Talent Development Centre

Category Archives: IT Contracting

All Talent Development Centre posts for Canadian technology contractors relating to independent contracting.

Lifetime Capital Gains Exemption – Rules

Lifetime Capital Gains Exemption – Rules

This post by Shaun Hope first appeared on the CPA4IT Blog on July 23rd, 2019

As the owner of an active business corporation, you’ve probably heard about the lifetime capital gains exemption that can apply to the sale of qualifying private company shares. If you and your family members can claim this exemption when you sell the shares of your business, you could each realize substantial tax savings, providing that the shares you’re selling meet certain requirements.

Every individual is entitled to a lifetime “capital gains exemption” on qualifying small business shares (and farm and fishing property). This exemption, which is indexed for inflation annually, is limited to a lifetime amount of $848,252 for 2018 (and $866,912 for 2019). It’s important to note that you don’t have to claim the exemption all at once – you can carry forward any unused amount to use in the future.

To qualify for the exemption, three tests must be met at the time of disposition.

  • Small business corporation (SBC) test: All, or substantially all, of the company’s assets must be used in an active business carried on primarily in Canada. “All or substantially all” is generally considered to mean at least 90%, using fair market value. Only the company’s assets are considered in the criteria; debt and other liabilities have no impact. Assets not listed on the balance sheet are also included, such as goodwill and internally generated patents. The reference to “primarily in Canada” generally means at least 50%.
  • Holding period test: The disposed share must have been owned by the shareholder or a related person throughout the 24-month period prior to the disposition. This is an attempt to limit the CGE to longer-term investments rather than rewarding quick flips.
  • Basic asset test: Throughout the 24 months prior to the disposition, the corporation had to have been a Canadian-controlled private corporation and more than 50% of the company’s assets had to have been used in an active business carried on primarily in Canada.

For example:

You sell shares of a small business corporation in 2019 and make a $900,000 profit (also called capital gains). Without the LCGE, you would have to pay taxes on half of this amount, i.e., $450,000. However, seeing as the LCGE allows you to subtract $866,912 from your profits in 2019, you only pay taxes on ($900,000 – $866,912) x 50% = $16,544 rather than on $450,000.

Watch out for these pitfalls

  • The alternative minimum tax (AMT) can cause an unexpected tax liability in the year CGE is claimed. Generally, this can occur when a taxpayer crystallizes in a year of otherwise low income. While AMT is refundable, a refund is generated only when AMT is less than the regular tax calculation in the subsequent seven years.
  • A balance in a taxpayer’s cumulative net investment loss (CNIL) account can restrict access to the CGE. As the name implies, this is a cumulative calculation that considers all of an individual’s investment income and investment expenses incurred after 1987. If the calculation results in a net loss, the CNIL could impact a CGE claim.
  • An allowable business investment loss (ABIL) could impact a CGE claim. If an ABIL is realized in the year, whether or not it is claimed on the tax return, it is used in the CGE calculation.

If you are considering selling the shares in your active business corporation, please contact us to discuss what steps you should take to ensure that you benefit fully from the Lifetime Capital Gains Exemption.

Eating Lunch at the Office is Complicated — Where and How to Eat When You Bring Your Own Lunch

Eating Lunch at the Office is Complicated -- Where and How to Eat When You Bring Your Own Lunch

 

Eating lunch is an important part of any professional’s day. It is not only necessary to keep healthy but it guarantees you have enough energy to remain productive for the rest of the afternoon. According to a 2017 survey by Tork, it also increases how much a person loves their job, especially among Canadians.

Still, many people, including IT contractors, get sucked into a project and completely lose track of time. Before you know it, it’s almost time to go home and you haven’t eaten anything since breakfast.

One way around skipping lunch is to bring your own mid-day meal. When you do suddenly bring your head-up from your computer and realize it’s time to eat, you aren’t burdened with the time it takes to leave the office, order your food, wait for it to be ready, eat and come back. On top of the time you save, eating lunch at the office is often a healthier diet choice and will also save you money. It seems, nothing is simple today, though, and bringing your own lunch leaves you with more considerations.

