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Taxation

//Taxation
Taxation 2018-02-13T06:42:23+00:00

At Tax Partners, we understand that creative taxation strategies go far beyond the preparation and filing of tax returns.  Our in-depth taxation knowledge and 35+ years of experience in helping our clients protect their earning and minimize income tax payable has established our team as the ‘go-to Accountants’.

Our clients recognize the added-value we offer by thinking outside the box.  Our team’s objective is to clearly identify each client’s unique situation, as well as their goals, desires and aspirations.   We provide strategic plans to maximize your earnings and minimize your tax, all while allowing you to do what you do best – running your business.

You won’t be shuffled around from department to department like the large accounting firms.  Our team has all the expertise required to help you achieve success.

Big firm advice at a price you can afford.

Incorporating your business makes ultimate sense once profits exceed your living requirements by a certain amount, as the surplus, if it remains within the company, is taxed at much more favourable results on corporations (encouraging companies to retain earnings).

However, even then there is still more that can be done to protect those earnings from taxation, or at least minimize the rate at which they are taxed.

Your options are wide and varied and, as your accountant, our role is to clearly describe your options and help you make informed business decisions.

The result will be that you take advantage of all possible options of incorporation and are able, in time, to pass-on your business with minimal fuss to the next generation, or if your goal is to sell, then the strategies selected may be different, but the result the same.

Our goal is to help you minimize your corporate income taxes! Our firm’s in-depth tax knowledge and years of experience enables us to accomplish this for you. With over 35 years of working in this area, we have the ability to identify strategic opportunities for your company to accomplish this!

There are a number of alternatives to choose from including, and not limited to, the establishment of an:

  • owner’s profit sharing plan
  • owner’s company retirement savings plan
  • owner’s deferred employee profit sharing plan

Our clients need tax advice at many various stages of their business’ life cycle. We recommend you talk to our team as you are seeking professional tax advice when:

  • our business becomes profitable and grows
  • your business structure becomes more complex
  • the government introduces new tax legislation and tax law changes
  • your business acquires another business or real estate
  • your business divests itself of an operating unit or sells a significant asset
  • your business expands internationally
  • you’ve decided to sell your business or transfer it to a family member
  • you are planning for retirement and the distribution of your wealth to your estate
  • you are preparing your will

Our Firm is focused on providing value-added services to our private corporate clients. This is particularly true for the tax advisory services provided to our family-controlled businesses. We take a proactive advisor role with our clients to assist them in all aspects of corporate tax planning, owner remuneration, structuring & advising of significant transactions, dealings & representations on matters with taxation authorities.

Our overall objective of corporate income tax planning is to structure a business to minimize its income tax now and in the future. There are a number of alternative ways to accomplish this not limited to tax deferral, improved tax accounting and other methods of structuring the business to gain the best possible tax advantages.

However, there are any number of traps awaiting the unsuspecting entrepreneur, so call us to start planning the tax strategies for your corporation today.

 

“In this world nothing is certain but death and taxes.” – Benjamin Franklin –

Introduced as a temporary measure to finance the 1918 war effort, Income Tax is with us to stay.

Yes, our Firm can prepare your personal income tax returns. Reality is it’s not just about determining how much income tax you owe, or the amount of your refund. It’s about looking at the big picture and planning ahead, so you always pay the least amount of income tax or generate the largest refunds possible!

In addition to dealing with the usual year-end tax planning and reporting issues, we also advise on key areas such as:

  • What is the most tax-efficient method to take profits out of your business?
  • Are you utilizing all possible allowances and reserves each year?
  • How much tax would be payable if you were to sell your business?
  • How much tax would be payable if you or your spouse were to die?
  • What is the best way to save for your retirement?
  • Should you be using a family trust?
  • Are you deferring as much income and taxes as possible?

Other strategies we consider:

  • Splitting income among several family members or legal entities in order to get more of the income taxed at lower brackets
  • Shifting income from one year to another in order to have it fall where it will be taxed at a lower rate
  • Shifting deductions from one year to another to place them where the tax benefit will be the greatest
  • Deferring income taxes through certain investment choices and pension plan contributions
  • Structuring your affairs to obtain a tax deduction for some expenses paid for things you enjoy, such as a vacation home
  • Investing your money, in safe investment vehicles, to generate income that is deferring, or exempt from, income tax

Our Firm adds value with creative advice on structuring deals, the most tax efficient method to put compensation into the hands of the business owners, preparing you for the proposed sale of the business, and estate planning.

