The following checklist provides tactics you should consider as part of your year-end tax planning. If you need further explanation, please contact Chaplin & Co., Chartered Accountants at 416-667-7060.

Installments - reduce instalments if you anticipate that the current year’s taxable income will be less than the prior year’s taxable income.
Final tax balances - Pay final corporate income and capital tax balances within two months after year end (three months for certain Canadian-Controlled private Corporations).
Salary/dividend mix - Determine the optimal salary/dividend mix for you and other family members for 2010.
Pay salary or bonus - other than dividends if the corporation’s combined Federal and Provincial rate exceeds 20% - generally when taxable income exceeds $500,000.
- If the individual’s tax rate is higher than the corporation’s, retain in the corporation income on which the corporation pays tax, to allow personal tax to be deferred.
Remuneration accruals - Accrue salary and bonuses before the year end of your business. Ensure that accrued amounts are paid within 180 days at the corporation’s year-end.
Employee gifts and awards - Consider the CRA’s revised policies when formulating an employee gift and award program.
Salaries to family members - Pay a reasonable salary to a lower-tax bracket spouse or child who provides services to your business.
Corporate withdrawals - Make tax-effective withdrawals of cash from your corporation (e.g., by paying dividends, non-taxable capital dividends, or a return of capital).
Depreciable assets - Accelerate purchase of depreciable assets.
Reserves - Identify and claim any additional reserves for doubtful accounts receivable or inventory obsolescence.
Dividends - Convert dividends to capital gains.
Dispositions - Defer planned dispositions that will result in income until after year end.
Costs of doing business - Compare costs of doing business in different jurisdictions.
Sales to related businesses - Ensure that goods sold to related businesses are resold to third parties before year end.
$750,000 capital gains election -
- Ensure that the company qualifies as a qualified small business corporation.
- Crystallize the capital gain now.
- Consider taking steps to have your spouse or children share in future appreciation to use their $750,000 capital gains exemption.
- Determine whether you have a cumulative net investment loss (CNIL) amount which will affect any capital gains exemption claim.
- If you have already used your exemptions, consider transferring private company shares to your RRSP if a cash contribution is not practical.
Capital gains rollover - Investment proceeds on the sale of eligible small business investments in other eligible small business investments.
Inter-company charges - Ensure inter-company charges are reasonable given changes in the economy.
Donations - Make charitable donations and political donations before year-end.
Shareholder loans to your corporation - Have your corporation pay deductible interest on shareholder loans made to the corporation in order to reduce active business income to the $500,000 threshold. This threshold may be higher in some jurisdictions.
Shareholder loans from your corporation - Repay shareholder loans from your corporation no later than one tax year after the amount is borrowed (exceptions apply).
Fines and penalties - most government and court fines are not deductible.
Professionals and sole proprietorships -
- Consider making election to retain your off calendar year-end.
- If your business is growing and the income increasing annually, the alternative method may provide some income tax deferral.