5 Best Tax Tips

You’re undoubtedly sick of paying too much tax if you’re a company owner.

There are, however, tax methods that may be used to reduce the amount of tax you pay.

A Toronto Chartered Accountant’s Top 5 Tax Tips:

1. Dividends — Tax Advice

Dividends are taxed at a lower rate than salaries.

For example, in Toronto, Ontario, the highest personal income tax rate is 46.4 percent for salaries and just 31% for dividends. Also checkout: tax brackets married filing jointly

In fact, in Toronto, Ontario, the first $38,000 in dividends is tax-free if you have no other source of income.

As a result, your company would be better off paying you dividends rather than wages.

Before using this technique, you should speak with your Chartered Accountant in Toronto.

2. Tax Tip: Income Splitting

If your spouse works in your company, you may pay him or her a fair wage for the work that he or she has done.

If you are in a high tax bracket and your spouse is in a lower tax band, paying your spouse a wage will reduce your overall tax burden.

3. Tax Tip from the Home Office

As a sole owner with a home-based office, you can deduct a part of your operating expenses.

Utilities, property taxes, mortgage interest, and upkeep are all included in these expenditures.

The amount you can deduct is determined by the percentage of your home office’s size to the entire size of your house.

For example, if your home office takes up 10% of your entire living area, you can deduct 10% of your house’s operating expenses.

You should consult your Toronto Chartered Accountant before using this plan.

4. Tax Tip: Shareholder Loans

You can have your business return a loan to you on a tax-free basis if it owes you money.

Shareholder loans are frequently derived from the company owner’s original capital investment or from costs paid on behalf of the firm by the business owner.

If your Toronto Chartered Accountant hasn’t informed you about shareholder loans, you should inquire as to why.

5. Tax-Free Automobile Allowance — Tax Recommendation

Consider having your firm pay you a tax-free automotive allowance for the kilometres you drive for business purposes if you have a corporate-owned vehicle.