Year End Tax Edition
Posted On: 29/11/17 - 0

Are You Thinking About Year End Tax Planning?

Want to know how to reduce your year end tax liability and put more of your hard earned money back into your pocket? Hard to believe that 2018 is almost here. It’s time to take advantage of the many personal and business tax-planning opportunities that are still available before year end. There are numerous ways to save on taxes for 2017 and beyond.

Do You Know About Year End Tax Deductions?

Were you aware that if you pay the following expenses by December 31^st, 2017 they will be eligible for the deductions of credits? Some of those deductions could include childcare expenses, investment council fees, and deductible support payments.  Other deductions to consider are political and charitable donations, interest paid on loans and accounting fees.  There is also tuition fees, union and professional dues as well as medical expenses to consider.

Re-filing Your Tax Waiver –  Update

Have your employer reduce taxes withheld at source from your pay, don’t forget to re-file this form.  Your form may need to be submitted and approved by the CRA annually. If you have not filled this form out in the past, consider doing it if you normally receive a tax refund when you file your tax return. This will help with more cash flow during the year to accomplish various financial goals such as making monthly investment contributions. It would also help you with making additional mortgage payments. And even reducing or eliminating other personal loans or credit card debt.

The CRA will normally approve the tax waiver for individuals who expect different types of deductions.  Those deductions could be RRSP contributions, support payments or childcare expenses.  There is also employment expenses to consider. Approval of the tax waiver by the CRA usually takes about six weeks.  Therefore, for the 2022 tax year, you should start applying in late October or early November of 2021.

Consider an Individual Pension Plan (IPP) In Your Business

If your business is incorporated, as an employee of your business, you have the option of considering an IPP as a method of saving for retirement within your business. An IPP is a registered pension plan, that is created and sponsored by your company. IPPs generally have only one plan member, however, certain family members may also participate if they are employees of the company.

In order to create a plan, you must receive employment income from your company which is reported on a T4 slip. An IPP is usually most suitable for those who have significant employment income and are at least 40 years old.

Pay Salaries and Bonuses Before Year-End

If you operate your own business, consider paying additional salary or bonus to yourself, and reasonable salaries to family members who work in the business, before year-end. This year-end earned income, which may create RRSP contribution room for the following year. The payment will also give your business a current tax deduction. The salary paid must be reasonable based on the services performed by your family member. A good rule of thumb is to pay your family member what you would pay someone who isn’t related to you for the work performed in the business.

If you need assistance with your year end tax planning, call 780-482-7297.

12203-107 Avenue.
Edmonton, Alberta.
T5M 1Y9

Call us:
780.482.7297

cheryl@padgettnw.com