Corporate tax preparation and planning is an integral part of the strategies considered by Canadian businesses. At Shajani LLP we make it a cornerstone of our practice to ensure our clients plan effectively and pay the least amount of tax feasible. In doing so, some of the considerations we will take include the following:

1. Evaluate your personal compensation options as it relates to dividends, salary, bonuses, or shareholder loan repayments. All of these forms of compensation have different tax consequences; we can assist you in determining the best course of action for your situation.
2. Consider an estate freeze. An estate freeze is undertaken when the shareholders of a business wish to have future growth of their business be taxed in the hands of their heirs. This can result in a significant potential deferral of tax when properly planned and executed.
3. If you’re a shareholder of a Professional Corporation, consider adding your spouse and / or children as non-voting shareholders. Recent legislation in many provinces has permitted the inclusion of specific family members as shareholders in the Professional Corporation of Professionals. This can provide significant tax planning opportunities. Ensure you speak to your tax advisor about not running afoul of the kiddie tax rules.
4. Consider paying your children from your corporation in the form of salary or dividends. Any salary paid must reasonable and for work done by the child, but can provide excellent income splitting opportunities as well as allow the child to earn RRSP room. Dividends declared and paid to a minor child may be subject to the kiddie tax provisions, but any investment income earned thereafter may be taxed in the hands of the child, potentially sheltering much of this future income from immediate tax.
5. Consider having your corporation loan you money to purchase a home. The Canadian Income Tax Act does allow for this to occur without triggering what would otherwise be a potentially large tax payment. Be advised, however, that the loan must be made to someone in their capacity as an employee of the corporation (not shareholder), with bona fide repayment terms at the prescribed rate of interest. We can assist you in executing this strategy.
6. Consider dividend sprinkling. By structuring shareholdings appropriately, your business can potentially maximize income splitting opportunities by declaring the appropriate dividends at the appropriate time. In order to maximize flexibility, it is important to take advantage of the corporation’s ability to issue different classes of shares and time its dividend declaration.
7. Take advantage of the automobile allowance rules. Your corporation is permiited to pay you an automobile allowance for the kilometres that you drive your personal vehicle for business purposes. This allowance that you receive is not taxable to you and is tax deductible to your corporation. It is important to keep a log of the kilometres you drive for business purposes, and to keep in mind that you cannot claim this allowance for mileage incurred from your home to your place of work. New rules in the process of being implemented are making it easier to claim this allowance by allowing the taxpayer to keep a sample log and extrapolate it over the course of the year. Talk to your tax advisor about this opportunity.