Many business owners think that filling your “T2” corporate tax return is just something they must think about once a year. However, the world of tax contains many intricacies beyond just the income tax aspect, and you should be thinking about tax proactively throughout the year to save you money.
In fact, incomes taxes are just one slice of the whole tax pie! Remember there are taxes for payroll, sales, capital gains, etc. Furthermore, particularly as the owner of the business, corporate taxes can also influence your personal taxes as well. And so, you will often find it close to impossible to discuss just one particular type of tax in isolation.
–To illustrate this, let’s say your company intends to buy a building and you are wondering about the most cost effective and tax advantageous way to go about this. Well there are several issues to consider – to name a few:
- It could be bought by the company or through the owner personally,
- What are the possible tax implications (e.g. HST on purchase, capital gains upon sale)
- Are there any capital cost allowances to be claimed on the building or the equipment within etc.
Although things started off with the fairly simple premise of acquiring a property, due to the domino-effect of various taxes, it quickly turned into something much more multifaceted and complex.
Because taxes are such an all-encompassing part of business you should pay attention to them throughout the year and make them a part of all business decisions not just when your T2 is due.