Tax planning is a year-round process that should be done with the assistance of a Canadian Chartered Accountant to minimize by legitimate means, the amount of taxes to be paid. Here are some of the items and strategies that can be put into place:

• If you are planning to sell an unincorporated business, you should consider rolling the assets into a newly-incorporated small business corporation in exchange for shares, to become eligible for the enhanced capital gains exemption.
• If you own a Canadian-controlled small business corporation with substantial investments and you are planning to sell the business in the next few years, consider looking into transferring the investments out of the corporation to enable the business to qualify for the enhanced capital gains exemption.
• If selling stocks held in US dollars, the capital gain is calculated by translating the sale into Canadian dollars. However, keep in mind that there is a $200 exemption that can be deducted from capital gains of this type.
• An “allowable business investment loss” can be deducted from all other income on the tax return, which is not the case with an ordinary capital loss. The “ABIL” arises on the disposition of shares or debt of Canadian-controlled small business corporations.
• Transferring income to a lower-income spouse is a long-standing method of reducing income taxes. There are many ways of achieving this, one of which is the optimization of pension income. This can be done directly on the tax returns of the two spouses without making any prior arrangements, by transferring an appropriate amount of pension income to the lower-income spouse.

Each of the above tax planning approaches has been summarized and does not include all of the implications affecting a particular individual, which could vary according to the circumstances. Please contact us if you need further assistance with any of these points. Click here for additional contact information