THE ANNUAL REVIEW CHECK LIST: Please don't forget to let me know what has changed in your life during the past year. This is your Annual Reminder. You can complete the Annual Review Check List on our web site, print the page off, complete it and forward it back to me.

If you're not on the internet, please call me and I'll personally get the Annual Review Check List to you.

Please, allow me to say it once more: MERRY CHRISTMAS AND A HAPPY NEW YEAR TO YOU AND YOUR LOVED ONES.

HAPPY INVESTING!
Sincerely,
Hans Mathisen

 

LIFE LETTER

Tax planning for small business owners

The small business landscape is constantly changing. Many economic models that guided businesses for decades are no longer applicable. Technology has spawned a massive and ongoing global economic revolution. It used to take many years or even decades for a company's products to reach a global marketplace. Now it can happen almost overnight. In light of this, governments are continually updating tax legislation to keep pace.

Most small business owners wrestle with the challenges of keeping up with the demands of their marketplace. There are customers to please, creditors to appease, and employees to manage. They seldom have time to sort through the "tax maze" when their primary focus is on increasing business revenue. Do you want to ensure you're taking full advantage of your tax planning opportunities?

Here are a few strategies you should talk to your tax specialist about:

Are you aware of these changes to the tax code?

• A two year freeze on Employment Insurance (EI) premiums resulting in a $4.5 billion stimulus.
• A temporary capital cost allowance (CCA) rate change for the purchase of computers between 2009 and 2011.
• Raising the amount on small business income that is eligible for a reduced federal tax rate.
• The extension of the 50% straight line amortization (CCA rate) for the purchase of machinery and however equipment.
• Changes to tariffs on selected machinery and equipment is providing over $440 million dollars in savings to Canadian industry.
• A $240 million injection into various business support programs that may provide guaranteed financing or grant opportunities.

Did you know?

• There are legitimate home maintenance and ownership deductions that many home-based businesses overlook?
• There is a Scientific Research and Educational Development Tax (SR&ED) credit available for small businesses?
• There are tax benefits and grants for digital media companies that may apply to your business?

A qualified tax professional stays informed and is able to advise on how these changes impact small businesses. Each year as you review your business plan, consider taking some time to speak with your tax advisor to ensure you are fully informed of the tax implications of your business plans and models.

These are just some of the types of tax strategies overlooked by many small business owners. A professional tax planner stays abreast of these changes and how they can apply to you.

Copyright © 2011 Life Letter. All rights reserved

Minimize Income Taxes - because it's the right thing to do!
Call Hans Mathisen today at (306)242-7042.
or email - hans@mathisen.ca

 

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LIFE LETTER

TFSAs - Flexible wealth building strategy

The Tax-Free Savings Account (TFSA) was introduced in the February 2008 Federal Budget and became available January 1, 2009. It is touted by the Government of Canada as "the single most important personal savings vehicle since the introduction of the Registered Retirement Savings Plan (RRSP)."

The Canada Revenue Agency (CRA) draws a distinction between an RRSP and the TFSA program as, "An RRSP is primarily intended for retirement. The TFSA is like an RRSP for everything else in your life." The reason for this distinction is that TFSAs offers the investor the flexibility to access the funds without incurring a tax obligation upon withdrawal. As we are all aware 'life happens' and having all of our money in rigid investments can put a damper on our liquidity. This is especially true for growing families where access to emergency funds is always necessary. It’s better to save those funds in a tax free account than to have your interest income eroded due to taxes.

The features of the Tax Free Savings Account:

• Available to Canadian residents who are least 18 years of age.
• Includes a $5,000 annual deposit limit.
• Allows withdrawals tax-free.
• Contribution room carry-forward.
• Withdrawal amounts can be reinvested in future years future years.
• Does not affect eligibility for Old Age Security (OAS), Guaranteed Income Supplement (GIS), or the Canada Child Tax Benefit.
• Can be transferred to a spouse or commonlaw partner upon death.
• Investments can be in the form of cash, mutual funds, GICs, or bonds among others.
• Allows a higher earning spouse to contribute to the TFSA of a lower income partner.
• Is indexed to the Consumer Price Index (CPI) to account for inflation.
• Has no upper age limit for participation or withdrawal.

The Tax Free Savings Account is an ideal investment for those who want to earn investment income without the tax burden as well as those who want liquidity in their savings. While the wealthy may take advantage of these savings vehicles, it is the middle class that stands to reap the most benefits. Instead of holding funds in a 'rainy day' savings account, you can increase your return through tax savings without losing flexibility. As with any investment plan there are some caveats to consider as the CRA found that some of the 4.7 million TFSA investors were confused in its application.

Copyright © 2011 Life Letter. All rights reserved