November 5, 2015, No. 2015-32. As an owner-manager, it’s the perfect time to take stock and consider ways to improve your tax position for the current year now that Canada has a new government. A new Canadian government that campaigned on significant tax changes means that you may only have a few weeks left to properly address time-sensitive issues to reduce taxes for yourself and your incorporated business.
To help you assess your business and personal tax situation for 2015 as a part of your regular financial planning, KPMG has prepared a checklist with tips below. These tips, which include several limited time opportunities to prepare for upcoming 2016 tax changes expected under Canada’s new government, assume your corporation has a December 31 year-end. Regardless, you can still use these ideas whenever your business' year-end comes up as well as to enhance your 2015 and 2016 personal tax savings. For more general tips on year-end tax savings for individuals, see our TaxNewsFlash-Canada 2015-30, “Post-Election 2015 Personal Tax Savings — Act Fast”.
You should consider accelerating income into 2015 versus 2016 (or, where possible, deferring expenses or deductions until 2016) if you are affected by the newly elected Liberal government’s election platform promise to introduce a new 33% tax bracket (up from 29%) for annual incomes of more than $200,000. Since it appears that the rate increase will not take effect until 2016, individuals at the new top marginal tax rate will realize a 4% federal savings on salary or bonuses (i.e., ordinary income) received in 2015 rather than in 2016, which could result in combined federal and provincial absolute tax savings ranging from 1.9% in British Columbia to 7.75% in Alberta, depending on your province of residence (see table below).
Information is current to November 5, 2015. The information contained in this TaxNewsFlash-Canada is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG’s National Tax Centre at 416.777.8500.