Revenue Canada Taxation Strategies
Professional accounting assistance can help provide clients with customized taxation strategies to interpret the Income Tax Act and assist in their dealings with Revenue Canada.
We have state of the art electronic research services to assist in quickly and efficiently obtaining income tax information with which to formulate personal and corporate taxation strategy.
Statutory income splitting, for example, is governed by certain rules which could cause income to be attributed to and taxed in the hands of the individual making the contribution.
Therefore, it helps to know under what circumstances a contribution can be made to, for instance, a spousal RRSP, or child's investment account, without causing the resulting income to be attributed back to the contributor.
The tax strategy centering around an allowable business investment loss is important because such a loss is treated as a non-capital loss and applied against all income, not just capital gains.
Up to 75% of the loss can be applied against other income in the year the loss was realized, with any unused portion carried back three years, and forward seven years.
Rental properties, can, under certain circumstances, be used to leverage capital, earn CCA sheltered rental income, and write off expenses.
Investment in a labour sponsored venture capital corporation (LSVCC), backed by labour organizations, represents another potential tax strategy, because it allows individuals to pool their money in order to purchase a portfolio of diversified small and medium sized businesses which can be tax sheltered in an RRSP.
Effective estate planning can be used to minimize or defer tax on death. Assets which have been previously transferred to a spousal trust, for instance, may be protected from taxation on the date of death, when assets owned by the individual will have been deemed disposed of at fair market value.
Various trusts can be established, including a living trust (inter vivos), or a testamentary trust created by the settlor's will, to protect various assets in the estate from immediate taxation.
A spousal trust, for example, could be either an inter vivos or testamentary trust. When property is passed to a spousal trust, tax is deferred until the property is disposed of, or the spouse dies.
Taxation rates for trusts, although similar to those of individuals, are functionally different because personal tax credits are not available and some trusts, such as the inter vivos trust, attract tax at a fixed rate.
After 21 years, the property within a trust is deemed to have been disposed, and capital gains realized for taxation purposes.
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.