Eating Lunch at Your Desk

Whether you work from a home office or a client site, there are multiple options where you might choose to eat it. A lunchroom, a cafeteria, or outside are all stress-free, neutral environments. However, many of us stick with eating at our desk so we can continue to work, ignoring the many studies and experts advising against it for both health and productivity reasons.

Continual sitting is bad for your health, whereas moving around, socializing and getting sunshine are all proven to be good for your mental and physical health. Moreover, productivity experts will tell you that multi-tasking does not increase productivity (but actually reduces it) and taking time to relax does increase your productivity. Even if you’re not “working” while eating at your desk, just being present is a pass for clients and colleagues to interrupt your break and take away from that important relaxation time. Independent contractors have another dilemma when they mix lunch breaks and work — how will you bill? Because you’re eating, your client is not getting 100% of your time and will not appreciate being asked to pay for it.

For more tips on this topic, check out this article about how IT contractors can take better breaks.

Etiquette of Eating in the Office

When you bring your own lunch to the office, should you choose to eat at your desk or somewhere else, there remains etiquette to be followed.  At a minimum, follow the same rules you were taught by your parents — don’t chew loudly, slurp your drinks, or eat food that falls on the floor. There are also some codes of conduct that are unique to office settings:

  • Don’t hog resources. It is inconsiderate to take up excessive amounts of fridge space and if your meal requires 10 minutes to heat up in the microwave, prepare it during off-peak hours.
  • Speaking of off-peak hours, if you do decide to eat at a time when most others are working, be respectful and minimize distractions. Be extra quiet while preparing, eating and cleaning up after yourself.
  • That’s right, you must clean up after yourself. That includes inside the microwave after an explosion or the fridge after a spill, to avoid messes from getting old and smelly.
  • Smells are a controversial debate around many offices. This Monster article advises you stick with plain foods with few spices and avoid the common offenders such as onion, garlic, tuna and sardines. However, in this Kitchn post, etiquette expert Kirsten Schofield says you should eat what you want. Everything smells bad to somebody so don’t fret too much.
  • In that same post from The Kitchn, Schofield also warns against judging or commenting on people’s food choices at any level. “It’s irrelevant, it’s mean, and you can rapidly get into class/religion/ethnicity/gender/medical history stuff and hit a professional third rail,” she says.

Are we over-thinking something as simple as eating lunch at work… maybe. But you can be certain that if we found this much information on the topic, clients, contractors and employees you work with will also find it relevant. What problems have you run into while eating lunch at the office?

5 Ways Independent IT Contractors Can Reduce Their Carbon Footprint

5 Ways Independent IT Contractors Can Reduce Their Carbon FootprintAs climate change continues to dominate headlines as a leading cause of natural disasters, climate irregularities, and other concerning trends, people around the world are taking note and doing what they can to help slow it down. If you believe climate change is man-made and want to continue doing your part to minimize the effects, then you are probably already working to reduce your carbon footprint, or at least thinking about it.

A person’s carbon footprint is a measurement of how much carbon dioxide is released into the atmosphere as a result of their own activities. By nature, IT contractors, and generally most people in the gig economy, have opportunities to significantly lower their carbon footprints. If you’re looking to do a little bit more, here are 5 ways an independent contractor can help the environment (you may find you’re already doing more than you realize):

1. Telecommute as Much as Possible

Riding a bike or public transportation are both responsible ways to lower a carbon footprint, but they are not always feasible depending on the distance between your home and client. Though your client may have some preferences about how much you’re at their site, independent contractors are not tied to specific office hours. Having a home office allows you minimize how much you’re in the car, only driving (and dealing with traffic) if you must be at the client’s building for important face-to-face meetings or to deal with items that cannot be taken offsite.

2. Schedule Meetings and Errands Efficiently

Of course, you can’t be a hermit and must leave the house some times. Planning efficiently will not only save you time but also reduce your carbon footprint with fewer trips. Try to coordinate recruiter interviews in the same area of town on the same day. If you must be in the client’s office, take care of other personal items while you’re in the area and avoid the trip on the weekend.

