9 Ways Businesses In Canada Can Reduce Tax Liabilities

Business Incorporation Brampton

Completing the end-of-year corporate taxes is indeed pretty challenging for any business incorporation and to limit these areas of concerns, as well as to address several other issues, it is strongly suggested to compute your business taxes beforehand.

One of the fundamental advantages of preparing your corporate taxes early is that it will allow you, in specific circumstances, to devise tax strategies for maximizing the tax benefits. Also, it permits the owners of business incorporations in Brampton or elsewhere in Canada to better plan their organization’s senior shareholder remuneration and better coordinate the individual financial planning schemes of their company.

Furthermore, computing your commercial taxes beforehand allows you to calculate the sum that you are to owe after the current year comes to an end. This way, throughout the year, you will be able to maintain the required liquidity for paying off the dues in a stress-free fashion.

Finally, another major benefit is that it helps you to eliminate the odds of failure-to-file, monetary penalties. As the federal regulations impose strict deadlines for submitting income tax returns any non-compliance on the part of your business incorporation is likely to result in a financial penalty. Filing your business taxes in Brampton or wherever you may require in Canada well ahead of time will help you get rid of this necessary hassle.


  • Identify eligible deductions

Examine your bank and personal credit card statements for any unnoticed business expenditure and if you happen to personally collect payments then do record them in your management accounting system.

  • Congress and training

If you are to participate in conferences or training sessions relevant to your industry and your enterprise, such expenses are typically deductible; and you are only required to maintain a record of your schedules for all the conferences and the classes that you are to attend, proofs of attendance and certifications, as well as your invoices for future audits if ever required by the tax officials.

  • Refreshments and public relation expenditure

For meal expenses, gifts to clients, public relation expenditure (food and beverages, restaurants, sports, and cultural events), it is highly advised to write the full name of the individual and document the reasons in brief for the business meal at the reverse of the invoice.

  • Gifts

Gifts to workers should not be presented by checks or in cash but offer them goods instead albeit not exceeding to a maximum amount of five hundred dollars.

  • Home office expenses

If you are to use your very own property to conduct business, and as long as the required conditions are met, a part of your total expenditure is reimbursable as per the ratio of the house that you own. Home insurance, mortgage interest, power, municipal and school tax, house repair, and maintenance, telephone line, co-ownership expenses, cell phone are considered eligible.

  • Capital expenditures

If you are to dispose of or acquire capital asset; such as furniture, computers, franchises, goodwill towards the end of the year; make a point to own them as early as possible so that you would be in a position to utilize them before the prior to the year-end.

  • Income splitting

If your significant other and/or your adult children work in your business incorporation then you may seriously want to consider paying them a reasonable remuneration if their taxable sources of income are found to be lesser than yours. Sharing the revenue earned by one or more of the family members is an excellent strategy to exploit the GIT rate as well as reducing taxes. It may be worth noting that GIT stands for graduated income tax.

  • Personal cash

If you are to require a huge amount of cash, postpone it to a day after the year-end of your business incorporation. For instance, if your organization’s year-end happens to be December the thirty-first, wait until January the first for using your business’s cash.

  • Year-end bonus

For specific circumstances, while it is wise to declare a bonus after the end of the year, many conditions do apply.

When you are contemplating to start a family, in order to be deemed as eligible for the Quebec Parental Insurance Plan or QPIP, you may seriously want to consider offering yourself a paycheck (!) in place of dividends for appropriately maximizing your allowances.

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