While we all must pay our fair share of tax, you should not have to pay more in tax than you are required to. As Corporate Tax Return Preparers in Toronto, we are aware of numerous tax strategies to minimize taxes.
Tax Savings Strategies
Some examples of tax savings strategies include:
1. Payment of Dividends vs. Salary
As your provider of Corporate Tax Return Preparation services in Toronto, we can help you evaluate whether dividends or salary are better for you given your situation. Generally speaking, dividends have a lower tax rate than salary, are not subject to social security tax (CPP) and the first $38,000 of dividends can be received tax free.
2. Shareholder Loan Repayments
Shareholder loans can be repaid tax free. Therefore, before you pay yourself a salary you should repay any shareholder loans owing to you. You should discuss this strategy with your Corporate Tax Return Preparer in Toronto.
3. Income Splitting
The purpose of income splitting is to distribute the compensation or earnings that you would have taken for yourself amongst your family members. By doing so, the overall tax paid is reduced.
For example, you can pay dividends to your spouse, by adding your spouse as a shareholder of your corporation. Alternatively, you may wish to pay reasonable salaries to your family members.
Before undertaking any income splitting strategies, you should have a discussion with your provider of Corporate Tax Preparation Services in Toronto.
4. Tax Free Automobile Allowance
Your corporation can pay you a tax deductible automobile allowance of 52 cents per KM for the first 5,000KM and 46 cents thereafter, for the kilometres that you drove your vehicle for business purposes. The allowance that you receive is not taxable to you.
You should discuss this strategy with your provider of Corporate Tax Return Preparation Services in Toronto to see if it’s appropriate for you.
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.