1. Get the bank statement for the month you’re reconciling (PDF or paper).
2. Confirm you’re reconciling the correct bank account in QBO (e.g., “TD Chequing” vs “TD Savings”).
3. Make sure you’ve entered or imported all activity up to the statement end date:
   • Bank feed transactions have been Added/Matched (not left “For Review”), and/or
   • Any missing cheques, transfers, or fees are entered.

Step-by-step: How to reconcile in QBO

1) Open the Reconcile screen

1. Go to Accounting in the left menu.
2. Select Reconcile.
3. Choose the bank account you want to reconcile.

2) Enter the statement information (this is the critical part)

You will see fields for Ending balance and Ending date (and sometimes a starting balance that QBO fills in).

4. Ending date: Enter the statement end date (the last day on the statement period).
5. Ending balance: Enter the statement ending balance exactly as shown on the statement.
   • Use the balance labelled “Ending balance” / “Closing balance” on the statement.
   • Do not enter:
     • the “available balance”
     • today’s balance from online banking
     • the month’s total deposits/withdrawals
     • the opening balance
   • Enter it exactly, including the sign (almost always positive for a chequing account, unless the account is overdrawn).
6. If your statement shows a different format (rare, but it happens):
   • If it shows “Balance forward” at the end, treat that as the ending balance.
   • If it shows multiple balances, use the one tied to the statement end date.
7. Click Start reconciling.

3) Tick off transactions that cleared the bank

You’ll now see QBO lists of transactions (usually separated into money out and money in).

8. Using the statement, go line-by-line and check off each transaction in QBO that appears on the statement:
   • Match date (allow small timing differences), amount, and payee/description.
   • If the statement shows a transaction but QBO doesn’t:
     • Stop and add it (common ones: monthly bank fee, interest, NSF fee, cheques, transfers).
   • If QBO shows a transaction but it’s not on the statement:
     • Do not check it—it hasn’t cleared yet. Leave it for next month.

4) Watch the “Difference” amount

9. As you check items, QBO updates the Difference (or “Remaining”) amount.
10. Your goal is Difference = $0.00.

5) Finish the reconciliation

11. When the difference is $0.00, click Finish now (or Done).

If the difference is not zero (most common fixes)

Use this order—fastest to slowest:

1. Ending balance entered wrong
   • Re-check the statement ending balance and make sure you didn’t use “available” or “current” balance.
2. A transaction amount is entered incorrectly in QBO
   • Compare the statement amount to QBO. Even a $10.00 vs $100.00 error will throw it off.
3. A transaction is duplicated
   • You might have one from bank feed plus one manually entered.
4. A transaction is dated in the wrong period
   • Some items clear a few days later. If it’s not on the statement, leave it unchecked.
5. Beginning balance issue
   • If QBO says the beginning balance changed, don’t force it. It usually means something old was edited/deleted. You’ll need to find what changed (often by reviewing prior reconciliations or the reconciliation history).

What NOT to do

• Do not use “Reconcile by adding an adjustment” unless you have explicit instruction to do so. Adjustments hide the real problem and create messy books.
• Do not guess the ending balance or use online banking’s current balance.

Good habits (makes next month easy)

• Reconcile monthly, right after the statement arrives.
• Enter bank charges/interest monthly if the bank feed didn’t capture them.
• Avoid editing previously reconciled transactions unless you understand the impact.

What Is a Bank Reconciliation?

Bank reconciliation is the process of comparing your accounting records with your bank statement to ensure that all transactions are accurately recorded and reflected in both places. Discrepancies are investigated and adjusted to ensure the records are in alignment.

Key objectives:

• Confirm all cash transactions are recorded
• Identify bank errors or missed entries
• Detect unauthorized or duplicate transactions

Step-by-Step: Manual Bank Reconciliation

1. Obtain the Bank Statement
   • Download the most recent bank statement (monthly or more frequently).
2. Access Your General Ledger
   • Review the cash account or bank ledger in your accounting system.
3. Match Deposits
   • Verify each deposit on the bank statement against the corresponding deposits in the books. Record any missing deposits or investigate discrepancies.
4. Match Withdrawals
   • Review payments, withdrawals, and electronic transactions. Ensure that each item is accurately recorded in your books.
5. Identify Outstanding Transactions
   • Note any cheques issued but not yet cleared, or deposits in transit. These are timing differences and should be reconciled in future periods.
6. Adjust for Bank Charges or Interest
   • Record any service charges, NSF fees, or interest income that appear on the statement but are not yet in your records.
7. Resolve Discrepancies
   • Investigate any unexplained differences. These could be data entry errors, duplicate entries, or unauthorized transactions.
8. Finalize the Reconciliation
   • Once all differences are accounted for, confirm the adjusted book balance matches the bank balance. Prepare a reconciliation report for documentation.

