Kustom Design Group of Companies

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How do we save taxes in Canada? We do not look at tax evasion or tax avoidance. Instead, we look for ways to minimize your taxes legally.

The Supreme Court of Canada super cedes the CRA (Canada Revenue Agency) and overrules it. The Supreme Court of Canada says that you have the right to arrange your affairs in ways to minimize taxes.

There are many ways to take control over the amount of income tax you pay.

Maximizing all tax deductions and tax credits (write-offs)
You need to look at every possible deduction and credit for you personally, and for businesses, you should be maximizing all possible business expenses (deductions). It is recommended that you seek professional advice to identify all deductions and credits available. For individuals that are employees, they should consider opening a home based business so they can start to take advantage of more tax deductions.

Home Based Business Benefits
A small business is one of the best tax saving tools. We are talking about a simple sole proprietorship and not a big enterprise. A home based business could save you thousands of dollars per year in taxes.

If you now have a job and do not own a business, you should start a home based business. The most significant benefit of full or part time self employment is that you will be able to increase the amount of deductions your are entitled to write off.

Deduction of a portion of your home
Very important for people that want to have a home based business with a home office. Additionally, almost all of your home expenses can now be used as deductions. Every person should be writing off at least a portion of their home and vehicle.

Make your mortgage Tax Deductible
If you have a mortgage on your home and you have money to invest, it is better to pay off your mortgage to increase your home equity. Then you can borrow new funds toward your mortgage through a line of credit or an adjustable mortgage. Why do you have to go through this process? Because CRA says that all the interest you pay on money borrowed to invest is tax deductible.

Structuring
Sole Proprietorship is the simplest form of structure and only requires you to be running a legitimate business with a potential for profit. You can and should register a trade name if you are planning on running this business for the long run. The tax advantage of this type of structure is that all the expenses of the business are your own and they can be used as deductions to reduce your taxable personal income.

Incorporation is the creation of a new entity – a corporation. The corporation abides by different rules; the corporation pays its own taxes. The corporation’s tax rates are much lower than the personal tax rates.

Holding Companies. The main purpose of a holding company is to hold assets, such as shares of other corporations, real estate, equipment, vehicles, etc. The holding company allows the separation of assets for liability purposes and the ability to lease the assets to operating company.

International Business Corporations (IBC’s) can be used for global operations or international investments

Trust Structure can protect your assets and pass them to the next generations. Trusts can also be used for effective tax minimization through income splitting. Click here to learn more about trusts (link to 5th step).

Tax Shelters

Generate new tax credits and support humanitarian causes. Tax Shelters help the less fortunate while helping you to save taxes at the same time.

Other Tax Strategies

Tax Deferral Strategies (Canadians Care).

This is an arrangement where you get tax benefits immediately but will most likely pay it back at a later date. Aside from its tax benefits, the tax deferral strategy allows individuals to support Canadian humanitarian initiatives.

Flow Through Shares

Flow Through Shares are common shares of Canadian resource companies issued to finance the exploration and development of resource properties. To encourage investments by these companies, the federal government allows exploration and development expenses incurred to be “flowed-through” to investors and deducted for tax purposes.

There are many ways to save or minimize tax. Come and see us to learn more!