Holding deposits

[Suzie_Homemaker]

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?

Yes. This what I do.

My client pay bi-week in advance. Fees paid on Monday 28th Dec cover until Friday 8th Jan. Tax receipt for 2015 will include 28th-31st fee and rest apply to 2016 receipt.

[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.

[babydom]

I do what suzie does. Claim the deposit in the yr when it is used and claim money up to dec 31 the rest goes in the following yr

[5 Little Monkeys]

I'm going to have to change my bookkeeping a bit to keep better track of the deposit and the Dec/Jan payments but I'd rather do that than deal with stress if I get audited and know that they would find mistakes!

[Suzie_Homemaker]

I'm going to have to change my bookkeeping a bit to keep better track of the deposit and the Dec/Jan payments but I'd rather do that than deal with stress if I get audited and know that they would find mistakes!

I have big receipt book. Think it came from Staples. It has security receipt so make copy for me as I write receipt out. Has over 100 receipts in book so using same one I started with.

When I get deposit, I write "Non refundable - Deposit to hold place. Start Date no later than (put date). Applied to final week of care". I have little page marker sticker for pages with deposit receipt.

I use same book for year end receipt.

When someone leaving, they just pay difference of current fees and deposit paid for last week of care.

I then use book for my income at tax time. And if someone left, when I add deposit amount from book mark page to income, I remove book mar sticker. That way I know page with sticker still have income for declaring.

[Ottawaroses]

Thanks for all your responses. Turns out I may not have to worry after all about this family starting care in Jan. We had been e-mailing back and forth with them anxious about having an interview for a spot in my daycare for Jan. This is why I wanted some heads up information about deposits. They have not responded to my last e-mail so not sure what's up.

[5 Little Monkeys]

I have big receipt book. Think it came from Staples. It has security receipt so make copy for me as I write receipt out. Has over 100 receipts in book so using same one I started with.

When I get deposit, I write "Non refundable - Deposit to hold place. Start Date no later than (put date). Applied to final week of care". I have little page marker sticker for pages with deposit receipt.

I use same book for year end receipt.

When someone leaving, they just pay difference of current fees and deposit paid for last week of care.

I then use book for my income at tax time. And if someone left, when I add deposit amount from book mark page to income, I remove book mar sticker. That way I know page with sticker still have income for declaring.

Thanks!! I have the same book it sounds like. I have a really organized way of doing my receipts but at year end it all (receipts, payment sheets for the year) goes in my tax file and that big envelope bag goes out to the garage for storage. I will just make a note in their file about the deposit from now on and that way I'll know quickly when and how much they paid and if receipt was given without having to go I to the garage lol. As for the dec/jan payments, I will just split that payment on their payment sheet (right now I just mark it all as dec and than put into my tax file)

[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?

[kindertime]

I was thinking about this today... if this money is a deposit, a "holding fee," then isn't the "holding" of the space earning it? I understand that you may use this money to pay for the child's last days of daycare, (i.e. their last 2 weeks) but if you call it a "holding fee," it is a fee for holding the space.

The other thing you should know, the people who work for the CRA are not obligated to give you the correct information. Call them today with this question and Beatrice will give you one answer and tomorrow George will give you a different answer. They are interpretting the rules like everyone else.

The CBC story Feb, 2015

http://www.cbc.ca/news/politics/reve...port-1.2946998