Reconciliation in QuickBooks Online (QBO)

Steps in QBO:

1. Go to Banking > Reconcile.
2. Choose the bank account and enter the statement ending balance and statement ending date.
3. Match transactions from your bank statement to what’s in QBO.
4. Check off matched transactions; QBO displays the difference between the statement balance and the cleared balance.
5. Resolve discrepancies, then click Finish Now once the difference is $0.
6. Save or print the reconciliation report.

Tip: Ensure all bank feeds are current and categorized before starting.

Reconciliation in QuickBooks Desktop

Steps in Desktop:

1. Go to Banking > Reconcile.
2. Choose the account, input the ending balance and statement date, and optionally any service charges or interest.
3. On the Reconcile window, tick off matched transactions.
4. Investigate any uncleared transactions or mismatches.
5. When the difference is zero, click Reconcile Now.
6. Save or print the reconciliation report.

Tip: Use the Previous Reconciliation Report to review prior adjustments or uncleared items.

Reconciliation in Xero

Steps in Xero:

1. Navigate to Accounting > Bank Accounts, then select Reconcile on the appropriate account.
2. Xero automatically suggests matches for imported bank feed transactions.
3. Confirm matches or manually match them using the Find & Match tool.
4. For unmatched transactions, create manual entries or adjustments.
5. Use the Reconciliation Report to confirm balances and identify outstanding items.

Tip: Use cash coding to quickly reconcile high-volume low-value transactions.

Best Practices

• Reconcile monthly: At a minimum, complete reconciliations when you receive the bank statement.
• Use automation carefully: Bank feeds are helpful but not infallible. Always review transactions before approving.
• Document adjustments: Maintain clear notes on all manual adjustments for audit purposes.
• Review uncleared items: Routinely follow up on cheques or payments that remain outstanding.

Final Thoughts

A properly completed bank reconciliation assures that your financial records are accurate and up to date. Whether you’re using QuickBooks Online, QuickBooks Desktop, or Xero, the process is largely the same—compare, confirm, and correct.

Need help getting started with bank reconciliations or automating your bookkeeping? Contact us to discuss how we can support your business.

Links

• Reconcile in QuickBooks Online
• Reconcile in QuickBooks Desktop
• Reconciliations in Xero
• Preparing your bookkeeping for your accountant

We frequently see common issues that delay year-end work—missing reconciliations, incomplete documentation, and overlooked intercompany transactions. To streamline your engagement, we’ve created a practical, accountant-approved checklist for bookkeepers to complete before records are submitted.

This checklist is designed for owner-managed corporations and sole proprietors where bookkeeping is managed internally or by a third-party bookkeeper.

Why This Matters

A clean set of books avoids delays, prevents additional accounting fees, and reduces the risk of tax filing errors. It also helps your accountant provide more timely advice, especially in areas like dividends, tax planning, or adjusting journal entries.

Key Areas to Complete Before Submission

1. Reconcile All Accounts

• Ensure all financial accounts are up to date:
• Bank accounts, credit cards, and loans are reconciled to their year-end statements.
  • Extra entries are corrected, and unreconciled entries are documented
• Intercompany balances (loans, transfers, charges) are reviewed and reconciled across all related entities—this is a frequent point of concern.
• Suspense or clearing accounts (e.g., Payroll Payable, GST/HST Payable, Shareholder Loans) carry no unexplained balances.
• Accounts Receivable and Payable are aged, reviewed, and cleaned up where needed.

2. Gather Supporting Documentation

Have the following on hand:

3. Year-End Adjustments

You don’t need to finalize every entry—but flag these:

• Accruals for wages, subcontractors, bonuses, or interest.
• Prepaid expenses and deferred revenue.
• Inventory count and valuation method.
• Any declared dividends or shareholder draws.
• Adjustments for personal vs. business use of vehicles or home office (if applicable).

4. Corporate and Legal Records

• Verify legal name, address, and CRA Business Number.
• Confirm shareholder changes or structural changes during the year.
• Note any major events: new corporations, wind-ups, business sales, etc.

5. Final Review and Submission

• Provide a final Trial Balance and General Ledger export (Excel or backup file).
• Lock the books or flag the year-end in software to prevent changes.
• Notify your accountant of any unresolved items, timing issues, or known errors.