Hundreds of thousands of dollars can often be at stake. Don’t leave this critical area to anyone but a tax expert, such as the team at Tax Partners.

Nobody likes to pay any more in tax than they absolutely have to, yet, the fact is that every year thousands of Canadians do just that by default.

Don’t be one of them.  Spend some time to organize your affairs in the most tax-efficient manner possible, and reap the rewards.

The best time to prepare your taxes is months ahead of the deadline, not in March or April of each year! We offer proactive tax planning services. There are a variety of year-end strategic tax planning decisions that have to be made before tax time, and we would be happy to review these with you.

The real difference is the creative application of the income tax rules that comes from years of experience and dedication to providing clients with superior tax planning ideas. We take pride in our ability to ensure that you pay the lowest amount of tax that is legally possible.

We frequently develop tax planning strategies for high net worth individuals. We attempt to minimize their current taxes and develop a long-term strategic plan that will minimize their taxes on and after retirement. In some cases, the plan may involve a non-resident aspect, an estate freeze, or the use of trusts. The plan may also focus on investment strategies, retirement plans, and creative uses of insurance.

Our tax planning services are offered by our knowledgeable tax practitioners and include customizing owner-manager remuneration packages, providing advice on making interest tax deductible, income splitting, setting up trusts, together with retirement, estate and succession planning to minimize income taxes on death and a variety of many other tax planning strategies, as outlined on this web site.

Call today for a free, no obligation consultation with our team of accountants so we can help reduce your exposure to income taxes.

 

For high net worth clients, Estate and Trust Tax planning are essential services that usually can save tens or even hundreds of thousands of dollars over time.

Estate planning is critical if you wish to avoid passing the lion’s share of your wealth to Canada Revenue Agency (CRA) upon your untimely death.

Trusts are highly efficient tax tools that are often confused by many as a complex tax mitigation vehicle. We take the mystery out of these issues and explain the benefits of what’s involved, in easy-to-understand terms.

We don’t try to impress you with our technical jargon.  We explain your options in a language you’ll understand and help you establish a structure for your trust that will deliver the desired results.

Estate Planning
The art of estate planning is more than just knowing the tools. Our team will approach the planning of your estate with your unique goals in mind. Our technical expertise has put us at the top of the game and our intimate knowledge of each client’s goals has kept us growing. We’ll structure your plan according to your situation and your philosophy.

What Does Estate Planning Mean?
Planning your estate means managing what you own during your lifetime and beyond, not leaving things to chance or even to just a will. It means taking stock and organizing your business and personal affairs so they continue as you want them to. It means minimizing the costs and taxes associated with the distribution of an estate.

And That Means Planning, Now
Planning your estate means arranging for the transfer of your assets to the individuals you wish them to be transferred to, both during your lifetime and beyond. It means planning for the years ahead and achieving your goals and your family’s goals by:

  • Having a valid, updated will
  • Minimizing taxes
  • Funding your final wishes
  • Planning for the transfer or sale of your business

You might also benefit from the use of a trust, shareholders’ agreement, or a valuation of your business. 

Who Needs an Estate Plan?

You do, if you want the protection and continuation of all you work hard for. 

You do, if you own any of the following:

  • A business
  • Real estate
  • Investments and savings
  • RRIFs or RRSPS
  • Life insurance

You do, if you want to control how those assets are managed beyond your lifetime, and if you want to pass those assets on with the least possible alteration to them. Estate planning protects:

  • Your spouse
  • Your child(ren)
  • Any other relative(s) or friend(s)
  • Your preferred charity or other organization 

You do, if you don’t want the government to be your primary beneficiary.

Without a comprehensive estate plan, CRA could take a significant portion of what you’ve worked so hard to build and your assets might not be left as you intended.

Managing what you own beyond your lifetime means not merely having a will, but having a plan. It takes a lifetime to build your estate – spend a few hours now, planning for it. 

Trusts
Trusts can be extremely flexible tools used in professional estate planning. A trust is created by the transfer of an asset to a trustee who will look after it for the benefit of another person or persons. A trust can help you with both family-related and tax-related planning issues.

