These are the documents generally needed for the preparation and Filing of Tax returns for 2009.
General Documents
- 2008 No tice of A ssessment/reassessment
- 2009 tax installment summary
Checklist for Preparation and Filing of Income Tax Returns 2009Automobile Deduction Limits and Expenses Benefit Rates for Business The following limits and rates are in effect for year 2009 and 2010
Income Splitting Income splitting is a family tax planning technique designed to shift income from a higher-income earner to a lower-income earner to reduce the overall tax paid by the family. An example of income splitting The following simple example will help you understand the basic idea. Should I register for the GST/HST? If your taxable sales do not exceed $30,000 in a taxation year, GST/HST registration is optional. You will have to decide whether or not to register GST/HST voluntarily. Sometimes, this is not an easy decision to make. Here are some issues to think about. Do I have to register for the GST/HST? You have to register for the GST/HST if your sales of taxable goods or services during the fiscal period of your business exceeds $30,000. You must register and begin charging the GST/HST the month after you reach the $30,000 threshold. You cannot wait until the following year to register. Basics of registered retirement savings plan (RRSP) The registered retirement savings plan (RRSP) is one of the best tax deferred income plans. An RRSP allows you to save pre-tax “earned” income, within specific limits into registered plans. The amount contributed into an RRSP is deducted from your taxable income and thus saves you tax. Another tax saving benefit is that income earned in the RRSP is not taxed. However, any RRSP withdrawal will be added into your income and taxed for that year. Three basic types of income: employment income, business income and property income In canadian income tax system, you are taxed on your taxable income. What is income? "Income" is not specifically defined in the Income Tax Act. Almost any benefit you receive from any activity is likely to be taxable as income. Using shareholder loan wisely: an income splitting strategy If you own an incorporated business, the taxman wants a share on any distribution from your company. To prevent you or your family members from avoiding taxes by extracting funds as shareholder loan from your corporation, the subsection 15(2) of the tax law requires the amount of loan be included in the borrower's income in the year the loan was made if the loan is not repaid by the end of the corporation's following taxation year. However, if the amount is included in income and is repaid at a later date, it is deductible from income in the year of repayment. In fact, you can turn around and use this rule at your advantage to achieve income splitting among family members. Here is an example. Lets say you r child is studying in the university. You can have your corporation make a loan to your child to pay tuition fees, books etc. The amo0unt of the loan will be included in your child's income. Your child will likely pay little or no tax on the loan if your child has no other income. After your child graduates and starts working full-time, he will repay the loan to your corporation and get a deduction for the repayment. The benefits? Your child pays little or no tax when receiving the loan, and enjoys a nice deductino for repaying the loan when his income is much higher. This strategy does not work if the child is a minor because the loan will be taxed at the highest marginal tax rate. For this reason, use this strategy only after your child has reached at least 18 years. If you own an incorporated business, the taxman wants a share on any distribution from your company. To prevent you or your family members from avoiding taxes by extracting funds as shareholder loan from your corporation, the subsection 15(2) of the tax law requires the amount of loan be included in the borrower's income in the year the loan was made if the loan is not repaid by the end of the corporation's following taxation year. Capital cost allowance (CCA) Business cannot write off the cost of capital assets, such as computers, furniture and etc, immediately upon purchase. The cost has to be spread over several years. For tax purposes, this write-off, which is referred to as Capital cost allowance (CCA), is subject to strict rules and limitations. Employ family members - An effective income splitting and tax saving strategy If your family members, such as spouse or children, help you out in your business, paying them salaries may be an effective strategy of income splitting and reduction of the family's overall tax burden. |
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If you are self-employed, you can deduct all expenses incurred in the conduct of your business as long as the expenses are undertaken to earn income. 
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