Corporate Tax Planning
Let’s face it, paying taxes is probably the least enjoyable thing you can do with your money. Corporate taxation in Canada is very complex and only growing in complexity as time goes on. We stay up to date on changes made every year to help you navigate every tax update and change effectively.
Our tax planning process is rigorous and designed to discover any potential efficiencies that are available. Over the years, we have identified tens of thousands of dollars of potential savings for many different companies. While we can’t guarantee the same will be true for your business, we take pride in finding every opportunity possible for savings.
How do you want your business to grow 1, 5, 10 years or more in the future? Having a smart financial plan gives you a clear sense of what path to take.
Here are some common mistakes we see in corporate tax planning we can help resolve:
1. Zero Consideration of Salary Payments vs. Dividend Payments
- Dividends don’t include many important benefits (i.e. CPP, RRSP’s).
- The rules for how much you can pay to a spouse are very different depending on if you’re paying salaries or dividends. Incorrectly paying a spouse can have serious tax implications.
- Many people incorrectly equate CPP with taxation—CPP is not tax, it’s a forced savings plan.
- Payroll requires regular remittances to be sent to the CRA, but this can easily be automated through your bank.
2. Accumulating Cash/Investments in Operating Companies
- Accumulating large cash/investment balances (including real estate) inside of a company that has active operations puts all of your hard-earned money at risk.
- Your assets need to be protected (via a holding company) so that an issue in your operating company doesn’t result in you losing everything you’ve ever earned.
3. Missing Deductions
- Some of the common ones are: office–in–home deductions, RRSP deductions (i.e. not contributing to RRSP’s when it’s possible), childcare, medical expenses, and work–related training.
4. Improper Income Splitting
- Taxation in Canada greatly accelerates once you earn over $100,000 per year. Plus, the rates change every year so we update our tables annually. Check out the link on our Resource page or call us to learn more about tax rates and how they affect your business!
- The highest rate of tax is roughly 50% of the income earned—it’s almost pointless to earn money if you only get to keep half!
- Structuring your affairs so that income is evenly distributed between spouses is critically important. Having one spouse earn a large income while the other spouse earns a small one results in tens of thousands of dollars going to the CRA every year that could actually be retained.
Navigate CPA Team regularly write Articles on tax planning concepts that break down all of this as well.
Set yourself up for freedom. Find the right opportunities to save money and earn more income for you and your business by setting up an appointment with one of our accounting professionals.
Personal Tax Planning
Personal Tax Planning is arranging your income sources (i.e rental properties, employment income, business income, etc.) in a way that minimizes taxation and is in compliance with tax legislation.
Cash Flow Forecasting/Budgeting
Not sure if you’re taking your business in the most profitable direction? Find out with our help if that’s the case and how to manage your profits and expenses to get there.
A financial plan is a documented mathematical representation of your finances today and where you will be over the course of your life. It’s made to be easy to understand and simple to read.