The utilization of a trust in tax planning has many advantages, not limited to the following:

  • Freezing the value of one’s estate
  • Business succession planning
  • Income splitting for adults
  • Multiple use of the $800,000 capital gains deduction
  • Residence planning, including your principal residence, cottage, and US owned property
  • Deferring capital gains
  • Inter provincial tax planning (utilizing lower personal tax rates in other provinces)
  • Confidentiality, including avoiding unnecessary publicity of your wishes
  • Control
  • Preserving assets
  • Family law protection and protecting family assets
  • Providing for special needs (disability)
  • Reducing probate fees
  • US estate tax planning
  • International estates

The type of trust chosen is very important in providing for your wishes. There are a surprising number of different types of trusts commonly recognized for income tax purposes, including trusts created during your lifetime and testamentary trusts which are set up in your will. They form an important part of the toolkit available in planning your estate and achieving your wishes.

Some of the types of trusts that we use to accomplish the needs and wishes of our clients include:

  • alter ego trust
  • bare trust
  • blind trust
  • charitable purpose trust
  • commercial trust
  • discretionary trust
  • health and welfare trust
  • immigration trust
  • inter vivos trust
  • joint spousal trust
  • personal trust
  • non-discretionary trust
  • non-resident trust
  • henson trust
  • mutual fund trust

If you would like to enquire about how trusts can assist you with your wishes and in minimizing your personal income taxes, just call us.

Wills
A legally valid will is central to ensuring that your wishes are followed in a timely, cost-effective and tax-efficient manner. It’s important to review your will every few years because changes in the law or in your life can impact your will.

A will ensures your property will be transferred according to your plan. In the absence of a will, your assets will be distributed by the Province according to its own formula. That formula likely will not reflect your intentions, and it could involve lengthy delays and significant additional costs. As part of our estate planning services, we can help you:

  • Take stock of what you own
  • Design the allocation of your assets
  • Make sure your will is consistent with your comprehensive estate plan
  • Evaluate whether your spouse and children will receive sufficient income
  • Ensure that your will includes tax-saving strategies which your executor can implement
  • Reduce probate costs
  • Value your assets
  • Have your final tax return(s) filed 

Tax Planning
Taxes are a fact of life, and a fact of death. But with effective planning, you can minimize the tax that would otherwise be paid at death. You can also make sure that the plan you intended will not be altered because of consequences of which you were not aware.

Many of the assets you’ve accumulated will be taxed in the year of your death – as much as half your total assets could be lost to tax. That’s not what you’ve worked for, and it’s not the legacy you want to leave behind. There are a number of obstacles you’ll want to avoid:

  • A lack of liquidity that could result in your business stopping at the first generation
  • A forced sale of assets
  • A loss of family control of assets
  • Limited choices
  • An alteration of your planned transfer of assets, resulting in an inequitable allocation
  • A disruption in the smooth execution of your plan

There are many steps you can take now to reduce or defer taxes at that future time. The steps themselves and the combination of them will be as individual as your life and your estate.

A list of your assets and their current value is a place to start. Trust, estate freezes, business ownership structures, and insurance are some of the tools we can use to help you achieve your goals.

To get started, call us for a free, no obligation consultation to determine whether which tax saving tools are suitable for you.

Taxpayer Identification Numbers Required for all U.S. Returns

Tax Partners is an ACCEPTANCE AGENT accounting firm by the IRS. We are approved to handle ITIN applications. More information, please visit our US Tax Website at www.ustaxpartners.com.

What is an ITIN?
An Individual Taxpayer Identification Number (ITIN) is a number that is assigned to non-resident aliens of the U.S. who earn income in the U.S. This number is not a replacement for the Social Security Number (SSN) and does not grant any residency status in the U.S. (unlike a green card or work visa). There are new requirements for Canadians obtaining a U.S. tax I.D. number.

Previously, the IRS would issue an ITIN applicant an ITIN card. However, due to the confusion and similarity to an SSN card, the IRS has amended this policy and now only issues a confirmation letter to Canadians applying for a tax I.D. number in the U.S.

