer clients in our reception area. If your item is too big for the drop-box, please walk inside and there is a reception area where you can leave your package. The drop-off hours are 8:30 – 4:30pm, Monday to Friday.

OR

c) AYLMER – Please drop off supporting documents to the secure drop box located directly outside of our regular main reception lobby door. This drop-box is emptied daily and allows us to have fewer clients in our reception area. If your item is too big for the drop-box, please refer to c) below. The drop-off hours are 8:30 – 5:00 pm, Monday to Friday.

OR

d) If you prefer, please call the office and one of our friendly administrative staff will arrange a time for you to come in and drop off your documents. If you need to meet with a GSE Firm Member to review your documents, please make an appointment in advance as well. All visits to the office are by appointment only.

OR

e) Some combination of the above! Perhaps you’ve physically dropped off your documents but located one more slip that you’d like to scan to your secure Portal – go for it.

 

2. We have a new Document Library on our website. Here you will find the following documents:

a) 2021 Personal Income Tax Return Checklist – please review this listing to determine if you are submitting all necessary documents to support your reported income, deductions and credits. Within the Checklist there is some helpful information about how some of COVID-19 government benefits will be treated on your personal return, as well as the impact of working from home.

b) T1 Brief Client Questions – Please complete these questions on an annual basis. Either print and drop them off with your personal taxes or upload your responses to the Portal. These questions help us to ensure we have accurate information about your current tax situation.

c) T1 Client Questions Form – We highly recommend this Form for new clients or returning clients with changing tax situations. Either print and drop it off with your personal taxes or upload your responses to the Portal.

d) Final Return & Estate Checklist – If you are assisting with the final tax return for someone who has recently passed away, please complete and return this checklist. It outlines some of the additional information we will require.

e) Authorization/Cancellation Request Form – For new clients to allow us to communicate with the Canada Revenue Agency on your behalf.

f) Decision tree to help you determine your tax deduction from working from home – Information to help you determine whether you qualify to claim home office expenses where you are required to work from home by your employer, or whether you can claim the tax deduction for working from home due to the Covid -19 pandemic and whether to use the detailed or simplified method of claim. Note that employees can only claim a reasonable portion of the following under the detailed method:

    • Electricity
    • Heat
    • Water
    • Utility portion of condo fees (must obtain from Condo Corporation)
    • Home internet access fees (cost of plan only, new for 2020)
    • Maintenance and minor repairs (related to the workspace only)
    • Rent

 

3. How do I get my documents and personal tax return back?

a) Once your tax return has been prepared and reviewed, you will receive a call indicating that your personal income taxes have been completed.

b) If you have not already told us, we will ask if you would like it back electronically (via our Secure online portal) or a paper copy (which can be picked-up at a scheduled appointment time). Prior to us filing your return, we require a signature – this can be done either via Portal (using an electronic signature – DocuSign), via Portal (with a scanned upload of the signed document), via fax, via Mail, via drop-box at our office, or it can be signed in-person at the time of your scheduled pick-up.

 

As always, if you have any questions, please reach out to us at (519) 633-0700/ (519) 773-9265 or contact the individual you usually work with.

Happy tax filing!

 

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Update to the Canada Emergency Business Loan Account (CEBA)

On January 12, 2022, the Federal government announced that it is extending the repayment deadline for interest-free loans disbursed under the Canada Emergency Business Account (CEBA) program.

The repayment deadline for CEBA loans to qualify for partial loan forgiveness is being extended from December 31, 2022, to December 31, 2023, for all eligible borrowers in good standing.  Repayment on or before the new deadline of December 31, 2023, will result in loan forgiveness of up to 33.33% of the value of the loans, up to a maximum forgivable amount of $20,000.

Outstanding loans on January 1, 2024, will be converted to two-year term loans with an interest rate of 5% per annum, with the loans fully due by December 31, 2025.

This extension also applies to the equivalent lending program through the Regional Relief and Recovery Fund.

Visit the CRA for more information: Government extends loan forgiveness repayment deadline for the Canada Emergency Business Account – Canada.ca

NEW HIRE UPDATE! – NICK BOYER

Graham Scott Enns LLP is pleased to announce that we have added a new member to our GSE team! Nick Boyer started with the firm October 2021 at the Senior Accountant position. Nick previously worked 3 years at a small accounting firm located in Woodstock Ontario and brings with him some great experience working on compilation engagements, review engagements, audits, personal tax returns and answering general client questions. Nick graduated with a Bachelor of Commerce degree from the University of Guelph and is currently pursuing his CPA designation. Outside of the office, you will likely find Nick at the hockey rink! Nick played Varsity Hockey at the University of Guelph and is currently passing along his hockey knowledge to the Port Stanley Junior C Sailors, as he is their current Assistant Coach. Nick has strong organizational, leadership and communication skills and we are excited to have him on our team!

“I have really enjoyed working at GSE over the past 3 months. All the staff at GSE are very friendly and have made the transition from my prior firm very easy”

Nick Boyer

Welcome to GSE Nick!

If you would like to learn more about working at GSE, please visit our website, www.grahamscottenns.com for more information about our career opportunities.

GSE Attends Mental Health Training

On January 26, 2022, the Staff and Partners at GSE held our annual training on Mental Health Awareness. We know that this time of year can often be difficult for many people, so we encourage open and honest conversations about mental health during this period and throughout the year. Life can be hard at times, but seeking help does not have to be. Resources are only a phone call away.
CMHA Elgin Crisis Line: 519-433-2023
London & Middlesex Mental Health Hotline: 1-800-273-TALK
     

Congratulations Tina

The Partners and staff of Graham Scott Enns LLP are excited to announce the promotion of Tina Nevrly, CPA, CGA to Senior Manager, Tax, effective January 1, 2022!

