Tax Planning

Whether you are an employee, self-employed or shareholder of a corporation, you will have to pay taxes on the income earned. However, proper tax strategies can minimize the amount of taxes owed, and will often prevent from making mistakes that can result in double taxation, punitive taxation at the highest tax bracket or penalties and interest for non-compliance or late filing of required returns/forms. Hence it is very important to reach a tax specialist to check if there is potential for tax savings or deferral of tax payments. At our firm, we do not start any engagements if we don’t believe that our services can bring value to the customer. After the initial consultation we are usually able to tell if we think that we can help to implement a taxation plan that will minimize the overall amount of taxes owed.

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Some of the strategies that can be considered include:

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• Income splitting by hiring your partner or other relatives and paying reasonable compensation for the services they provide

• Careful selection of dates for major transactions. For instance, purchasing major capital assets at a certain date in order to take advantage of an accelerated tax deduction or deferring asset disposal until the next fiscal year

• Tax-efficient compensation – shareholders of corporations have multiple options to get paid. They can receive salaries from the corporation or get paid in the form of dividend. Depending on circumstances, one form may be more beneficial than the other.

• Taking loan from a corporation can be a good way to temporarily use the funds without immediate tax consequences, however certain things such us applicable interest rates and repayment requirements must be taken into consideration in order to avoid income inclusion of such amounts.

• There are also special elections that allow individuals to transfer property to businesses on tax-deferred basis, rules that eliminate taxation on disposal of personal residence, or capital gain exemptions that allow certain entrepreneurs to sell their businesses without paying taxes on the increased value of their corporations.

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All of the above strategies can result in massive tax savings, but they must be planned for and implemented in advance. In addition to tax planning, we are also offering tax-related assistance for events that have already occurred, and that need attention now. CRA audits or review cases often make business owners stressed and overwhelmed. This is mainly because these people do not know what to expect from such procedures and are not sure what kind of documents they should provide to the tax authority. Should you find yourself in this position it is important to contact a tax specialist immediately, so that there is enough time to analyze the situation and prepare sufficient response package.