Want the Full Checklist?

We’ve put together a printable checklist you can download and use year after year.

Only the spouse with the lower income may claim unless the lower-income spouse is attending a post-secondary institution.

If your compensation is in the form of dividends from your private corporation, you cannot claim childcare expenses, even if you are the lower-income spouse. The compensation must be in the form of salary.

The child must be under 16 years or have a mental or physical impairment and be dependent on you.

Child Care Expenses and Supporting Documents

The table below outlines child care expenses, along with the supporting documents we will require to make the claim.

These changes will apply to many individuals and businesses that may not be aware these rules will apply, as well as the penalties and other consequences for noncompliance. The rules became effective in 2023, with the April 2, 2024 filing deadline.

Required reporting has been expanded to include situations where a trust acts as an agent for its beneficiaries (commonly known as a bare trust). In such cases, the trustee is listed as the legal owner, not the true beneficial owner.

Many parties involved in a bare trust arrangement may not realize they are and may not know the filing requirements.

Trust Filing Requirements After December 2023

There are three main changes under the new rules:

1. Unless certain conditions are met, all trusts will be required to file an annual T3 Return,
2. Trusts that are required to file a T3 Return, other than listed trusts, generally need to complete Schedule 15 in their annual T3 Return to report beneficial ownership information.
3. Bare trusts are subject to the new reporting rules (see below).

Registered plans are exempt from this legislative change.

A Trust can exist even if there is no written agreement.

Bare Trust Examples

The following is a list of potential bare trust arrangements. The CRA has not directly commented on some of these, and it is not clear how they will interpret the legislation:

Individuals

• Intrust accounts: A parent or grandparent holding an investment or bank account in trust for a child or grandchild, or
• Mortgages: A parent on the title of a child’s property (without the parent having beneficial ownership) to assist the child in obtaining a mortgage.

Business

• Family Home (asset protection): One spouse being on title of a house or asset, although the other spouse is at least a partial beneficial owner,
• Banking: A corporate bank account opened by the shareholders, with the corporation being the beneficial owner of the funds,
• Real Estate & Vehicles: A corporation being on title of an individual’s real estate, vehicle or other asset, and vice-versa,
• Cross-owned assets: Assets registered to one corporation but beneficially owned by a related corporation,
• Nominee Corporation: Use of a nominee corporation for real estate development purposes,
• Property Management: Holding operational bank accounts in trust for their clients, individuals managing properties for other corporations holding bank accounts for those other corporations
• Lawyer’s specific trust account: (while a lawyer’s general trust account would largely be carved out of the filing requirements, a specific trust account would not), or
• A partner of a partnership holds a bank account or asset for the benefit of all the other partners.

Estate Planning

• Real Estate: A child on the title of a parent’s home (without the child having beneficial ownership) for probate or estate planning purposes only.
• Investment Accounts: Adding an adult child to a bank or investment account for estate planning purposes.

Penalties

Failure to make the required filings and disclosures on time attracts penalties of $25 per day, to a maximum of $2,500, and further penalties on any unpaid taxes. New gross negligence penalties may also apply, being the greater of $2,500 and 5% of the highest total fair market value of the trust’s property at any time in the year.

Next Steps

1. Determine if a trust exists and review the bare trust information above.
2. Gather information on each reportable person or entity (name, address, date of birth and tax ID-SIB/BN/Trust # foreign tax ID).

Sources

• Tax Tips and Traps 145 2024- 1st Quarter
• CRA Who Should File a T3
• CRA New Trust Reporting Requirements
• David J. Rotfleisch’s – A Canadian tax lawyer’s guide to the In-Trust-For (ITF) Account

In this quarterly edition:

• Tax ticklers – Some points to consider
• Starting a business and not getting paid – Can I collect EI?
• Tips– Reporting Issues
• Real estate sales– Taxable or not?
• Contributions of goods and services to an NPO– Tax Implications
• Home accessibility renovation credit – Increase in Home Value?
• Working from home during COVID-19 – Home Office Expenses
• Business use of home  – Eligible Expenses
• Uncollectible accounts – Making Them Valuable

Download your copy of Tax Tips and Traps

A copy of this newsletter can be downloaded here.

It is a concise summary of the measures announced up to and included Wednesday April 9, 2020.

Discussed in the newsletter:

Filing deadline and payment due dates (see the table on Page 12)

Individuals

Staring on page 6:

• The special one-time GST/HST credit payments,
• Payment and filing deadlines for income taxes,
• The Canada Emergency Response benefit (CERB) and EI,
• Mortgage & debt support,
• Emergency loans for Canadians abroad, and
• Student loan relief measures.

