TAX PLANNING CHECKLIST

Over the years, we've found  that going through this checklist with clients opens up doorways to a variety of tax planning opportunities. Many clients are surprised at the many opportunities available to save huge amounts of taxes.

You may recognize as you glance over this checklist, that you have the potential to put into your pocket dollars that would otherwise go to the taxman. If you live in the Toronto area, feel free to call us to learn how you can plan your way to save taxes.

SELF EMPLOYED AND COMMISSION SALESPERSONS

• are you income splitting?
• do you take advantage of all  permissible tax deductions?
• are you structuring your activities to maximize the deductible potential of otherwise personal expenses ( e.g., travel, vehicle, conventions, interest etc.)
• have you structured your personal/business debt to maximize the deductibility of the interest you pay (many taxpayers don't realize the interest they pay on their personal residence is sometimes partly deductible)
• if you're contemplating starting up a business, is it better to incorporate or not? (many business owners incorporate too soon, losing  the tax deductibility of start-up costs)
• shareholder/partnership agreements- has one been written/ updated in such a way to maximize tax advantages (few business owners consider this)
• have you registered with the various government tax authorities to ensure compliance with tax law and eligibility for deductions/credits? (many business owners neglect to register for the GST and lose input tax credits for purchases)
• are you taking advantage of tax advantages of small business corporations (lower tax rates and tax free rollovers)
• if you are an employer, are you aware of the many tax free benefits you can give your employees?
• Do you have the potential to get R&D credits?

EMPLOYED PERSONS

•   can you structure your activities to reclassify yourself as self-employed (or commission salesperson) to maximize deductions (but  beware of potential loss of health / pension/employment insurance benefits)

• if you're contemplating switching jobs, are you aware of how this will affect your entitlement to health/pension benefits
• EI clawback  trap- if you're considering collecting EI,  have you planned to keep your income low enough to avoid the clawback?

ELDERLY TAXPAYERS

(These people are particularly vulnerable to falling into traps that cost them big taxes. In their need for cash, they often sell property without realizing that by doing so they fall into the capital gains tax trap.)

• sale of property- Plan the best way to raise needed cash without paying high taxes
• disability deduction- make sure that it's claimed if you're eligible
• avoid Old Age Security clawback by keeping income below threshold
• converting RRSP's- have you decided which is your best option?
• will- is it up to date? Does it reflect your wishes? (many folks still have wills that provide that their entire estate fall to their ex-spouse)
• planning to reduce the capital gains tax on death

BUYING AND SELLING A BUSINESS

• best way to structure sale/purchase- whether better to buy/sell shares of a company or its  individual assets
• best way to legally allocate sale price among various assets (sometimes there is a degree of flexibility)
• best way to deal with GST implications of a sale or purchase
• best way to minimize, or defer, taxes on sale
• best way to maximize the potential tax deductibility of a purchase
• ways to ensure that you capitalize on the exempt capital gain for sale of small business corporations

OTHER

• Do you have a farm, or a property that can be converted into a farm, to capitalize on the farm loss deduction
• Can you capitalize on the $10,000 tax free death benefit?
• Can you be eligible for the clergyman's residence allowance?
• If you are employed by a research or educational institution, can your salary be structured so that at least part of it  is classified as a research grant (so that applicable expenses can be deducted from it)
• RRSP  contributions- who should contribute how much for whom? (often taxpayers are confused as to the meaning of "contributor" and "annuitant", resulting sometimes in the lower income spouse contributing on behalf of the higher income spouse)
• RRSP trap- Are you a potential victim?- i.e. contributing in a lower tax bracket year and withdrawing the funds in a higher tax bracket year
• Locked in RRSP- Is there a way to unlock it? Should you?
• RESP's- What, if any, is the optimum amount to contribute?
• Home Buyer's Plan- Can you and should you contribute?
• RRSP's vs. mortgage payments vs.RESP's- Most folks have limited funds and are confronted with choosing between paying down their mortgages, contributing to RRSP's and contributing to RESP's. What is the best option for you?

Contact info:

Name:        B.C. Chastkofsky C.A.

E-mail:        bc@torontotaxhelp.com

telephone:   416-785-6567

fax:            416-785-1718 (daytime only please)