Tax Time
Having last weekend lightened my desk by a couple of kilos of pending paperwork, today's fun activity was doing taxes. I'll be away on vacation for the last week of April so I want to get all of this stuff out of the way now.
One of the things I was looking forward to when I went back to salaried employment was simpler taxes, and while it is simpler now than when I was running the business, the stock options and share purchase plan provided by my employer still ensure sufficient complexity that it took me the entire afternoon to get it all sorted out. Not that I'm complaining: all those little bells and whistles combined to add another 30% on top of my base salary last year. That's well worth a couple of extra hours of paperwork every April.
The feds screwed me up a bit this year by changing the rules on how the share purchase plan works. What happens is that I put money into a pool. At the end of every March and September the company takes that money and buys me shares at a discounted price. I then sell the shares and pocket the difference. The discount effectively grows as the company's stock price rises. Since the price has been rather high for the past year, it's been a pretty sweet deal.
Up until this year, it was up to me to pay the taxes on that extra income when my yearly taxes were due. The way I would handle that was to use the proceeds from the March sale to pay the taxes for the preceding year. But starting this year Revenue Canada has decreed that the company must withhold taxes at the time the shares are purchased. This means that the March sale, which I was expecting to use to pay my 2010 taxes, will be about $7,000 less than I was expecting. Grrr. It's not so much that I object to the rule change itself, but they could have at least phased it in over a period of time to allow people like me to synch up our finances.
The good news is that my taxes owing are about $7,000 less than I had anticipated, so it all balances out. (I hadn't taken into account that options are taxed more lightly than the stock purchase plan shares.)
Now I just have to get this high-priority project at work in the can before my flight leaves on the 23rd. I'm currently about 3 days behind schedule, which means that I have to work tomorrow and all of next weekend to get caught up. I'm really going to need a vacation after that.
One of the things I was looking forward to when I went back to salaried employment was simpler taxes, and while it is simpler now than when I was running the business, the stock options and share purchase plan provided by my employer still ensure sufficient complexity that it took me the entire afternoon to get it all sorted out. Not that I'm complaining: all those little bells and whistles combined to add another 30% on top of my base salary last year. That's well worth a couple of extra hours of paperwork every April.
The feds screwed me up a bit this year by changing the rules on how the share purchase plan works. What happens is that I put money into a pool. At the end of every March and September the company takes that money and buys me shares at a discounted price. I then sell the shares and pocket the difference. The discount effectively grows as the company's stock price rises. Since the price has been rather high for the past year, it's been a pretty sweet deal.
Up until this year, it was up to me to pay the taxes on that extra income when my yearly taxes were due. The way I would handle that was to use the proceeds from the March sale to pay the taxes for the preceding year. But starting this year Revenue Canada has decreed that the company must withhold taxes at the time the shares are purchased. This means that the March sale, which I was expecting to use to pay my 2010 taxes, will be about $7,000 less than I was expecting. Grrr. It's not so much that I object to the rule change itself, but they could have at least phased it in over a period of time to allow people like me to synch up our finances.
The good news is that my taxes owing are about $7,000 less than I had anticipated, so it all balances out. (I hadn't taken into account that options are taxed more lightly than the stock purchase plan shares.)
Now I just have to get this high-priority project at work in the can before my flight leaves on the 23rd. I'm currently about 3 days behind schedule, which means that I have to work tomorrow and all of next weekend to get caught up. I'm really going to need a vacation after that.