15 Ways To Reduce Your Income Taxes for 2007

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.. According to Deloitte’s October 2007 TaxBreaks Newsletter

It’s a good read … here’s just one of these 15 tax tips .. #10 …

10. Pay a bonus

The small business tax deduction (SBD) is available to Canadian-controlled private corporations with active business income of less than $400,000 federally in 2007 (this amount varies regarding provincial and territorial taxes). If the active business income derived from your company exceeds the $400,000 threshold, a common suggestion has been that the corporation pay out a bonus to bring its income below the threshold. However, since 2006, changes to federal and many provincial (including Quebec) corporate tax rates have been both announced and effected for future years. The implementation of eligible dividends has also affected dividend tax rates. Given these modifications, it is important to ensure that this strategy remains on target with your situation and generates the best tax savings possible. Talk to your tax advisor. If you opt for this solution, your company will be able to claim the tax deduction as long as the bonus is paid within 180 days of your corporation’s fiscal year-end.

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