Also see the table on page 10 and 11 for a summary of benefits.

Businesses

• The 10% Temporary Wage Subsidy (TWS)
• The 75% Canada Emergency Wage Subsidy (75% WS or CEWS)
• EI Work sharing program,
• Government backed interest free loans, and
• Tax payments and deferrals of payments.

Also see the table on page 10 for a summary of benefits.

Qualifying for the CEWS

To qualify for the CEWS, the business must be an eligible business with eligible employees a 30% or more drop in sales in March, April or May.

Eligible Employer – An eligible employer is a taxable corporation (i.e. pays taxes in Canada), individual, partnerships whose partners are eligible employers, not-for profits, and registered charities.

30 % Decrease in revenue – There are three reference periods to measure the 30% drop in revenue and covers payroll paid as follows:

1. Payroll Paid from March 15, 2020 to April 11, 2020 – Compare sales of March 2020 to March 2019,
2. Payroll Paid from April 12, 2020 to May 9, 2020 – Compare sales of April 2020 to April 2019, and
3. Payroll Paid from May 10, 2020 to June 6, 2020 – Compare sales of May 2020 to May 2019.

Eligible remuneration – Includes salary, wages and other pay but does not include severance, stock options and allowances.

Claiming owner-manager salary under this benefit should be done so with caution. It would be prudent to have already been on payroll with regular source deduction remittances prior to March 11, 2020.

Taxable – The subsidy received will be taxable income to the business.

Compliance and penalties – Businesses that have used the subsidy but that do not qualify may be required to repay any amounts and fraudulent claims may be subject to files, penalties or potentially imprisonment.

How to Apply

Applications may be made though CRA’s My Account for Business or via a web application through the CRA’s website.

CEWS Information

• Financial Post – Everything you need to know about the upgraded COVID-19 wage subsidy program
• Department of Finance – The Canada Emergency Wage Subsidy

Temporary Wage Subsidy (TWS)

The Government previously announced the Temporary Wage Subsidy (TWS) which was designed to help small and medium sized businesses with payroll. The TWS is a 10% subsidy whereby the business can reduce is payroll source deductions by 10% of payroll paid to a maximum of $1375 per employee and $25,000 per employer.

To qualify for the TWS, your business must be and individual, partnership, non-profit, registered charity or Canadian-controlled private corporation (CCPC), with an existing business number and payroll account on March 18, 2020 and have pay salary, wages, or bonuses to employees.

Eligible employees are an individuals who are employed in Canada. There does not appear to be any limit on owner-managers and if an owner-manager was already on payroll, there would be no reason to suggest the subsidy would not have been available.

The payroll paid must have occurred between March 18 and June 19 and the subsidy is self-claimed by reducing remittances of source deductions.

If you use a payroll service, please check with them directly to determine their procedures for taking advantage of this program.

Note, access to this program is not dependent on the CEWS and thus it is possible to qualify under both programs.

TWS More information:

• The Governments TWS – Frequently asked questions
• CPA Canada – Temporary wage subsidy: How it works

Moving a 401(k)

Moving a 401k to a Canadian RRSP differs slightly from the process for an IRA because the 401k is an employer sponsored plan and you must determine if the plan itself qualifies for the transfer. The tax treatment of moving your 401k to Canada depends on whether you were a resident of Canada at the time the contributions were made to the plan.

If You WERE A Resident When The Contributions Were Made

If you were a resident of Canada when your employer contributed to the plan, you will not be allowed to rollover the 401k to an RRSP. Although you can cash out your 401k, the lump-sum will be taxable in Canada. However, you can offset this by contributing to your RRSP, if you have RRSP contribution room available.

If You WERE NOT A Resident When The Contributions Were Made

A lump-sum payment from a 401k that are considered to be in the form of pension or superannuation attributed services rendered while you were NOT a resident of Canada may be transferred to an RRSP without affecting your RRSP contribution room.

The Conditions To Transfer The 401k

Transferring a 401k to an RRSP without affecting your RRSP contribution room is possible provided you meet the following conditions:

1. Lump-Sum Payments Only – The amount received from the 401k must be a lump-sum payment and not be part of a series of periodic payments.
2. Non-Resident Contributions – As outlined above, the payment must be the result of services rendered while you or your spouse or common law partner was not a resident of Canada.
3. Included In Taxable Income – You are required to report the gross amount (i.e. before U.S. withholding tax or the penalty tax) in your taxable income on Line 115.
4. Contribute By The Deadline – You must make a contribution to your RRSP for an amount up to the gross amount received within 60 days after the end of the tax year you received the lump-sum payment. This is done under s.60(j)(i) of the Income Tax Act and is reported on Line 240 of Schedule 7.

