Year-End Tax Planning Tips for Small Business
The end of the calendar year is your last opportunity to take actions that affect this year's taxes. Strategic planning now can significantly reduce your tax bill.
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Key Takeaways
- Start year-end planning in October/November
- Time income and expenses strategically
- Review owner compensation before fiscal year-end
- Make capital purchases for CCA claims
Income Timing Strategies
- Defer invoicing to push income to next year (if beneficial)
- Accelerate collection on receivables if needed for expenses
- Review passive investment income ($50K threshold)
- Consider timing of capital gains recognition
Expense Strategies
- Prepay expenses (rent, insurance, subscriptions)
- Purchase equipment for CCA deductions
- Write off bad debts before year-end
- Review shareholder loan repayments
Owner Compensation Review
Before fiscal year-end, determine optimal salary vs dividend mix:
- Pay salary to create RRSP room
- Declare dividends for tax efficiency
- Ensure shareholder loans are properly structured
Bonus Accrual
Bonuses declared before year-end but paid within 180 days are deductible in the current year.
Don't Wait Until December
Many strategies require time to implement. Start planning at least 2 months before year-end.
Plan Your Year-End Strategy
Tax Punjabi can help you maximize deductions before your fiscal year ends.