What are the Legitimate Ways to Decrease Business Taxes in Canada

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What are the Legitimate Ways to Decrease Business
Taxes in Canada?
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In this post, we will take you through some of
the best legal techniques to save business taxes
in Canada. There Are several legal ways that you
can make use of to save your corporations taxes.
So, why be untruthful in the first place? Were
going to talk about the top 5 legitimate ways to
decrease business taxes in Canada.
Incorporate your small business
The foremost legitimate way to decrease business
taxes in Canada is by incorporating your
corporation. Companies pay a pretty low tax rate
of just 12.2 percent on the first half-million
dollars of profit. In the contrary, individuals
can pay as high as 52 percent in taxes if the
reach their highest tax bracket (at graduated
rates). So, you see, you can save in taxes by
just incorporating your small business. Keep in
mind that when income is withdrawn from the
corporations, it adds back to individuals income
with a credit available for paid. So its more of
a tax deferral tool!
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Having a higher income, why not to set up a
tiered structure?
Add lower income spouse as a shareholder
The second best legitimate way to decrease
business taxes in Canada is by incorporating your
spouse to your existing corporation as a
shareholder. Being a shareholder of your
corporation, your other half can get up to
33,733 (2021, ON) in dividends, tax-free, per
year, from your organization, given that your
spouse doesnt have any other income
source. Even if your spouse is working is
earning considerably less than you are from your
business, it is still beneficial to pay dividends
to your spouse, as youll decrease the overall
tax burden of your family. This is because youre
in a higher tax bracket your other half is in a
lower tax bracket.
Write-off donations given to charities
The third best legal way to decrease business
taxes in Canada is through donations. Companies
that make donations to enrolled charities can
take advantage of charitable donations.
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Promote your business avail a tax deduction
The 4th best legal way to get a tax deduction in
Canada is to promote your business. Advertising
expenditures are completely deductible, and
purchases done for gifts to offer to clients are
also entirely deductible (subject to
limitations). Finally, meals entertainment
incurred, for instance, for winning and dining
clients, are 50 deductible.
Set up a Tiered Corporate Structure
If you are having multiple entities generating
significant amounts of profits, consider
utilizing the benefits of tiered structures.
Setting up a holding company allows dividends to
flow freely from operation corporations to
holding corporations. For professional
Corporation Tax Preparation Services in Canada,
do get in touch with Maroof HS CPA Professional
Corporation!
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