Top Tax Planning Tips for Growing Corporations in Toronto
Do you know which is one of the most important pillars for the growth of any corporation? It is effective tax planning. For Toronto-based businesses, it is important to strike a balance between complying with the rules and regulations of the Canada Revenue Agency (CRA) and maximizing savings.
With a growing business, there are so many aspects that you need to look into, like payroll management, cross-border operations, etc. Having the right tax accountant proves to be a boon for your business.
When you search for – accountant near me, you would be led to Taxccount Canada. For best-in-class tax filing and accounting services, you can trust us. We have a professional team of tax accountant experts who are there to guide you and make the entire tax filing process smooth and hassle-free for you.
Make Use of the Small Business Deduction (SBD)
The Small Business Deduction (SBD) provides eligible small businesses in Canada with a reduced federal tax rate of 9% on the first $500,000 of active business income earned by Canadian-controlled private corporations (CCPCs). This deduction helps in significant savings, which can be used in your business.
But as the corporations grow, there is a risk of phasing out of the limit when taxable capital exceeds $10 million.
Tip – Carefully review your corporate structure annually to find out whether the income-splitting strategies or reorganization can help preserve SBD access for your business.
Leverage Scientific Research & Experimental Development (SR&ED) Credits
The Scientific Research and Experimental Development (SR&ED) tax incentives are intended to encourage businesses to conduct research and development in Canada. If your business is based in Toronto, then you need to understand that Toronto’s growing ecosystem makes SR&ED credits particularly relevant.
Businesses that are engaged in R&D activities can claim refundable or non-refundable credits for eligible expenditures, including salaries, cost of materials, and overhead costs.
Get in touch with Taxccount Canada, and our tax accountant will help you understand these intricacies.
Tip – Make sure to maintain detailed project documentation to substantiate claims during CRA review. Many corporations leave thousands of dollars unclaimed by failing to capture all eligible activities. Your tax accountant can help you with this while tax filing.
Strengthen Tax Strategy
☎️ Get HelpManage Income Timing Strategically
Delayed income and increased expenses can be two factors that can shift tax liabilities for the future, thus improving short-term cash flow. For growing corporations, this is a beneficial strategy and can help manage liquidity during critical expansion phases.
A professional tax accountant can help you manage your corporation’s income timing, and that’s why Taxccount Canada is highly recommended.
Structure Effective Compensation
Compensation planning for shareholders and executives is an important aspect of the growth of a business. It would be best if you rely on the experience and expertise of professionals. Deciding between salary vs. dividends has an impact on both the personal and corporate tax outcomes.
Tip – Salaries create RRSP contribution room and reduce corporate income, while dividends can be tax-advantaged under integration rules. A combined approach is recommended, as it provides the best of both worlds.
Plan for GST/HST Compliance
Whether you are a business based in Toronto, it is important that corporations with growing revenues ensure accurate collection and payment of GST/HST. Mistakes and non-compliance can lead to CRA audits and penalties.
When you talk to your accountant, make sure you discuss this point for risk-free tax filing.
Tip – You can maximize Input Tax Credits (ITCs) by ensuring all the eligible expenses are claimed. Use accounting software that integrates with GST/HST tracking, or ask your tax accountant for help.
Reinvest Through Capital Expenditures
Expanding your business often means spending on technology, equipment, real estate, or materials. A lot of corporations don’t know that all these expenditures are a part of CCA, which allows businesses to deduct a portion of the cost over time.
Consider Corporate Reorganization
Reorganization can be a critical step for your corporation’s growth. As corporations grow, holding companies, partnerships, and share reorganizations may reduce tax exposure and can help improve succession planning.
Reorganization can also help safeguard access to the Lifetime Capital Gains Exemption (LCGE) on qualifying shares during an eventual sale.
Tip – Get in touch with your tax accountant before finalizing restructuring. Improper execution can lead to unwanted tax liabilities.
Monitor Instalment Payments
As corporations grow, the tax bills also increase. Corporations owing more than $3000 annually must make instalment payments, either monthly or quarterly. Your tax accountant can help you make this decision.
Plan for Provincial and Federal Changes
Toronto-based corporations must comply with both the federal and Ontario-specific tax rules. We understand that understanding all the nuances can be overwhelming, and that’s why the team at Taxccount Canada is there to assist you.
Legislative changes like adjustments to corporate tax rates or credit eligibility can have an impact on your tax planning strategies.
Tip – Conduct an annual tax planning session to make sure your corporate strategy is in synch with the CRA and Ontario Ministry of Finance guidelines.
For growing corporations in Toronto, tax planning is not just about reducing liability — it’s about enabling strategic growth. With the right tax accountant backing you, you can sail through this journey seamlessly and efficiently. So, get in touch with the experts at Taxccount Canada for the best accounting and tax filing services.
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☎️ Consult NowThis is general information only and not professional advice. Consult a professional before acting.
