Take advantage of the small stuff – *New for 2012 – BC Seniors Home Renovation Tax Credit (a refundable credit). Businesses have until Feb 28 to get T-4s out to employees. RRSP deadline for 2012 contributions is March 1.
You can write off the cost of a safety deposit box. Two-income families can also deduct the cost of kids’ after-school lessons and summer camp if those expenses allow the parents to work and earn money. Moving expenses incurred to take a job elsewhere in Canada are deductible; as are tax preparation fees in some cases. And don’t forget medical and dental expenses. In general, interest on money you borrow to invest into your business or to earn income, is tax deductible, but interest on money that you borrow to spend personally isn’t. So rather than using your savings to buy business equipment and borrowing to buy the family car; talk to your tax advisor and turn the interest into a tax deduction. Split income with your spouse, both now and in retirement. By making your incomes as equal as possible, you’ll minimize the overall tax that both of you will pay. One strategy is for a high-earning spouse to contribute to a spousal RRSP for the stay-at-home partner. When running your own business, you can also cut your family’s overall tax bill by employing your lower earning spouse – or kids – to perform some tasks you would otherwise have to do yourself. Talk to your tax advisor for tailored solutions for you and your business.
At year end is always a good time to take stock; draw up a business and personal net worth statement every year on the same day. If it’s going up every year, that’s great; if not start asking questions.
Order your credit report and make sure that the information it contains is accurate. Errors are more frequent than you may think and since those errors could cost you precious time and money with higher borrowing rates, it pays to be vigilant. Canada major credit bureaus – Equifax and TransUnion – are obligated to mail you a copy of your report for free upon request; or for a fee you can receive an electronic one. Visit their websites for more information.
Paying no tax; good job until your business needs to borrow. Remember financial institutions use your businesses bottom line, when calculating the ability to take on additional credit. If possible max out CPP contributions, it is part of your retirement.
For more information visit Revenue Canada website www.cra.gc.ca