If you are eligible for an SSN, you must first apply for one. Persons eligible to receive a Social Security Number are not eligible to receive an ITIN. If the Social Security Administration denies the applicant’s request for an SSN they will issue a letter of denial. That letter must be attached to the Form W-7 (application for an ITIN) when it is submitted to the IRS.

Can apply for a U.S. Tax ID Number help with taxes?
As a Canadian earning income in the U.S., the tax I.D. number provides several key benefits. This include:

  • Lower withholding taxes on U.S. income earned
  • Claiming foreign tax credits on your Canadian tax return for U.S. taxes paid
  • Reducing the chance of double taxation

In addition to these benefits, the IRS stipulates that the ITIN is required to file your US Non-Resident Tax Return (1040-NR), process a tax refund, and withhold taxes on certain types of income in the U.S.

How can Canadians get a tax identification number (ITIN)?
In order to properly apply for your ITIN, you must prepare Form W-7 and present proof of residence in Canada.

The IRS streamlined the number of documents it accepts as proof of identity and foreign status to obtain an ITIN. There are 13 acceptable documents.

  • Each document must be current and contain an expiration date. The IRS will accept documents issued within 12 months of the application if no expiration date is normally available.
  • Documents must also show your name and photograph, and support your claim of foreign status. The most commonly used document by Canadians applying for ITIN is a Canadian Passport.
  • Notarized copies from a lawyer are not acceptable. The IRS will only accept copies that are certified by the issuing agency.

If you do not provide these documents, your ITIN Application will be denied.

As a cross-border tax specialist operating in the Mississauga, we can help you with:

  • Getting a tax identification number
  • Co-ordinate your ITIN application to minimize delays
  • Identifying withholding tax requirements in the U.S. and opportunities to minimize these taxes.

Please note that Form W-7 for your tax ID number is usually only accepted when it is submitted with your Non-Resident U.S. tax return. However, there are certain exceptions to this rule that can help expedite the application process.

Also, If you are planning to file your U.S Taxes with Tax Partners, please do not hesitate to contact us for a quick consultation.

US Taxation

Individuals and businesses are moving and investing across borders in record numbers. Besides everyday issues involved in such situations, a fairly complex set of tax rules must be considered. Our firm can help you understand and plan for these issues.

Our personal U.S. tax services are designed to offer client focused innovative solutions.

Some of the U.S. tax services we provide to individuals include:

  • preparation of U.S. personal income tax returns
  • preparation of U.S. state personal income tax returns
  • designed strategies for high net worth individuals
  • retirement planning for U.S. tax deferred retirement plans
  • advice on tax issuing for individuals considering moving from the U.S. to Canada and from Canada to the U.S.
  • investing in U.S. real estate including assisting with buying or selling U.S. assets
  • assisting with preparation of U.S. ID numbers for nonresidents of the U.S.
  • S. estate tax for U.S. citizens living in Canada
  • tax planning for U.S. citizens living in Canada
  • preparation of delinquent U.S. tax filings for non-filed tax years
  • assisting with outstanding income taxes issues, nonpayment, payments in arrears, etc.
  • a variety of other U.S. tax related services for individuals

Attention, U.S. Citizen and Greencard holder! Were you born the in the U.S.? Are you a U.S.  

Citizen or Greencard holder? If so read on.

If you were born in the U.S., are a U.S. Citizen, or Greencard holder living in Canada you are subject to the same income tax filing requirements that you would be subject to if you were living in the U.S. This means that you must file U.S. income tax returns each year to report your worldwide income. In addition to the income tax returns, there are various information returns reporting forms that must be filed with the Internal Revenue Services (“IRS”) that result in significant penalties (i.e. $10,000.00 per form) if not filed on time.

In February 2011, the IRS announced a new voluntary disclosure program to bring U.S. taxpayers that have not previously been filing a U.S. personal income tax return, into the U.S. tax system and provide them with a mechanism for resolving their U.S. tax issues. The new initiative applies to calendar years 2003 through 2010 and is scheduled to only be available until August 31, 2011. The voluntary disclosure program is designed to eliminate the risk of criminal prosecution and provides for lesser civil penalties that would apply if the non compliance came to the IRS’ attention through other means.

