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3 Ways Corporate Tax Accountant Can Help You Reduce Your Business's Taxable Income

Business documents illustrating the concept of corporate tax.

 

For Canadian-controlled private corporations claiming the small business deduction, the net federal tax rate is 9 percent. Moreover, they also need to pay provincial corporate tax.

 

Businesses must pay taxes on taxable corporate profits, i.e., business's income receipts less allowable deductions.

The Canadian Revenue Agency allows several deductions and incentives to help businesses minimize their taxable income.

 

However, many businesses don't take advantage of these tax laws and pay a higher amount of tax every year.

Here are three ways corporate tax accountant can help reduce a business' taxable income.

 

Making Smart Tax Elections

 

Your corporate tax accountant will minimize your taxable income by making smart choices about your business' capital expenditures.

For instance, as per Canadian tax laws, you can reduce 50% of the specified machinery and equipment cost that qualifies as a capital amortization expense on written down value each year.  

 

But if your business is not yet profitable, your accountant will advise you to delay the purchase to take advantage of the depreciation to your future tax years.

 

It will allow your business to make deductions in future years and offset your taxable income. They will make smart tax elections like these for all your business assets.

 

A corporate tax accountant calculating the business tax on a MacBook using a calculator.

 

Use Carryovers

 

Canadian tax laws allow several credits and deductions to corporations; however, there are limits on the amount that prevents you from using them completely in the current tax year.

 

Your corporate tax accountant will use carryovers to use these credits and deductions in the future and reduce your business's taxable income.

 

The accountant will keep track of all carryovers so they can be utilized in the future to minimize your tax liability.

Some common examples of carryovers include capital losses and net operating losses.

 

Do Year-End Planning

 

You can substantially reduce your taxable income by performing year-end planning for your business. Many strategies allow you to defer and minimize your tax liability.

 

For instance, you can buy fixed assets and claim depreciation in full. You can also revalue your assets to increase the amount of depreciation, which will reduce your taxable income.

 

Your corporate tax accountant will several strategies to reduce your business's taxable income and, as a result, minimize your overall tax liability.

 

Final words

 

These are only a few of the many ways a qualified corporate tax accountant can help you reduce your business's taxable income.

Having a tax expert by your side will allow you to slash down thousands of dollars from your taxable income and minimize your tax burden.

 

If you are looking for a professional corporate tax accountant in Edmonton, get in touch with us today!
At Duggal Professional Corporation, we provide specialized tax solutions to ensure our clients pay their fair share without paying more than required by the law. Call +1 780 863 2224 to get started.