November 21, 2018
Year End Tax Planning for 2018
*For the most recent version of this post, please click here*
The end of the 2018 is almost here and in addition to holiday planning it is important to focus on year-end tax planning.
Below is a list of tax deadlines which need to be met before the end of the year or shortly thereafter.
On or before December 31, 2018
Determine the dividend/salary mix for owner-manager and other family members.
Consider the following:
Tax on Split Income implications
The salary/dividend mix depends on each recipient’s marginal tax rates, desire to make RRSP contributions, and utilization of tax credits such as the child care tax credit.
Salary payments to family members must be reasonable and the remittance of payroll taxes must be made on time.
Approximately $50,000 of eligible dividends can be received by an adult family member with little or no tax if that family member has no other sources of income and the new Tax on Split Income (“TOSI”) rules do not apply to the dividend.
Dividends may need to be paid to avoid certain attribution rules
Make donations of cash shares
Donations of public company shares with inherent gains are very tax efficient. The capital gain is not taxable and the amount donated is equal to the value of the shares at the time of the donation.
Make political contributions
Pay for medical expenses
Purchase and use capital assets if the business year-end is December 31, 2018.
Distribute income from family trusts to beneficiaries.
Consider selling capital assets with inherent capital losses if large capital gains were realized in 2018.
Maximize TFSA contributions.
Make RRSP contributions if an individual turns 71 in 2018 and is required to wind up their RRSP
Payment of tax instalments
On or before January 30, 2019
Payment of interest on low-interest loans from non-arm’s length parties and employers
On or before March 1, 2019
Make RRSP contributions
Please contact any member of the Manning Elliott Tax Team for assistance with year-end tax planning.
This content is believed to be accurate as of the date of posting. Tax laws are complex and are subject to frequent change. Professional advice should be sought before implementing any tax planning. Manning Elliott LLP cannot accept any liability for the tax consequences that may result from acting based on the information contained therein.