Year end is quickly approaching! Here are a few things you should do for your taxes, personal and business, before December 31.
Even though you don’t have to file your tax return until the Spring, you need to do some of these items in the next few days. Some reasons are: to claim them on your 2016 tax return, some are required by law to do before the end of the year, and others are recommendations to maximize savings.
- If you are a retail store owner, or have a small business with inventory, remember to count your inventory is December so that it can be captured in your year end.
- If you are thinking about purchasing a large capital item shortly, you may want to move that up to get the benefit into the current tax year. Large capital items are rarely fully deductible but amortized over some years. If it is a planned purchase, buy it before the year end so you can start receiving the benefits on your 2015 tax return.
- If you have a corporation, make sure your shareholder account is ‘on-side’ you may still have time to transfer some funds or property back to your corporation to avoid taxes on withdrawals. This means that if you have taken funds or property out of your corporation during the year, you can still put the cash or other assets back in, to avoid the taxes. At year end, it is okay if the corporation owes the shareholders some funds, but not the other way around.
- For personal taxes, review whether or not you should be doing an RRSP before the end of February of the following year. Have a look at your tax assessment from last year to see you allowed maximum contribution. You get immediate tax relief by deducting your RRSP contributes from your income each year.
- Review any final tax credits; including medical, charities, donations, etc. There are extensive lists and descriptions of eligible expenses on the Canadian Revenue Agency website, including medical expenses. Donations made to charities and not-for-profits will issue an official receipt which is needed for your tax return, so make sure you have them on hand. Other tax-deductible credits are available for families with children; such as the children’s arts tax credit and fitness credit. A full list of top things families should know about taxes available on the CRA website.
Review your income for the year, make sure to complete what you need to do before December 31, collect all the necessary paperwork, and then talk with your accountant to review your options. Set up an appointment early in the new year to review with your accountant what you need to do to get ready to file your income tax. Getting ready early will help you plan effectively and meet the required deadline for filing.