The end of the year is fast approaching. People everywhere are busy preparing for Christmas and New Year's celebrations. However, for entrepreneurs, this time of year is also a good time to take some actions that can result in significant tax savings. Certain rules governing company taxation can be taken advantage of, provided that they are implemented before the end of the year.
Here are some year-end financial planning tips for entrepreneurs who want to reduce their tax burden.
Purchase capital assets before the end of the year
If you were planning to acquire capital assets within a few months, why not do it before the end of the fiscal year and save a lot of money?
If these new assets are purchased and put into service before year-end, you will have the opportunity to claim half of the usual amount of tax depreciation, or capital cost allowance. This will reduce your business income for the year, which means you will have a lower amount to pay in business taxes.
Don't hesitate to use this strategy even if your SME will incur losses this year, since you could benefit from a full capital cost allowance for the following fiscal year.
Celebrate with your employees to mark the end of the year
The end of the year, which coincides with the holiday season, is often an opportunity to bring the whole team together and celebrate. However, did you know that you can deduct a great deal from the costs incurred by this type of social activity? In fact, if the event is accessible to all employees, the costs don't exceed $100 per person and you don't exceed the limit of 6 events per year, the 50% limit generally imposed on the deductibility of meal and entertainment expenses doesn't apply.
However, it is worth noting that if the cost of the event exceeds $100 per person, including transportation costs, the total amount including incidental expenses becomes a taxable benefit and must be included in the employee's income.
Defer the sale of capital assets that have increased in value
If your company had planned to sell fixed assets with accumulated capital gains, it is probably best to postpone their sale until the next fiscal year. In doing so, you can benefit from both an additional year of capital cost allowance and a one-year deferral of capital gains to be included as income for the business's tax year.
Let T2inc handle your year-end business taxes and save money
In conclusion, for an entrepreneur preparing year-end taxes, now is the ideal time to apply these few tips.
At T2inc, our tax specialists and business accountants can prepare your year-end taxes and ensure that you benefit from all the deductions you are entitled to. Don't hesitate to contact us!