When crossing the border, U.S. border guards are starting to request those born in the U.S. to use a U.S. passport. To obtain a U.S. passport, you must file all delinquent tax returns. Also, starting in 2014, Canadian financial institutions will be required to report information to the IRS for U.S. Citizens.

If you are a U.S. Citizen or Greencard holder and have not been filing the U.S. income tax returns and/or the information returns, please contact us as soon as possible to discuss your alternatives.

Recent changes have been made by the Internal Revenue Service. A recent article that appeared in the Globe & Mail on January 16, 2012 outlines various matters related to the filing requirements and new onerous reporting requirements that are required for US Citizens.

On June 26, 2012 the Internal Revenue Service announced new “catch up” filing compliance procedures for non-resident U.S. taxpayers.  The rules and regulations for this are outlined per the attached article titled New U.S. Filing Program – June 26, 2012 Regulations.  The changes are significant, and the essence of the changes are briefly outlined per the attached article.

Cross Border Tax Issues

To minimize any tax liabilities and take full advantage of cross-border planning opportunities, Canadian businesses need the assistance of an accountant on their side who fully understands how to navigate the U.S. tax laws.

We can assist our clients since we have unique skills and experience to deliver the result that your business requires. Some of our assistance may take the following forms:

  • Strategies and due diligence in the acquisition of U.S. entities or assets
  • Structuring corporate investment and expansion into the U.S.
  • Developing tax-efficient financing structures
  • Planning expatriation of U.S. profits to Canada
  • We can obtain U.S. Individual Taxpayer Identification Numbers (ITIN’s) on behalf of clients
  • We can obtain Corporation Employer Identification Numbers
  • We can expedite U.S. Federal and State payroll processing
  • We can also assist or direct you to certain individuals and organizations that can assist with immigration, emigration and U.S. citizenship
  • And much more

We can provide taxation and business services in Canadian, United States or combined tax situations, involving individuals, corporations, partnerships, estates and trusts.

Call Today at 905-836-8755 for a free, no obligation consultation with Tax Partners team of accountants.

Indirect taxes are increasingly important in Canada. Most transactions are affected. Every contract concluded, and invoice produced or received, may result in potential exposure or overpayment of tax if not properly managed. Getting it right can save your business money, while getting it wrong can be very costly to your bottom line.

Tax Partners team of indirect tax specialists assist clients in Canada, the United States and around the world, from all types of industries, in complying with their Canadian indirect tax obligations and minimizing risks in identifying any available opportunities.

Key services provided by our indirect tax specialists:

  • Registration
  • Completing tax returns and other tax forms
  • Tax audits and objections
  • Compliance consulting
  • Educating/assisting foreign businesses in expanding to Canada
  • Submissions to the voluntary disclosure programs
  • Preparation of requests for letters of interpretations and rulings from the tax authorities
  • Review of internal procedures to identify risk areas and planning opportunities as well as strategies and effective processes to implement solutions
  • Due diligence

Our International tax specialists respond to your personal or your company’s needs.

We make sure that your cross-border taxes are done right the first time. At Tax Partners, we stay up to date with the ever-changing world of cross border and international tax laws. We will work with you to make sure that you comply with all relevant tax requirements. Tax Partners is one of the few accounting offices in Canada that specialize in Canada-US tax planning and preparation.

Since 1987 Hutcheson & Co. has worked with hundreds of Canadian and U.S. companies preparing their annual 1040 and Canadian returns. We help individuals and companies avoid double-taxation while minimizing overall taxes payable With constantly changing laws and regulations, entrusting your cross border tax services to our qualified team at Hutcheson & Co. saves you both time and money. In addition to corporate cross border tax services, Hutcheson & Co. also provides Canadian residents and U.S. citizens with non-resident tax filing services.

These services include:

  • U.S. 1040 personal tax returns
  • Cross Border Financial Planning
  • U.S. corporate tax returns
  • Non resident real property tax filings
  • 1040-NR non resident tax filings
  • Real estate clearance certificates for non residents
  • IRS Individual Taxpayer Identification Numbers
  • Personal tax returns for Canadian non residents
  • Tax returns for non-resident corporations
  • Section 216 rental returns
  • Clearance certificates for non-resident real estate sales

If you would like to speak with a member of the Hutcheson & Co. team about your corporate or personal cross border tax requirements, contact us today!