If you’ve just incorporated, you can get help registering with the Canada Revenue Agency (CRA) from the business specialists at TaxAssist Accountants. Even if you’re simply looking for ways to increase your profits, you can benefit from the expertise of the tax specialists at TaxAssist Accountants. Every company incorporated in Canada must pay corporate tax on its profits. But you should take advantage of every opportunity to lower the amount you pay.
Federal tax rates in Canada can be confusing if you don’t have a dedicated accountant on staff who knows how to read the rules and apply them to your business. Rather than pay the highest corporate tax rate, for example, a knowledgeable accountant finds sufficient expenses and other conditions to help you reach the lowest rate your company should pay.
What Are Provincial and Territorial Tax Rates?
Not only do you need to have someone with in-depth knowledge of the constantly changing federal Canadian tax rules, but also someone with extensive knowledge of the lower and higher rates commissioned by territories and provinces. Variations include:
- Some provinces and territories rely on the federal limits for businesses to set the limits for their own localized tax rates.
- Others create limits that don’t align with the federal rates.
- Personal tax rates can vary from zero percent in places like Saskatchewan and the Yukon on the low to 16 percent on the high end in Prince Edward Island.
For all territories and provinces, except Alberta and Quebec, the federal government collects the tax revenues in addition to federal taxes. You can lower your tax burden when you file by filling out the proper forms, such as the Schedule 5 form that’s required if your company:
- Has permanent residences in more than one province or territory
- Is claiming tax rebates or territorial or provincial tax credits
- Must pay other taxes besides income tax
How Do I Lower My Final Corporate Tax Burden?
Once you’ve identified the appropriate tax forms, find an experienced accountant to design a tax planning strategy to reduce the amount of corporate tax you must pay. Save receipts for your deductions to support your claims in case you are selected for an audit. But before adding deductions to lower your tax burden, make sure those deductions apply to the correct year. The most common deductions you can take to reduce the amount of corporate tax you pay each year include:
- Start-up costs, including filing and license fees
- Supplies you need to operate your business
- Small office supplies, such as pens and paper; desks and computers, fall under capital expenses
- Business use of home expenses
- Employee wages and benefits
- Meals and entertainment, usually restricted to 50 percent of actual costs
- Management and administration fees
- Office rent
- Interest paid on loans
- Utilities and phone services
- Advertising and marketing
- Professional and accounting fees
While the process may seem straightforward, you have a business to run. Keeping track of the details of your expenditures isn’t always front of mind. Instead of paying higher taxes because you haven’t had the time to maintain the necessary data, contact TaxAssist Accountants today to get started on a system that ensures you pay the lowest corporate taxes possible.
Date published Jun 22, 2022This article contains general information only and should not be relied upon for accuracy or completeness. You should seek appropriate tax or accounting advice from a qualified accountant before you take, or refrain from taking, any steps based upon this article. This article should not be construed as tax, accounting or other professional advice and QX Franchise Limited (Master Franchisee for TaxAssist in Canada) disclaims liability for any loss, howsoever caused, arising directly or indirectly from reliance on the information in this article.
Choose the right accounting firm for you
Running your own business can be challenging so why not let TaxAssist Accountants manage your tax, accounting, bookkeeping and payroll needs? If you are not receiving the service you deserve from your accountant, then perhaps it’s time to make the switch?
We specialize in supporting independent businesses. Each TaxAssist Accountant runs their own business, and are passionate about supporting you.
We enjoy talking to business owners and self-employed professionals who are looking to get the most out of their accountant. You can visit us at any of our 3 locations, meet with us online through video call software, or talk to us by telephone.
Changing accountants is easier than you might think. There are no tax implications and you can switch at any time in the year and our team will guide you through the process for a smooth transition.