3. Ditch the Desktop Computer

Desktop computers certainly have their advantages, but they also require more energy to operate. Switching to a laptop, as well as using your cell phone when possible, minimizes the amount these larger power-suckers have to run. It’s also more convenient for you!

4. Avoid Paper Whenever Possible

We live in an electronic world and excessive use of paper is rarely necessary anymore. Rather than printing a document for somebody to review, could you email it or share it through the cloud? What about payments, invoicing and time tracking with your staffing agency? If any of that’s still happening by paper, ask how you can switch to electronic.

5. Watch What You Eat

Reducing paper waste is beneficial, but reducing all waste will have a greater impact on reducing your carbon footprint. Lunches at work are a major cause of unnecessary waste. If you bring your lunch, put it in re-usable containers instead of packaging that will end up in the garbage. If you prefer take-out, encourage your favourite restaurant to switch to more environmentally-friendly packaging. Some environmental enthusiasts also encourage ideas like “Meatless Mondays” which follow the concept that meat industries produce high amounts of carbon emissions.

There are a number of simple things everyone can do to help reduce their carbon footprint if they’re so inclined. How much or how little you decide to do is a personal decision. While it’s okay to encourage others to do their part, it’s also important to remember that a political discussion at the client’s office can have negative consequences on your contract. “Preaching” too much about what people should be doing may not be received well.

IT Contracting Trends for the Final Stretch of 2019

Making the switch from a full-time tech employee to an independent contractor is a nerve-racking experience. You wonder if you’re making the right decision in giving up a steady pay cheque and definite work so you can have the freedom and benefits that come with IT contracting. Whether you’re just beginning that journey or are a seasoned veteran, it’s helpful to understand the current trends. If not for your own peace of mind, it helps with career planning.

MBO Partners recently released their State of Independence in America and, not surprisingly, the results are quite positive. Although it only surveys independent contractors in the USA, because of the close proximity and similar business cultures, it is safe to assume we are seeing the same trends in Canada.

Some political or business groups claim that independent workers are only in their positions because they have to be and would prefer, as well as be better off with, a traditional full-time job. According to the research, though, most independent workers in the US are in their positions by choice and are doing well financially. In fact, 81% choose to be full-time independent workers, up from 66% in 2012. There are also another 15 million occasional or side hustle independents in the US. In addition, MBO Partners’ Financial Well Being of Independent Workers explains that independent workers report similar levels of financial well-being to those with traditional jobs, with 77% reporting they are doing okay or living comfortably, compared to 78% of traditional workers.

With these numbers, it is no surprise that overall satisfaction as an independent is increasing. As shown in the chart below, in 2011, only 32% of independent workers in the US reported feeling more secure working independently than at a traditional job. That number rose to 53% this year. Furthermore, the report found that 82% are happier working on their own and 69% believe it has been better on their health.

Percent of Full-Time Independent Workers Who Report Feeling More Secure Working Independently
MBO Partners – Financial Well Being of Independent Workers

More Specifically: IT Contracting in Canada

We know that independent contracting in general can be a great career choice. Specifically, IT contractors in Canada can also take advantage of lucrative opportunities and interesting work, as proven by ITWorld Canada’s CanadianCIO Census 2019.

The report suggests new hiring could be cooling as only 37% of CIOs are planning on increasing headcount, while 44% are keeping it stable, 12% are in a hiring freeze and 4% plan to downsize their IT departments. An IT contractor might interpret this as meaning that new opportunities are on the rise. Because new employees are not being hired, when skills are inevitably needed for a project, the IT contractor gets the call.

Overall, CIOs says that the top skills they’re hiring for today are Big Data/BI/Analytics, Business Analysis and Enterprise Application Development. Of special note for IT contractors, their most difficult skills to contract or outsource (and most in-demand) are AI, Data Analytics, IoT, Mobile Development and Cloud Services.

