Mid-Year Tax Planning

The Good

Tax planning is something that ideally happens throughout the year. If you are having an outstanding year financially, you probably want to meet with your tax advisor to make plans for how to best handle the taxes that you will need to pay come tax season. For example, this might be an ideal year to buy some new assets for your business, and create a way to reduce your tax owing. If you are making tax instalment payments, you might want to review these and make sure you are contributing enough.

The Bad

If you’re having a rough year, it is also a good idea to consult your income tax specialist to come up with ideas on how to plan for your tax bill when you don’t have a lot of revenue coming in. Not making a lot of money should mean that you don’t have to pay a lot of taxes, but that is also something to discuss with your tax specialist – as a business, if you make *some* money you will probably need to pay *some* taxes. Not making a lot of money from your business and not paying much in taxes can be a red flag for the Canada Revenue Agency (CRA) – they have the mindset that people run businesses to make money, and if you are not accomplishing that year after year, they might start to suspect you are up to some shenanigans.

The… Ugly? TFSA And RRSP Contributions

It is probably a good idea to plan and make your TFSA and RRSP contributions throughout the year, rather than making one large payment just before you do your tax return. This keeps your cash flow healthy, and helps you earn more interest on these accounts (even if that interest is a little anemic these days).

Tax Planning Year Round To Reduce Stress

The bottom line is that income tax planning happens year round if you want to do a good job of it and make it easier on yourself as a business owner. Taxes are a fact of life, and staying on top of them and making good, informed plans with a tax specialist like Shaw & Associates will help make them as painless as possible.

For further information, this article has some good insight into mid-year tax planning. And here is a video on making tax plans throughout the year.

Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.