Navigating Tax Changes for Canadian Corporations and Individuals
The recent changes to corporate tax laws in Canada have left many taxpayers with corporations wondering how to best navigate the new landscape. With the introduction of tax on split income in 2018 and the potential for higher capital gains tax rates after June 25, incorporated business owners are facing tough decisions on how to manage their finances.
One key consideration for business owners is whether to trigger capital gains tax before the proposed deadline of June 25. By selling appreciated investments before this date, taxpayers may be able to avoid a significant increase in the amount of income tax payable on these transactions. With the potential for a 33% higher tax rate on capital gains after June 25, many are weighing the benefits of taking action sooner rather than later.
Looking ahead, taxpayers are also left wondering what other tax changes may be on the horizon. While the future is uncertain, one proactive step that married or common-law Canadians can take is to consider contributing to a spousal RRSP. By balancing RRSP balances and pension income between spouses, individuals can potentially reduce their overall tax burden in retirement.
As the tax landscape continues to evolve, it’s important for taxpayers to stay informed and seek advice from financial professionals to ensure they are making the best decisions for their financial future.