How Emotional Intelligence Makes You a Better IT Contractor

How Emotional Intelligence Makes You a Better IT Contractor

Emotional Intelligence (often referred to as EI or EQ) can be a fluffy term and not always simple to grasp. It refers to a person’s capacity to both identify and regulate emotions in themselves or others. Those with high EI are able to recognize, understand, manage and reason with emotions, which they can then leverage to manage their own behaviour and relationships. As Dr. Travis Bradberry has put it “Emotional intelligence is the ‘something’ in each of us that is a bit intangible. It affects how we manage behavior, navigate social complexities, and make personal decisions to achieve positive results.”

There is no shortage of documentation and articles advocating the importance of emotional intelligence in all areas of life, so we thought we’d investigate the benefits an IT contractor can reap with enhanced EI, specifically in the job search and while working.

How Emotional Intelligence Will Improve Your Job Search

Emotional intelligence becomes truly important for the IT contractor during the interview stage of your job search. Your skills and experience will help you sail through the technical evaluation, but EI is the piece that will help you build a connection with recruiters and non-technical hiring managers. These are the folks who, as much as they understand the value of your ability to do the job, are also ensuring you will fit into the team and work well with others.

Here are a few ways you can answer questions and describe past experiences in a job interview to highlight your emotional intelligence:

  • Show your ability to manage negative emotions by moving past bad experiences on past contracts. That means refraining from talking badly about previous clients or situations and focusing on the positive aspects.
  • Truly understand your strengths and weaknesses. Know how to communicate the areas you where excel and humbly accept the skills where you fall short.
  • Provide examples of times you accepted feedback and criticism and used it as a challenge to improve yourself.
  • Accept responsibility for areas that went wrong on a previous project without placing blame on other team members. Explain how you learned from your mistakes.
  • Take time to learn more about your interviewer and the position. Share their enthusiasm in what they do so you can build a connection with them.

How Emotional Intelligence Will Make You a Better IT Contractor

In 2012, a CareerBuilder survey showed that 71% of employers value emotional intelligence over IQ. Employers would rather hire people who have high EI than who are smart. Specifically, emotional intelligence is increasingly important for technology professionals for a myriad of reasons, some of them being:

  • It helps you get along with others. Tech workers regularly interact with non-technical people. The need to connect on a level where you can explain various concepts is crucial and emotional intelligence makes it happen.
  • It gives you job security. More and more we hear about how artificial intelligence and automation will steal our jobs. For the time being, these technologies still lack the human connection, including emotional intelligence.
  • It improves your decision making. By understanding others, and more importantly, yourself, you can push past biases and understand the emotions driving a situation to make decisions that are subjective and will be accepted by others.
  • It gets you through conflict. Your job as an IT contractor is to be the expert in an area. Naturally, with that turn comes conflict within your team and with your client’s employees. Emotional intelligence forms a sought-after leadership trait to work through conflict calmly and find solutions that work for everyone.
  • It means you can work well under pressure. The ability to control your emotions, listen and cooperate with others, all while understanding their emotions means you will be a prime candidate to lead a team through crisis and short timelines.

The great thing about EQ versus IQ is that emotional intelligence can be developed purposefully. There are a number of books and resources available that are worth researching if you’re seriously interested in improving yours. To get started, experts recommend reducing your stress levels as stress is known to mask your ability to tap into your emotions. From there, take some time to recognize your own emotions and learn more about your strengths and weaknesses, as well as read social cues to read into others’ nonverbal communications.

Breaking the Stigma of Independent Contracting and the Gig Economy

The “Gig Economy” is a prevalent buzzword and drastically grew in popularity as services like Uber became mainstream, but IT Contractors know it is nothing new.

While industry experts, economists and business experts frequently laud the trend, speaking of the benefits it brings to companies, economies and individuals, there continues to be a stigma to being an independent contractor or gigger. Some professionals are hesitant to accept a temporary or contract job, feeling that it’s a mere sign they’re unable to find full-time work and that this is a last resort. They believe it will lead to a dead-end job. It is also common to hear critics claim that participants in the gig economy are not there by choice and, in fact, are being exploited by greedy employers and staffing agencies.

