The Future of Accounting is Mind Blowing & Interest Deductibility on Shareholder Loan

Scott Zandbergen, Head of Product at Intuit, also a real estate investor showcased all the exciting upcoming features of QBO.

I attended Quickbooks Connect 2017 in Toronto last week.  It was the first year that I attended. I got to speak at one of their events, and I was completely blown away from the value I got out of it.

First and foremost, thanks to my accounting coach, Jeff Borchswa, I got to share my marketing journey with about 100 accountants and bookkeepers.

I was the least experienced person compared to the other three panelists. Very humbling indeed.

I had fun sharing the tips and tricks I used to build up my audience and how having a niche makes it so much more efficient and effective for my work.

And of course, I was completely blown away by the Artificial Intelligence that is implemented in the Quickbooks Online and where the future is taking us.

If you are an iPhone user, you would be familiar with Siri on your phone. You essentially press a button on your phone, ask Siri a question and she will research it and report back.

There’s something similar happening in the accounting world as well!

Soon, likely sometime in 2018, we could click a button and ask Quickbooks where I spent my money last month.  The breakdown would be automatically show you’re expenses.

Hanging out with my hero, Jeff Borschowa, at the conference. Thanks to him, I got to share my niche marketing with 100 accountants.

You can ask the Quickbooks app, how much in taxes you owe and it will tell you the exact amount.

You can ask Quickbooks if it loves you, it will respond too! 😉

You can pull out the phone, get your information right at your finger tip without calling your own accounting department or your bookkeeper to get all the information.

That *IS* BIG!

I am not a spokesperson for Quickbooks, for the record.  

It was so bad that a couple years ago, when my client, Scott Zandbergen, some big shot working for QBO, told me that he’s using QBO for his online bookkeeping, I had a disgusted look on my face.  Haha!

I *reluctantly* worked with his QB Online file for the past couple of years.

It is truly what the future can hold for us that really blows my mind away.  

QBO on its own isn’t the greatest software to work with.  But it is the hub that links a lot of the apps that I use together.

I am going to setup my tenants on an automatic collection in the future.  It is $1 per transaction.  

I am also going to setup payment system. With a click of a button, I can make payments to different vendors.

I am also going to use another payroll app for my company’s payroll.  It’s free from 0 to 20 employees!

And they are all synced with my bookkeeping software.  😊

Talking about systemized your rental operations and small business to simplify your life!

Hopefully, with the right team of people, I can host some webinars to go through these apps with all of you in the future (after I test out the product first)!

Now, onto this week’s topic.  

Many real estate investors and small business owners borrow money to invest in their business to build their rental portfolio.

More often than not, they use their existing home equity line of credit to make an interest-free loan to the corporation for running the business and buying properties.

The taxpayer is NOT earning any interest income from this loan.  

To qualify for interest deduction, the money borrowed must be used for the purpose of investment (direct use test).  

Can you deduct the interest on the line of credit personally when the shareholder loan is not interest bearing?

CRA didn’t think so. The taxpayer disagreed claiming that the interest free shareholder loan was to earn dividend income from the corporation.  A judge agreed with the taxpayer and allowed the deduction.

If you are making an interest free loan to your fully owned corporation without charging anything back in return, chances are, you can still claim the interest in your personal return!

Until next time, Happy Canadian Real Estate Investing.

Cherry Chan, CPA, CA

Your Real Estate Accountant

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