Holding deposits

[Suzie_Homemaker]

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.

I make sure I comply with CRA rules. Tax lady is only human and can make mistake. Since it CRA who can audit, penalize, fine, it their guide I stick to and if person give advice conflict with CRA rule, I call CRA and double check.

CRA say clearly it declared year it earned, that what I stick to. Not worth risk if non CRA professional say different since CRA audit on their rules not tax lady belief.

[BlueRose]

I make sure I comply with CRA rules. Tax lady is only human and can make mistake. Since it CRA who can audit, penalize, fine, it their guide I stick to and if person give advice conflict with CRA rule, I call CRA and double check.

CRA say clearly it declared year it earned, that what I stick to. Not worth risk if non CRA professional say different since CRA audit on their rules not tax lady belief.

My tax lady specializes in home daycare. She said that there is a difference between earning and receiving a deposit. The deposit if not used is not earned it is on hold. A deposit that sits in the bank until used is on hold and not earned until used. This is why it isn't to be claimed until it is used. But if you spend it on whatever as soon as you get it it is classified as earned and it is not on hold.

[Suzie_Homemaker]

My tax lady specializes in home daycare. She said that there is a difference between earning and receiving a deposit. The deposit if not used is not earned it is on hold. A deposit that sits in the bank until used is on hold and not earned until used. This is why it isn't to be claimed until it is used. But if you spend it on whatever as soon as you get it it is classified as earned and it is not on hold.

I understanding your view but CRA say "report your income in the fiscal period you earn it, regardless of when you receive the income;".

Although your tax lady who specializes in dayhome feel there difference, CRA is clear it want income reported when earned not when received, and not based on if you spent it or didn't.

If CRA audit me, they be using their tax rules, not your lady's, so I will continue go by CRA rules, to know that if audited, I done what should, not what someone else think I should. If your lady is mistaken, who pays for error if audited? You or her?