Tax Tips may be useful for you!

If you are an Employee:

• Income deferral - Try to defer the receipt of certain employment income if your personal tax rate will be lower in next year than in current year.

• Job-related courses - Ask your employer to pay for job-related courses directly rather than paying you additional remuneration. If you pay for postsecondary courses related to your current employment, you can claim the Education Tax Credit.

• Home office - If you work out of your home try to arrange your employment terms so that you can deduct expenses related to your home office. Your employer must sign form T2200 as evidence of this requirement.

• Deductible expenses - If you are remunerated at least in part by commission, consider leasing rather than purchasing your cellular phone, computer or fax machine. Your employer must sign form T2200 as evidence of this requirement.

• Company car - If you have a company car, you may be able to reduce your operating cost benefit and/or your standby charge benefit.  You may reduce your operating cost benefit on a company car such as Reimburse your employer for some or all of the operating costs, Reimburse your employer for 100% of the personal use portion of the actual operating costs or Minimize your personal driving. The same way you may reduce your standby charge benefit by the way of Reduce the number of days the car is available to you or have your employer sell the automobile and repurchase it or lease it back or you should keep automobile records to identify personal and business kilometers.

• Defer tax on stock options - Consider deferring the tax on up to $100,000 of stock options you exercised this year.

• Compensation packages - When negotiating an employee compensation package, consider employee benefits which are not subject to tax.

• Retirement allowance - Consider making direct transfers of retiring allowances to an RRSP (up to the deductible amount) to avoid withholding tax.

• Tradespeople’s tools - Deduct up to $500 of tools [Cell phones and computers will not qualify for this deduction]

If you are a Business Owner

• Advance Tax Installments - Pay your monthly/quarterly advance tax installments if required by law or asked by CRA to avoid interest for late payments or non-payments.

• Final tax balances - Pay final corporate income and capital tax balances within three months after year end.

• Salary/dividend mix - Determine the optimal salary/dividend mix for you and other family members for current year.

• Pay salary or bonus - other than dividends, if the corporation’s combined Federal and Provincial rate exceeds 26.5% (generally when taxable income exceeds $500,000 or the income is all investment income)

  • If the individual’s tax rate is higher than the corporation’s, retain in the corporation income on which the corporation pays tax, to allow personal tax to be deferred.

• Remuneration accruals - Accrue salary and bonuses before the year end of your business. Ensure that accrued amounts are paid within 180 days at the corporation’s year-end.

• Employee gifts and awards - Consider the CRA’s revised policies when formulating an employee gift and award program.

• Depreciable assets - Consider Accelerating purchase of depreciable assets.

• $971,190 lifetime capital gains election (in 2023) -
  Ensure that the company qualifies as a qualified small business corporation.

  • Crystallize the capital gain now.

  • Consider taking steps to have your spouse or children share in future appreciation to use their lifetime capital gains exemption.

  • Determine whether you have a cumulative net investment loss (CNIL) amount which will affect any capital gains exemption claim.

  • If you have already used your exemptions, consider transferring private company shares to your RRSP if a cash contribution is not practical.

• Donations - Make charitable donations and political donations before year-end.

• Shareholder loans TO your corporation - Have your corporation pay deductible interest on shareholder loans made to the corporation in order to reduce active business income to the $500,000 threshold. This threshold may be higher or lower in some jurisdictions.

• Shareholder loans FROM your corporation - Repay shareholder loans from your corporation no later than one tax year after the amount is borrowed (exceptions apply).

• Fines and penalties - Most government and court fines are not deductible.

• Professionals and sole proprietorships -

  • Consider making election to retain your off-calendar year-end.

  • If you are operating a successful unincorporated business, consider whether incorporation of the business will provide additional commercial and tax benefits.

  • Review whether you should incorporate your professional business, if allowed by your licensing authority.

If you are Student

• Scholarships and other prizes - Remember that all scholarship fellowship bursary or prize from a program that entitles the student to the education tax credit are tax-free.

• Moving expenses - If you moved to attend school, your moving expenses may be deductible.

• Tuition tax credit - Claim this credit if you are in a full or part-time student of if you pay for post-secondary education that is related to your current employment (and not reimbursed by your employer). This requires the T2202 form which will be issued by your school.

• Unclaimed credits - Remember that the carry forward period is:

  1. indefinite for unclaimed education and tuition fees credits; and

  2. five years for unclaimed student loan interest.

• Foreign university tuition fees - If you attend a foreign university, your tuition fees may be eligible for a tuition credit in Canada. This requires the school to issue you a TL11 form.

The information on this site is not intended to be a substitute for professional advice. Each person's situation differs, and a professional advisor can assist you in using the information on this web site to your best advantage.