| If you're a business owner, you're probably tired of | | | | size of your home office of total the total size of your |
| paying too much in tax. However, there are tax | | | | home. For example, if your home office comprises |
| strategies available to minimize the amount of tax that | | | | 10% of the total space in your home, then you can |
| you pay. | | | | write-off 10% of the costs for running your home. |
| 5 Best Tax Tips by a Toronto Chartered Accountant: | | | | Before undertaking this strategy, you should speak |
| 1. Paying Dividends - Tax Tip | | | | with your Toronto Chartered Accountant first. |
| Dividends have a lower tax rate than salary. For | | | | 4. Shareholder loans - Tax Tip |
| example, the highest personal income tax rate in | | | | If your corporation has a debt that it owes to you, you |
| Toronto, Ontario is 46.4% for salary and only 31% for | | | | can have your corporation repay that debt to you on |
| dividends. | | | | a tax free basis. Shareholder loans often arise from |
| In fact, the first $38,000 of dividends are tax free in | | | | the initial capital invested by the business owner or |
| Toronto, Ontario, providing that you have no other | | | | because of expenses paid on behalf of the |
| source of income. | | | | corporation by the business owner. |
| Therefore, it's more advantageous for your | | | | If your Chartered Accountant in Toronto hasn't told |
| corporation to pay you dividends instead of salary. | | | | you about shareholder loans, then you should definitely |
| You should consult your Chartered Accountant in | | | | ask why. |
| Toronto first, before you implement this strategy. | | | | 5. Tax-Free Automobile Allowance - Tax Tip |
| 2. Income Splitting - Tax Tip | | | | If you have a corporately owned automobile, consider |
| If your spouse is involved in your business, you could | | | | having your corporation pay you a tax-free automobile |
| pay him/her a reasonable salary for the work that he | | | | allowance for the KM's that you drive for business |
| she has performed. If you are in a high tax bracket, | | | | purposes. |
| and your spouse is in a lower tax bracket, then your | | | | In Toronto, Ontario, you can receive a tax-free |
| overall tax burden will be less by paying your spouse a | | | | automobile allowance of 52 cents per KM for the first |
| salary. | | | | 5,000 KM and 46 cents thereafter. In addition, the |
| 3. Home Office - Tax Tip | | | | automobile allowance paid to you is tax deductible by |
| As a sole proprietor that has a home based office, | | | | your corporation. |
| you can write-off a portion of the costs of running | | | | Again, please speak with your Chartered Accountant |
| your home. These costs include utilities, property taxes, | | | | in Toronto first, before paying an automobile allowance |
| mortgage interest and maintenance. The portion that | | | | to yourself. |
| you can write-off is the based on the proportion of the | | | | |