What a relief this week as the Bank of Canada held interest rate at 4.5%. How long will this last? We don’t really know. Recall that the interest rate has been raised 8 consecutive times and south of the border in the US, the Chair of the Federal Reserve Bank testified this week in congress in preparation of a rate hike in the US. We will wait and see where this goes and we will continue to learn and monitor the economic data in the coming weeks and months. In this issue, I share our offer for personal and corporate tax returns as well as other topics. It’s tax season and it’s time to be tax-efficient. Enjoy this issue and please remember to share this with everyone in your network:
1. Are You Ready To File Your Personal Tax Returns?
In the recent survey I completed on personal income taxes, 47% of you said you will be filing your taxes yourself, while another 24% plan to use a friend to help file their taxes. As technology continues to improve, we believe that this trend will continue to grow in the coming years. The truth is that filing personal taxes is not the hard part. What may be challenging is getting the appropriate insights from your tax returns that will enable you plan better going forward. As you file your tax returns this year, here are some questions to consider:
- What’s the dollar amount I paid in taxes?
- What’s my average tax rate?
- What’s my marginal tax rate?
- Why did I get a refund? Why did I NOT get a refund?
And when you have answers to these questions following the filing of your tax returns, you want to consider your next action steps. For example, what steps can you take in 2023 to pay less taxes than you did in 2022? This is where insights come in handy. As I’ve said many times, when you don’t get insights, you end up paying more in taxes than you’re required to and a dollar lost in taxes today will not only cost you a dollar today, IT WILL COST YOU A MULTIPLE OF THAT DOLLAR OVER TIME!
If you’re looking for INSIGHTS to help you minimize taxes, then consider the Personal Tax Services we offer. With our services, we can help you minimize taxes, improve cash flow and get ahead financially. Get the details here.
2. Are You Prepared For The New Underused Housing Tax?
If you own a residential rental property in Toronto, you may be aware of the new Toronto vacant property tax as you would have received a letter in the mail. This is an annual tax levied on vacant Toronto residences, payable beginning in 2023. What you may not be aware of if the newly introduced Federal Underused Housing Tax (UHT) which imposes a 1% annual tax on the value of residential real estate considered to be vacant or underused that is owned on December 31 of each year. While the government indicated that the tax would target property owned by non-Canadians, the scope of filing requirements extends to many Canadian corporations and individuals, including Canadian Controlled Private Corporations (CCPCs), trustees of a trust and partners of a partnership. The first filings and taxes are due by May 1, 2023. Penalties for failure to file the return (even where no tax is payable) start at $5,000 for individuals and $10,000 for corporations. In the coming weeks, I will share a short survey or checklist you can complete to help you determine if filing is applicable to you and if you have any tax liabilities owing on this. So, stay tuned.
3. Nine Money Mistakes to Avoid
Most of us start our journey in life with little or no preparation on how to manage our money…
We don’t learn it at school.
We don’t learn it from our parents.
We don’t learn it from friends.
So, we start our life journey without this important knowledge and as a result, we end up making too many mistakes. Some will learn from their mistakes, others will not.
And we’ve all made mistakes with our money. I have certainly had my fair share and in this article, I share nine of these mistakes so you can avoid making them on your journey to financial freedom. Read it here.
4. A Paradox of Life
We live in a world of instant gratification, a world ravaged by short-term thinking and short sightedness. If you want to stand out, you have to think long-term. In one of his recently emails, James Clear writes about this paradox of life where many incorrectly associate long-term thinking to inaction in this insightful quote:
“A paradox of life is that the greatest returns come in the long-term, but the opportunity cost of moving slowly is huge.
Long-term thinking is not slow acting.
Act fast on things that compound. Never let a day pass without doing something that will benefit you in a decade.”
James Clear, author of Atomic Habits, shares insightful quotes like this weekly. Consider subscribing to his weekly emails for tips on cultivating winning habits. Check it out here.
5. Do You Own A Corporation With A December 31 Year-end?
As some of you may know, we provide a number of services for corporate clients and it’s that time of the year when corporations with a December year-end should start organizing their documents to compile their financial results, estimate taxes, plan their cash flow for the new year and a number of other things. While we obviously help corporations with the tax compliance work of filing their annual corporate tax returns, we do provide other additional value added services such as:
- Streamlining and automating majority of your bookkeeping processes
- Doing a cash flow and budget analysis for your corporation
- Estimating corporate tax liability and developing a plan for installment payment of your taxes
- Corporate tax planning including how to invest corporate dollars and how to properly use insurance within your business to mitigate risk and plan for retirement
- Corporate restructuring to ensure you’re organized in the most tax efficient way
- Remuneration planning to ensure you’re taking money out of your corporation in the most tax efficient manner
- How to use your corporation as a nest egg for your retirement in a tax efficient manner.
- And many more…
If you’re looking for solutions for your corporation consider working with me and my team at GMS Professional Corporation. Check out our standard service offering for corporations here. And when you’re ready to have a chat, book a time with me here.