Over the next few weeks, I will publish a series of year-end tax planning that build on the 2009 Year End Tax Planning Strategies article posted November 19th. Here is a list all of the year-end tax planning articles.
Corporations should be aware of the following deadlines:
- If you have shareholder loans (that is loans from a corporation to it’s shareholders) that were made in the previous tax year, be sure you repay them before the end of your company’s current tax year. Failing to do so will result in the loan being added to the shareholders income.
- If you are going to pay a bonus, be sure they are paid within 179 days of the end of the year to be deductible in the current tax year. This is particularly important to small businesses that are just over the $500,000 small business deduction limit and need to bonus down to the limit to save income taxes.*
- R&D claims must be filed within a year of the businesses tax-return due date.
Also note that a corporation may chose a year-end other than December 31st when they are established.
* A Canadian Controlled Private Corporation (CCPC) that has active business income (as opposed to investment income) benefits from a much lower federal tax rate on the first $500,000 of taxable income and may provinces have similar reductions. For 2009, the rate of federal tax on active business income is 11% whereas the federal rate on income above the limit is 19% and the rate on investment income is 34.67%. Therefore, a CCPC that has taxable income over $500,000 may benefit by issuing a bonus to the owners when income exceeds $500,000 to avoid potential double taxation.
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Hi there,
“R&D claims must be filed within a year of the businesses tax-return due date.”
If you’re referring to the SR&ED program, you have 18 months after the corporate year end to file a claim.