Companies may claim a tax deduction for unpaid management fees or salary at year-end, provided that the fees are paid to the manager or shareholder within 179 days of the year-end date.
If a corporation’s year-end falls within 179 days of the calendar year, a bonus payable may provide for a tax deferral.
For example, if a company has a corporate year-end of Dec 31, 2012 and a profit of $100,000, the shareholders can issue a management bonus of $100,000 to reduce corporate taxable income to zero
Every year millions of Canadians pay more tax than they should. They either don’t file their returns to their family’s best advantage or they leave valuable credits and deductions on the table. Even worse, they don’t file at all and face unnecessary penalties.
Here are some ways to make sure the tax system works to your advantage:
1. File as a family. When it comes to getting the best return for your family unit, it is important to file all returns together. There are three simple steps:
• Prepare
Many new business owners ask about how to deal with Business Transactions Prior to Incorporation. Here is the right answer for this issue according to the CRA IT-364 Commencement of Business Operations:
2. It is not possible to be specific about the point in time when a contemplated business becomes an actual business. Generally speaking, it is the Department’s view that a business commences whenever some significant activity is undertaken that is a regular part of the income-earning process
If you are a Canadian resident intending to buy a residential property in the United States it is important that you are aware of the following tax implications particularly if you intend to rent it for any period of time during the year.
A non-US resident owning a US residential rental property may elect either of the following options:
This option makes little economic sense.
In order to avoid the 30% gross revenue tax on your US property you must file form W8-ECI (Certificate
For more information, please contact us at TaxServices@AccXpert.com, or call us at 1-613-600-6988.
The tips of buying rental property
If you borrow money to buy or repair a rental property, make sure you arrange things so that the interest on the loan is tax deductible. That means keeping mortgages and lines of credit for the rental property completely separate from loans taken out to buy or improve your principal residence, which are not tax deductible.
Say you have a $100,000 mortgage on your home
Real property is considered an important if not essential part of a good investment strategy. When you acquire and own rental property specifically, you need to consider the tax implications of this type of investment.
Rental property may be acquired by an individual, acting alone or as a co-owner, or by a partnership, a corporation or a trust. Each of these types of ownership has advantages and drawbacks for Canadian residents.
Tax planning review end of the year is also a good time to reassess and review whether you’re achieving the most effective tax savings opportunities for the future in:
Review your your personal marginal tax rate
You should consider your personal marginal tax rate and that of your business, registered retirement savings plan (RRSP) contribution room (a salary of $132,333 in 2012 provides the maximum in contribution room for 2013), and provincial health or payroll taxes. For example, it is
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