You should advise your RRSP plan provider that the contribution is a section 60(j)(i) contribution. However, the plan provider will typically issue a standard RRSP slip and there is special tax reporting required on your tax return to report the transfer properly.

Consider The Tax Implications

The transfer will have some tax consequences depending on your Canadian income, tax status in the United States and your age. A non-U.S. person will be subject to a 30% U.S. withholding tax and if you are under age 59.5 plus a 10% penalty tax. For Canadian tax purposes, the gross amount is included in your income and you deduct the amount contributed to your RRSP under s.60(j)(i). The 30% withholding tax may be claimed as a foreign tax credit but if you paid the 10% penalty tax, it cannot be claimed.

Moving An IRA?

An Individual Retirement Account (IRA) is very similar to a Canadian RRSP.  Contributions made to the account may be deducted from income in they year the contributions were made.  Income accumulates in the account free of tax and is taxed as income when withdrawn.  Withdrawals or collapse of the IRA before age 59-1/2 are also subject to the penalty taxes.

From a Canadian point of view a regular IRA can be rolled into an RRSP without affecting your RRSP contribution room.

The lump-sum payment must be included in your taxable income and you can make a contribution to your RRSP under s.60 of the Income Tax. Like the 401k, the IRA will be subject to U.S. withholding tax and potentially the penalty tax. The withholding tax may be claimed as a foreign tax credit.

Looking For Help

We are a Burlington Accounting firm that provides both U.S. and Canadian tax services. We can carefully analyze your specific situation to determine the best strategy to move your U.S. retirement accounts to Canada and any Canadian and U.S. filing obligations met. Give us a call today at 289-288-1206 to discuss your needs.

Why Have Joint Ownership?

Many people set-up joint accounts for a variety of reasons. For a married or common law couple, it could be for the day-to-day management of expenses. The account provides all parties equal access to the funds in the account to pay bills and manage the family’s affairs.

The account is also commonly used as a a way to ease the administration of an estate and reduce the probate fee (in Ontario the rate is 1.5% of the estate value).

The thought in most cases is that a parent will add a child to the account or title in the case of a home with the intention that the joint owner will distribute the assets equally to the other siblings or those named in the will. As is often the case, the surviving joint owner keeps the funds. However, the registration of joint ownership can have both negative tax and other consequences.

Tax Consequences of Joint Ownership

The transfer of property (investments, real estate, business asset etc.) to another person is considered a disposition of property at fair market value. In other words, the person transferring the property is considered to have sold the property at it’s fair market value. Any gain in value from it’s original cost will be considered a taxable gain and must be reported as so.

If the person receiving the property is your spouse, the gain is deferred but any income will remain taxable in your hands. This effect is due to the income attribution rules.

Other Non-Tax Consequences

Other non-tax considerations from transferring to joint ownership can have a number of unintended consequences. These can arise from family disputes, sibling rivalries or matters that you may never have considered. These include:

• Loss of Control: You may lose control over the property and decisions may no longer be made without the consent of the other party.
• Bankrupt Joint Owner: If one of the account holders becomes bankrupt the joint account will form part of the bankruptcy. You may find that you lose some of your assets to settle the other party’s debts.
• Sibling Rivalries: If the joint owner is a one child but not the others,  a conflict may arise particularly if the joint owner decides not to share the proceeds.
• Divorce: If the joint owner goes through a divorce, your property could be subject to the divorce proceedings.
• Principal Residence: If the joint owner has a home of their own, joint ownership may limit their ability to claim the full principal residence exemption.

Lastly, joint ownership can cause a change in cost base for one owner but not the other and the administrative burden.

The use of joint accounts is not as simple as it may appear particularly when used as part of one’s estate plan. A well constructed estate plan should be carefully documented and your wished are fully communicated to all family members concerned. Your will should be current and up to date and take into consideration recent changes in tax legislation.

Dean C. Paley, Professional Corporation, CPA are Burlington Accountants specializing in estate planning and estate administration. If you would like to discuss your estate plan, the care of survivors and the efficient transfer to your intended beneficiaries, please give us a call today at 289-288-1206 to discuss how we can help you with your estate plan.