If you haven’t done anything to reduce your taxes yet don’t worry. There is still time….. but only just.
By the end of December, what you will have to pay in taxes is pretty much be set in stone. You may
not have tracked the income and expenses yet but they are what they are and you can’t change much in
the New Year…..With the exception of ploughing money into your RRSP’s. Which isn’t a bad thing but it
doesn’t help your business at all.
The planning for this really should have been set a few months back (and if you’ve been to one of my “A
Year in Finance” seminars you’ll know this already).
However it may not be too late to soften the blow. How are your profits looking for the year? Good……. Better
than expected? Now take a look at your cash-flow projections for next year. Are we still looking good?
Is there enough of a buffer in cash to warrant a little spending during December? I’m not suggesting you
suddenly start throwing your money away however now could be a good time to spend strategically.
Strategically spending money on your business (or incurring expenses) not only helps to grow your
business in the future but will reduce your “profit” in the current year and therefore defers the tax.
If you are looking to purchase some major assets you need to remember the 50% rule. You can only
depreciate 50% of the allowable deduction in the first year of an asset purchase……but it is still a
If your company really doesn’t need anything to boost performance in the coming months and you feel
that you would only be spending for the sake of spending perhaps now would be a perfect time to make
a larger donation that you otherwise would have. Most charities rely on donations during the holiday
season to make it through the rest of the year.
Donations are tax deductible. If you have a sole proprietorship you get to deduct them from your
personal tax return and if you are incorporated they are deductible in the corporation. Just make sure
that if you use corporate funds to make the donation the receipt is made out to the corporation also.
In addition to the financial benefits, people who donate and volunteer their time are said to be happier
than the rest of the scrooges in the world. And who wouldn’t be happy with less taxes to pay!