Year end tax planning - 2020: For individuals and owner-operators

The Year-End Tax Planning guide is primarily intended for individuals who have accumulated a certain amount of wealth or who own their business (large or small). It includes nine year-end tax planning checklists and several helpful information tables.

 

What's new?

Response to COVID-19 - introduction of wage subsidies (eg Canada Emergency Wage Subsidy) and benefits (eg Canada Economic Stimulus Benefit); extension of certain payment and production deadlines.

Employee stock options - proposed limits to restrict the beneficial treatment of stock options.

Provinces and territories

Response to COVID-19 - introduction of various incentives (eg, reimbursement of BC PST on certain machinery and equipment); extension of certain production deadlines

• Alberta - decrease from 11% to 10% on January 1, 2020 and to 8% on July 1, 2020
  
• Nova Scotia - down from 16% to 14% on April 1, 2020
• Quebec - decrease from 11.6% to 11.5% on January 1, 2020

Small Business Rates

• Nova Scotia - decrease from 3% to 2.5% on April 1, 2020
• Ontario - down from 3.5% to 3.2% on January 1, 2020
• Prince Edward Island - decrease from 3.5% to 3% on January 1, 2020 and to 2% on January 1, 2021
• Quebec - drop in the going rate from 6% to 5% on January 1, 2020 and to 4% on January 1, 2021; small business CCPCs M&T rate remains at 4%
• Yukon - Decrease in non-M&T and O&M rates from 2% and 1.5% to 0% respectively on January 1, 2021

Research and development (R&D) tax credits

Alberta - credits are eliminated for qualifying expenses incurred after December 31, 2019, but a new innovation and employment grant that supports R&D for SMEs will be available starting January 1, 2021

Quebec - the expenditure exclusion threshold applies only to the R&D salary tax credit for eligible expenditures incurred for a taxation year beginning after March 10, 2020

Yukon - lower corporate rate to 12% for qualifying expenses incurred in tax years ending after December 31, 2020

Beneficial ownership records

New (British Columbia, Manitoba, Prince Edward Island) and planned (Nova Scotia, Quebec and Saskatchewan) provincial requirements for private companies to maintain ownership records

Year end tax planning checklists

The assistance of your PwC advisor is essential to properly analyze the following year-end tax planning strategies. In addition to tax considerations, your financial plan should take into account investment philosophies, sound business practices, and motivational goals. Owner-operators must ensure that sufficient funds are retained to achieve business objectives; Given the uncertain economic conditions, cash flow management is particularly important.

 Year end tax planning tips

With December 31st just around the corner, now is a good time to review some tax return & preparation services that need to be in place before the end of the year.

Read More : Year end tax planning - 2020: For individuals and owner-operators

Pay Deductible or Creditable expenses before the end of the year

Certain expenses can only be deducted from taxable income or qualify for a tax credit if the amount is paid before the end of the calendar year. If you plan to pay an expense that is tax deductible or qualifying for a credit early next year, consider doing so before the end of the year to take advantage of the deduction or credit on the income tax return.