Research proves that most contract professionals are in their positions by choice and are definitely succeeding in their careers. A 2016 McKinsey & Company study found that 70% of gig workers are participating in the gig economy because they want to. A little more than half of them are casual earners, who also have other full-time jobs, where others are free agents who are using it as their primary income.

Breaking the Stigma of Independent Contracting and the Gig Economy

The study found that those 70% are also experiencing strong job satisfaction. The MBO Partners State of Independence in America 2019 further backed the notion that contractors enjoy their career choice, stating that more than half of independent workers feel more financially secure than in their traditional jobs, and 70% plan to continue their current path.

In a world with so much criticism and stigma, why do IT professionals choose to be independent contractors and what makes those 70% never want to turn back?

  1. There are Plenty of Job Opportunities, Especially in IT. A combination of fast-paced technology projects that require specializations, a growing IT skills gap around the world, plus a desire to cut costs and headaches with fewer full-time employers are all leading organizations to raise the amount of IT contractors they use.
  2. The Flexibility is Insane. The freedom and flexibility that come with contracting is nothing that can be experienced as a full-time employee. There are some restrictions based on client needs, but overall, IT contractors get to choose where they work, when they work, and what kind of projects they take on.
  3. It’s a Break from the “9 to 5”. This goes beyond flexibility. For some people, working in that same environment all day every day is long, stale and depressing. Independent contractors can break things up, deciding to work for another client on certain days. Plus, they can eliminate awkward employer-mandated team-building workshops.
  4. Their Entrepreneur Spirit Can Shine. Some individuals are regular entrepreneurs. They want to oversee their own business, take on their own marketing and grow into something bigger. Independent contracting is the perfect steppingstone to start that journey.

Independent contracting, the gig economy and temp work (whatever you want to call it) is not for everyone. As noted earlier, 30% of people are stuck there and would prefer a full-time job. Being independent comes with stress and uncertainty. A permanent position is also the ideal place to build experience and skills that allow you to be a specialized contractor.

If you’re considering becoming an independent contractor but are hesitating, what’s stopping you? If you’re already there, would you ever go back? If you have gone back, why did you? We’d love to learn where you are in your journey and help you through your hesitations.

20 Simple (and mostly free) Ways to Brighten Someone’s Day

20 Simple (and mostly free) Ways to Brighten Someone's DayWe’ve all had terrible days. We’ve also experienced the slightest gesture from somebody else that turned everything around. How many people do you interact with during your workday? Clients, their employees, other IT contractors, recruiters, the list goes on. Wouldn’t it be great if you were that person who turned around somebody else’s terrible day?

Many IT contractors are fortunate to interact with a variety of people, giving you more opportunities to brighten a day, and it doesn’t have to be grand like buying them lunch or delivering a speech filled with compliments. Many quick actions may seem small but, to the person on the receiving end, they are exactly what they needed to push them back to the bright side.

Consider trying any of these, at least once per day:

  1. Smile
  2. Help a busy colleague
  3. Compliment a teammate on their work
  4. Hold the door for somebody
  5. Bake (or bring donuts) for your client’s office
  6. Wish a nice day to a stranger in the elevator
  7. Lend your umbrella (or keep a spare one on-hand for people who forget)
  8. Ask someone about their children/pet/family
  9. Follow-up on a story they told a few days ago
  10. Fill the kettle in the office kitchen
  11. Introduce yourself to the contractor who’s new to the office
  12. Talk to the staffing agency’s receptionist when you arrive for an interview
  13. Send a hand-written thank you note
  14. Reach out to an old colleague just because
  15. Address someone by their name (studies have proven that a person’s own name is the sweetest sound they’ll here)
  16. Show your appreciation for the little things people do
  17. Invite someone you don’t know well to join you for lunch or drinks
  18. Actually listen when others speak
  19. Let someone get in line ahead of you
  20. Be nice and use your manners (it’s amazing how much these are missed in a busy world)

Doing little things to brighten somebody’s day will not only make them happier, but you’ll feel better about yourself as well. And the added bonus, they will remember you in a positive light, and that could come in very handy during your next job search.

