Tax planning is the analysis of a financial situation or plan from a tax perspective. The purpose of tax planning is to ensure tax efficiency. Through tax planning, all elements of the financial plan work together in the most tax-efficient manner possible.
Now is the time to decide whether you should hire someone to fill out your forms or do them yourself. The degree of complexity of your tax situation can guide you in this choice. If you feel overwhelmed or don’t understand the tax implications of your financial activities can also be resolved when you hire an Accountant.
It is often assumed that spouses can split income earned in a joint account equally or in whatever way minimizes their overall tax bill. This is not the case. In general, each spouse must report their share of income earned in a joint account in accordance with the proportion of funds they have each contributed to the account.
A Tax-Free Savings Account (TFSA) is a registered investment or savings account that allows for tax free gains. The amount of money that can be contributed to a TFSA is limited each year. A TFSA can be used for any savings goal and withdrawals can be made free of tax.
Once the business is profitable, incorporation can offer several significant benefits. Your business is a separate legal entity and as such, creditors or legal actions usually go against your corporation and its assets, not your personal assets. Your business has tax flexibility from which you may personally benefit. You can choose the most tax-efficient way to pay yourself, including dividends, salary, bonus, or a combination.