The Frosty Blast
Thank you for being part of the Frosty Squirrel CPA newsletter mailing list.
The purpose of this newsletter to assist in keeping the readership informed of certain information that might have overwise passed them by, while making it an enjoyable read.
Accounting News
CPP 2.0 was introduced this year in addition to the usual increase to total wages subject to CPP, which increased by $1,900. CPP 2.0 will apply to wages from $68,501 to $73,200 at a lower rate of 4% compared to 5.95% on the previous, resulting in a total increase of $301.01 or 8% from 2023.
Why didn’t they just increase the total wages for CPP 1.0 to $71,660 instead of $68,500 and keep the calculation simple? We may never know.
Economic News
RBC is closing the deal with HSBC this week to purchase their Canadian operations. It will immediately convert all its branches, eliminating another competitor that might have rivalled the Big 5 banks. This is only a few years since Rogers’s purchase of Shaw was approved. As the companies in the economy shrink and merge with others, the economy is seemingly starting to stagnate. While Real GDP was technically up by 0.1% at the end of 2023, the population grew 1.1% during the third quarter of 2023, and the CPI(Consumer Price Index) rose by 3.4% in December 2023. Given these facts it seems GDP per Canadian is decreasing, and given that inflation is, at best, a guess, it is likely that Canada has been in a recession for the past year.
The stagnation of investments in the market, in both the start-up sector and capital investment, of many companies supports this. Choose wisely!
Animal Facts!
Squirrel ankles can rotate 1800
Squirrels have a unique adaptation in their ankles that allows them to excel in a feature that might not be immediately associated with their day-to-day activities: descending trees head-first. The ankle joints of squirrels are designed in such a way that their hind feet can rotate 180 degrees, enabling them to grip the trunk or branches with their claws while moving downwards. This ability is crucial for their survival, providing them with agility and speed to escape predators and navigate the complex three-dimensional environments of forests and urban areas with remarkable ease.
Snow Leopards are not leopards! Snow Tigers!
The Snow Leopard and the Leopard belong to the same genus, Panthera, which also includes lions, tigers, and jaguars. However, genetic analyses have shown that the Snow Leopard is more closely related to the Tiger (Panthera tigris) than it is to the Leopard. The lineage of Snow Leopards and Tigers diverged from the rest of the Panthera species earlier in their evolutionary history. However, they are cute enough that we can forgive their lies.
Squirrel Opinions
Open Banking in Canada 2024
As of March 2024, open banking in Canada is still in the early legislative stages, with Bill C-365 having its first reading in November 2023. Open banking aims to allow consumers to securely share their financial data among financial institutions and accredited third-party providers, enhancing competition and innovation in the financial sector.
Canada’s progress is slow compared to other regions, primarily due to its highly regulated and less competitive banking system. The article discusses the potential benefits, implementation challenges, and the critical need for a regulatory framework that ensures consumer privacy, security, and trust. You can read the full article on Frosty Squirrel’s website.
Understanding Different Tax Slips
The Frosty Squirrel CPA page on different tax slips provides an overview of various Canadian tax slips, including T4, T4A, T4E, T5018, and others, explaining their purposes and differences. These tax slips report income from various sources like employment, pensions, investments, and more.
The post also touches on the importance of accurately reporting income and deductions to the Canada Revenue Agency. It highlights the potential implications of receiving certain tax slips for contractors versus employees. You can read the full article on Frosty Squirrel’s website for detailed explanations of each tax slip and its specific use.
Why is cryptocurrency not treated as foreign currency?
Should Bitcoin, and possibly other cryptocurrencies, be treated as a currency?
Currently, the powers that be say no, not under any circumstances. It is to be classified as a long-term intangible asset, which can result in significant disclosures and restrictions of those assets, or if you are a crypto miner, then it is to be classified as inventory.
If a company is using cryptocurrency as a form of payment in their normal daily operations this is still to be treated as a intangible asset or inventory. The biggest issue with this, is that each transaction results in a capital gain or loss. Unlike with foreign currency which is held as cash, but is adjusted to match the functional (home) currency of the financial statements. This results in 1 adjustment annually per currency if no foreign currency is exchanged into the home currency during this period. There is also no impact on taxes.
Comparing the two treatments we will use the following facts; CAD home currency. 730 transactions of $100 in and $100 out everyday of the year. USD and USDC the comparative transactional currencies. $1000 opening and closing balances. No impact to the income statement as this would be held on the balance sheet. This would result in:
USD: 1 Transaction, adjusting $1000 closing balance to Canadian at year end. No tax consequences beyond removing unrealized foreign currency gains from the income statement.
USDC: 730 individual transactions to record the purchase and sale of an intangible asset converted to CAD each time. Each of those transactions would have a tax consequence as it is treated as buying and selling the asset for each transaction. Then 1 last transaction to adjust the USDC at the year end to what it is worth in the home currency because the valuation can be directly tied to an active market.
For those unaware USDC is supposed to be an exact 1:1 exchange with USD.
Frosty Goals
Goals from Frosty Squirrel CPA and those of employees who wish to share.
Frosty‘s goal is to onboard two new clients by the end of the fiscal quarter.
Adrian‘s Goal is to find three more beta readers for the first book of his novel series, Fragments of Phoenix and Raven.