Holding deposits

[Busy ECE mommy]

My accountant told me to claim it in the year it was given/cashed.

[babydom]

I was told to claim in the yr it's used. So that's what I do

[kindertime]

There are 2 types of accounting (that I know of.) One where you claim amounts the year you receive it; and the other is when you earn it. I claim when I received it. Parents pay me in advance for 2 weeks at a time. So if payday is Dec. 30, but they are paying for Jan 2-13, I claim in the previous year. I can't speak to deposits, that's completely illegal here, but I would guess if they gave you a deposit in Sept. and keep their spot and they come to daycare in Jan., then claim it for Sept. and give them the 2015 tax receipt.

[playfelt]

I have always been told it is to be claimed in the year that it is received. It is your income and in your possession and as a cheque it is dated immediately and cashed so you have the income and should be claiming it that year regardless of when care starts.

[Crayola kiddies]

^^^^exactly^^^^^

[Suzie_Homemaker]

I disagree ... All money you receive in 2015 goes on your 2015 taxes and therefore you issue a receipt for that money .... It doesn't matter when you use the money

This is wrong.

On CRA website, is guide for self employed completing form T2125 - which we use for business incomes. In this it clearly say "■ report your income in the fiscal period you earn it,
regardless of when you receive the income;"

So if you take deposit this year, and it being applied to 2015 fees, you report in 2015.
If you take deposit this year, and it applied to FINAL week of care, then you not report until financial year that person leave.

http://www.cra-arc.gc.ca/E/pub/tg/t4002/t4002-14e.pdf

[Lee-Bee]

I have always been told it is to be claimed in the year that it is received. It is your income and in your possession and as a cheque it is dated immediately and cashed so you have the income and should be claiming it that year regardless of when care starts.

While you received the money, technically since it is a deposit for the last weeks of care it is supposed to be set aside until those last weeks of care...so despite being in your possession it is not yet your income.

[Suzie_Homemaker]

You can give receipt for deposit, and they can claim expense in year they paid it, but we not have to declare income until earn it. So if you apply deposit to first week care, that is the year you add into income. If you apply deposit, last week of care, then add it into income for year they leave. This might me many years away.

Some give me deposit in Nov 2014 for Sept 2015 start. She is 10 month old and start this week. She will not go school until Sept 2019 so if still here when age out, 2019 is when I declare as income because apply to final week care.

[5 Little Monkeys]

Thanks Suzie! I thought that is what I read. I've been doing it wrong, hopefully won't cause an issue!

So just to clarify, if payment is Dec 25 for 2 weeks, than we should be claiming only until the 31st and the remainder the following year?

[BlueRose]

According to my tax lady: If you receive a deposit and spend it right away then you claim it for the year you got it. If you put the deposit in a bank account and don't touch it until the client leaves then you claim it in the year then client leaves. I always add a note to my year end receipt stating the deposit will be added once its used. I have a separate bank account just for deposits.