The TRUTH About Remote Work (from a Programmer)

In an age where everything can be delivered to your doorstep or done at more, more and more companies are allowing workers to work remotely. The dream, right? Maybe not.

In this video by programmer Andy Sterkowitz, which he recorded while working remotely in Playa Del Carmen, he explains the obvious benefits but as well the challenges that come from working remotely.

Swearing at Work? What’s the Big @#$%* Deal?

Swearing at Work? What's the Big @#$%* Deal?

Do you curse? Do you swear when you’re mad, use profanity when chatting with friends or drop the odd f-bomb just because? Most people blurt out some sort of foul language occasionally and that’s ok… most of the time. There’s nothing wrong with swearing in a private setting or in a social atmosphere with the right friends, but where do you draw the line?

There are often questions about whether or not profanity is appropriate in professional settings, specifically the workplace. Given those questions, it’s no surprise that there have been a number of studies researching the effects of cursing, and the results differ:

  • A 2012 CareerBuilder study found that 64% of employers think less of an employee who regularly uses curse words and 57% would be less likely to promote that person. On the other side of the coin, 51% of employees said they swear in the office and half of them do so in front of their boss.
  • Another study by researchers at the University of East Anglia in Great Britain revealed that swearing at work can be beneficial because it enables the development of personal relationships within a team. It also acts as a stress relief which has direct effects on health.
  • Wrike also took a look at the perceptions of swearing at work. In 2016, their research discovered that while more than half of respondents swear, 41% found it was too casual and unprofessional, yet 33% would not consider working in an organization where swearing is strictly banned.

It’s clear that there are risks to spicing up your vocabulary in a professional setting but the choice is ultimately yours. Before you get too wild, though, there are some considerations if you want to land an IT contract and keep it:

  • The organization’s culture. As an independent contractor you are your own boss, but it is still mandatory to respect the policies and culture of your clients while on site and interacting with their employees. If the environment is not one that accepts swearing, then you should also choose to set it aside.
  • The context. Swearing can be linked to insults and bullying which must be eliminated from the behaviour of any ethical IT consultant. However, depending on the context of how words are used, it can enhance a message, be encouraging, or lighten the mood. Your job is to consider the context before opening your mouth.
  • The situation. Swearing should be reserved for casual settings around people with whom you have a good relationship. A job interview with a recruiter you just met or a serious client meeting with senior executives you don’t know are not the place to throw in your fancy adjectives.
  • The audience. As noted in the previous point, it’s important to get to know the people around you before becoming too liberal with your potty mouth. But just because you know them does not give you carte blanche. Respect those who prefer a clean conversation. If you’re uncertain of their style, err on the side of caution.
  • The medium. A good rule of thumb is to never write anything that can be taken out of context and used against you. Inappropriate language tops that list. Social media, email and even instant messaging can all come back to bite you in the… , so it’s encouraged not to type any curse words at all.

While we don’t need to provide examples, there is a scale where some words are more accepted than others, while other words should never be muttered. Similarly, because everybody has different cultures, backgrounds and experiences, some words are perceived to be worse by some than they are to others. It is up to you to distinguish and judge what you can say. If you are ever unsure, then its best you find other ways to spice up that conversation and leave the swearing for when you get home.

“Having a Great Week Does Not Start on Monday… It Starts Sunday Night!”

Sunday night. A night full of great weekend memories (or regret) and next week blues. Everyone’s heart drops at the reminder that in 12 hours they will be in their car, on the bus or on the train commuting to their office. Even if you are going to your dream job, it’s human nature to feel a bit reluctant to be a slave to the office hours.

Things might be stacked against you but if you are able to channel your productivity, there are 5 simple things you can — and should do — every Sunday night to make sure that you start your week on the right foot. Just watch this video from The Art of Improvement.