Top 5 Year-End Tax Planning Tips You Shouldn’t Ignore!
Anyone may feel stressed out thinking about tax-filing deadline and a perfect tax strategy to avail the maximum benefit. Saving the hard-earned money and filing the taxes before the deadlines can put your business in a better position. Thus, we at the Accounting and Tax, a reputed tax consultant in Toronto, will discuss on few such tips which you should follow to manage your taxation issues efficiently.
PAY YOUR FAMILY MEMBERS TACTICALLY
If you have a private business, you need a remuneration strategy annually to effectively fix the amounts of salaries and dividends to be paid to yourself and your family members. For that, you need to consider factors such as each individual’s marginal tax rate and need for cash, the corporation’s tax rate and benefits of deferral. Since 2018, this process has become more complex due to the modifications in Tax On Split Income (TOSI) rules. Hence, the number of benefits of income splitting has been decreased.
Lend money to your spouse or a minor for making investments and then charge them interest following prescribed rates. Your child or spouse can write off interest as an expense and then show the interest as an income. This procedure can lower the number of tax liabilities.
KNOW ABOUT NEW RESTRICTION ON THE DEDUCTION OF SMALL BUSINESS
The corporate tax rate for registered businesses is reduced by Small Business Deduction or SBD. To understand the common tax advantages, you need to learn the small business limit which is currently $500,000 federally with all provinces and territories except for Manitoba (where it is $450,000, and will increase to $500,000 from January 1, 2019) and Saskatchewan (where the limit is $600,000). Lower corporate tax rate paves the way for greater deferral of tax than for business income taxed at the general corporate rate.
PURCHASE CAPITAL ASSETS
You need to purchase the capital assets for your business before the end of the fiscal year. This will help you to claim one-half the usual amount of tax depreciation, or capital cost allowance (CCA) to reduce your business’ income in this fiscal year. Even if your business faces loss in the current financial year, then also the purchased asset will allow a full year’s CCA claim next year.
MANAGE SALE OF ASSETS
Delay the sale of capital assets until the start of your next fiscal year for accrued gains. Your business can claim one additional year of CCA, there will be no inclusion of any recaptured CCA and capital gains in taxable income by one year.
The Accounting and Tax is such a Tax consultation service in Toronto who can guide you effectively to save your hard-earned money.
