For individuals and owner-operators who want to pay less tax: Year End Planning
What's new?
Federal
Response to COVID-19 - introduction of wage subsidies (eg Canada Emergency Wage Subsidy) and benefits (eg Canada Economic Stimulus Benefit); extension of certain payment and production deadlines
Provinces and territories
Response to COVID-19 - introduction of various incentives (eg, reimbursement of BC PST on certain machinery and equipment); extension of certain production deadlines
Alberta - decrease from 11% to 10% on January 1, 2020 and to 8% on July 1, 2020
Nova Scotia - down from 16% to 14% on April 1, 2020
Quebec - decrease from 11.6% to 11.5% on January 1, 2020
Small Business Rates
Nova Scotia - decrease from 3% to 2.5% on April 1, 2020
Ontario - down from 3.5% to 3.2% on January 1, 2020
Prince Edward Island - decrease from 3.5% to 3% on January 1, 2020 and to 2% on January 1, 2021
Quebec - drop in the going rate from 6% to 5% on January 1, 2020 and to 4% on January 1, 2021; small business CCPCs M&T rate remains at 4%
Yukon - Decrease in non-M&T and O&M rates from 2% and 1.5% to 0% respectively on January 1, 2021
Research and development (R&D) tax credits
Alberta - credits are eliminated for qualifying expenses incurred after December 31, 2019, but a new innovation and employment grant that supports R&D for SMEs will be available starting January 1, 2021
Quebec - the expenditure exclusion threshold applies only to the R&D salary tax credit for eligible expenditures incurred for a taxation year beginning after March 10, 2020
Yukon - lower corporate rate to 12% for qualifying expenses incurred in tax years ending after December 31, 2020
Beneficial ownership records New (British Columbia, Manitoba, Prince Edward Island) and planned (Nova Scotia, Quebec and Saskatchewan) provincial requirements for private companies to maintain ownership records
Year end tax planning checklists
The assistance of your PwC advisor is essential to properly analyze the following year-end tax planning strategies. In addition to tax considerations, your financial plan should take into account investment philosophies, sound business practices, and motivational goals. Owner-operators must ensure that sufficient funds are retained to achieve business objectives; Given the uncertain economic conditions, cash flow management is particularly important.
Year end tax planning tips
With December 31st just around the corner, now is a good time to review some tax return & preparation services that need to be in place before the end of the year. Pay Deductible or Creditable expenses before the end of the year
Certain expenses can only be deducted from taxable income or qualify for a tax credit if the amount is paid before the end of the calendar year. If you plan to pay an expense that is tax deductible or qualifying for a credit early next year, consider doing so before the end of the year to take advantage of the deduction or credit on the income tax return.
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