Business Taxation Services
Effective corporate tax planning strategies have the ability to affect the profitability of all businesses. Some strategies involve a relatively simple analysis.
For example, determining a corporate year end, which can occur anytime within 53 weeks from the date of incorporation, is an important consideration which usually takes into account a number of factors, including the company's business cycle and anticipated cash flows.
Most issues are more complicated, however. Establishing a corporate legal structure involving multiple companies, including a holding company, can have significant income tax implications.
Establishing a management company might provide some businesses with a lower corporate tax rate, potentially making more cash available to reinvest in the business. Management companies can also be used in some circumstances to split income and defer tax, particularly if they are run by a spouse.
A taxable capital gain or loss could have an enormous impact on the dividends paid, because one-quarter of the gain or loss goes into a non-taxable capital dividend account, from which any positive balance is eligible for payout.
This tax-free capital dividend account can also be affected by proceeds from the sale of eligible capital property, or receipt of another corporation's capital dividends.
Business consolidations, acquisitions and amalgamations of both private and public corporations also require special consideration.
That's because a number of potential issues related to net and non capital losses, loss carry forward, business investment losses, related loans, paid up capital, stock and capital dividends and foreign tax credits, will significantly affect taxation.
Note to users: All information provided is of a general nature. Although we endeavour to ensure its accuracy and timeliness, no one should act upon it without appropriate professional advice after a thorough examination of the facts of the particular situation.