10 tax tips for new corporation owners in Canada
New beginning is something that must be handled with care. Hence, the ones who have started new corporation in Canada must take some points into consideration.
Some of the important tips are as follows:
Keep track of all the transactions
An updated file should be maintained where all the updates regarding transactions made must be kept. Keep a separate file with articles of incorporation, and other documents related to the foundation of the company. Any tax consultant in Toronto would first suggest you to do so!
Getting an HST No. registered is a must
Keep in mind that you usually have more expenses than revenues in these first months of operation. This registration is mainly because of this factor.
Choose your Fiscal Year End wisely
This is a very important factor that needs to be considered. Tax due is to be mandatorily paid three months after the year-end for Small Private Canadian Corporation. Therefore, it is very important to make choices regarding your fiscal year end very carefully.
Think twice before leasing/buying/spending in order to reduce tax
Always remember that the maximum cost to be considered by the CRA for write-off is 30,000. Corporate Tax consultants in Toronto suggests that spending recklessly in order to reduce tax is definitely not a wise decision.
Be cautious while using business account
As per CRA’s point of view, any deposit to the bank account shall be treated as income, unless it can be proven otherwise. So, handle your business account with utmost care.
Keep shareholder account accurate
This area draws special attention of tax collectors as most tax avoidance cases involve withdrawing funds without withholding tax, as it is in case of regular payroll.
Wealth should not be included in tax and legal liabilities
Limited liability offered by corporate structure has also its own limitations from tax perspective. Wealth should always be kept away from tax liabilities to be on the safe side.
Deduct medical insurance
Corporation shareholders can’t deduct the cost of medical insurance paid by their Corporation, if they own or are directly related to a 2% or greater stockholder. But can deduct 100% of the cost of medical insurance on their personal tax return.
Contribute to your retirement plans
Money put into retirement accounts is not typically taxed until you withdraw it. So, to save money this year, put as much as you can into a retirement plan.
Be sure of the health expenses and tax deductions
The Canada Revenue Agency has a particular list of health care expenses that are tax deductible. This should be undoubtedly kept in mind. Common health expenses you can claim include dental visits, laser eye surgery and organ transplants etc. The cost of any of these health care expenses that appears on the CRA’s list can be claimed on your tax return.
