Tax Planning and Tax Management
There are several ways a business or an individual can reduce taxes either by maximizing deductions and credits, tax deferrals, income splitting, income spreading, and tax-sheltered investments.
You can’t just ask your accountant on April 28 to see if you may utilize these options. To take advantage of the tax savings opportunities also requires some planning. Some of these tax planning opportunities may not always be in your best interest. It’s best to have a discussion first.
Part of tax planning is knowing what needs to be implemented to take advantage of a tax strategy. For example, if you wish to split investment income, what is the appropriate documentation needed?
Whether your taxed as an individual or as a business, there are three reasons why you want to properly manage your tax issues:
- You want to make sure you are meeting your payment obligations in a timely fashion.
- You want to avoid unnecessary interest and penalty charges.
- You want to make sure that you have adequate documentation ready for the CRA when they question an expense, deduction, or a transaction. For example, if you have income that you believe should be taxed as a capital gain instead of business income, you want to have appropriate documentation that supports your claim. Simply having the receipts, does not always justify the claim to the CRA.
To many Canadians, your income taxes nay be your single largest expense. Many people pay more in income taxes than they do for their mortgage payments. You want to make sure that you are not overpaying your taxes.
I am more than happy to have a discussion with you on these issues.