Tina joined GSE in February 2013 as a Manager in our Aylmer office. In 2017, she moved to our St Thomas office in pursuit of gaining more tax experience within our Tax Group. During this time, Tina enrolled in the CPA In-Depth Tax Program, which she completed in 2019. As part of her completion of the In-Depth Tax Program, Tina was part of a tax project team that was in the running for the Top Project in Canada out of 30 teams across Canada!

Tina takes great pride in assisting our clients with their tax and compliance needs. Within our firm, she is a knowledgeable tax resource for many staff, managers, and Partners. She is also a great Mentor to our staff as demonstrated by her involvement in our firm’s Buddy/Mentor program. Beyond her work with our Tax Group, Tina is an active member of our Training and Development Committee, and our Health and Wellness Committee.

“Tina has continued to advance within the firm, most recently in her role as a Tax Manager, having completed CPA Canada’s 3-year In-Depth Tax Course in 2019.  Using her experience and knowledge, Tina has taken on greater responsibilities to help our clients in their various tax planning and accounting needs, as well as supporting our own GSE staff by having become a Mentor in 2021 and continuing to assist our internal training efforts by preparing and presenting technical materials.  Congratulations Tina on your promotion!”

Derek Michell, CPA, CA, TEP

Partner

 

Congratulations Tina!

Tax Tips & Traps – 1st Quarter 2022 – Issue 137

Highlights:

Tax Tidbits
Small Business Air Quality Improvement Tax Credit: Could Your Business Benefit?
COVID-19 Business Supports: Targeted Measures
Falsified Employment Records: The Penalties Can be Large
Corporate Advertising and Promotion Expenses: CRA Increasing Reviews
Teachers and Early Childhood Educators: Expanded Access to Tax Credit
Canada Worker Lockdown Benefit (CWLB): Modified Support for Individuals
Old Age Security (OAS): Clawback Planning

Tax Tips and Traps 137, 2022 – 1st Quarter

Congratulations Brenda!

The Partners and staff of Graham Scott Enns LLP are pleased to announce the promotion of Brenda Dyson (Bell), CPA, CA to Senior Manager effective January 1, 2022!
 
Brenda joined Graham Scott Enns LLP as a co-op student in 2011 and has gained valuable experience throughout her years at GSE, serving clients in a variety of industries including large non-profit organizations, municipalities, owner-managed businesses, and assisting individuals with their personal tax return needs. Brenda has played a lead role in organizing our firm’s work schedule for our staff and leads our manager group meetings with respect to the weekly work allocation discussions.
 
Brenda is very interested in supporting firm members with training, mentoring and development opportunities including serving as the Chair of our firm’s PERT committee, which supports the practical experience requirements that our CPA students require to eventually attain their CPA designation. In addition to the PERT committee, Brenda is an active member of our training and professional development committee and our assurance committee.
 
Outside of her work with the firm, Brenda has previously been a marker for the Common Final Exam for aspiring CPAs and has worked to support many students in their goal of becoming a CPA.
 
“Amongst our management team, Brenda is a natural leader and works with clients and firm members to ensure client work is completed in a timely manner by our most qualified team members.”
Jim Frederick, CPA, CA
Partner
 
Congratulations to Brenda!
Photo of Brenda Bell

Congratulations Breanna!

Graham Scott Enns LLP is proud to make another Manager promotion announcement!

We would like to recognize the hard work and contributions made to the firm by Breanna Reid, CPA, CA which have earned her a promotion to Manager, effective January 1, 2022. Breanna started as a co-op in 2015 and has shown tremendous growth over the past 7 years, including obtaining her CPA, CA designation in 2019. Breanna is a strong leader, particularly in our audit and assurance service area, and is passionate about helping and mentoring our co-op students who are going through the CPA designation process.

“Breanna started with our firm as a co-op student and has grown in her role as a professional who is highly capable of serving our clients in a variety of industries including non-profit organizations, owner-managed companies and personal taxation. In addition to her client work, Breanna is a Mentor to junior staff members, provides support and guidance to current CPA students, and devotes time to the development of other firm members through training. Breanna is known for her helpful nature and is a welcome addition to the management team. Congratulations Breanna!”

Jennifer Buchanan, CPA, CA

Partner

Congratulations Breanna on this exciting opportunity and best of luck to you in your new role!

 

Congratulations Scott!

With the start of the New Year, we wanted to share some exciting news with everyone! Over the next few days, we would like to celebrate several staff promotions that will become effective in 2022.

The Partners and staff at Graham Scott Enns LLP would like to congratulate Scott Westelaken, CPA, CA on his well-earned promotion to Manager, effective January 1, 2022. Scott’s promotion to Manager is a direct result of all his years of hard work and strong mentorship relationships that he has developed with staff throughout his tenure at GSE LLP.  Scott started as a co-op student at GSE in 2015 and has shown great growth over the last 7 years, including successfully earning his CPA, CA designation in 2019. Scott takes great pride in training and guiding our junior staff and co-ops into becoming strong, well-rounded accountants. Scott’s humour and easy-going attitude have always made working with him an enjoyable experience.

“Scott takes a keen interest in both the work we are doing and just as importantly the people he is working alongside, both from our clients and our own GSE staff.  He is a strong mentor to our staff and we very much look forward to him continuing to broaden his opportunities to assist clients and staff as he moves into the manager role.”

Mike MacKinnon, CPA, CA

Partner

Congratulations to Scott on this exciting opportunity and best of luck you in your new role!