Small Business Tax Tip

Your Business Income Tax Deductions

Small Business Tax Tip # 1: Maximize your Capital CostAllowance claim.

Purchase necessary equipment and technology now rather than waiting for the new tax year to start. Although you’ll only be able to claim 50 percent of the normally allowable Capital Cost Allowance on your new assets, you’ll still be increasing your Capital Cost Allowance for this tax year – and setting yourself up for an increased CCA claim in the following tax year.

Small Business Tax Tip # 2: Delay disposing of depreciable assets.

If you’re planning to dispose of depreciable assets, such as manufacturing equipment or computer equipment, don’t dispose of them until the new year. Otherwise, you’ll be reducing your Capital Cost Allowance Claim for this tax year.

Small Business Tax Tip # 3: Payment of Dividends

As a result of the government’s proposed tax changes to Canadian Controlled Private Corporations (CCPC’s) and the limitations with dividend sprinkling, consider paying additional dividends to family members who are shareholders and are in a lower tax bracket to maximize the income sprinkling opportunities before the proposed rule changes commence in 2018.

Small Business Tax Tip # 4: Make your maximum RRSP contribution.

This is the best available tax deduction for any business set up as a sole proprietorship or partnership. In any given year, you can contribute up to 18 percent of your earned income, and your RRSP contribution is deducted directly from your income.