SMALL BUSINESS
MANAGEMENT
Chapter Thirteen
Tax Management
1
Taxation and Small Business
 History
of Taxation
 Income Taxes
–
complexity of principles and frequency of
legislative changes
2
General Tax Management Principles
 Nine
fundamental areas
 1. Continual tax planning
–
through the year requirements
 2.
Tax Deferral
 3. Income Splitting
 4. Marginal Tax Rates
3
General Tax Management Principles
 5.
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–
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Deductibles
accounting and legal expenses
advertising
business entertaining
automobile expenses
interest expense
repairs and improvements
office expenses
4
General Tax Management Principles
 6.
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Government Tax-Related Programs
Special tax rate deductions
 Small
Business Deduction (SBD)
 Manufacturing and Processing Deduction
 Investment Tax Credit
 Deferral Programs
–
–
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deferred profit sharing
registered retirement savings plan
bonus deferral
5
General Tax Management Principles
 6.
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 7.
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Government Tax-Related Programs (cont)
Accelerated Capital Cost Allowance
Small Business Financing Programs
The Incorporation Question
corporation vs proprietorship vs partnership
6
General Tax Management Principles
 8.
The Remuneration Question
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compensation salary or dividend
 9.
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
Transferring the Business: Capital Gains
capital gains and family members
Goods and Service Tax (GST) and
Provincial Sales Tax (PST)
7
Appendices
 A.
Federal and Provincial Tax Rates for
Individuals
 B. Federal and Provincial Corporate Income
Tax Rates
8
Concept Checks
 1.
Why is it imperative that the small
business owner have some tax knowledge ?
 2.
What is continual tax planning ?
 3.
What are two good reasons to defer taxes
 4.
What is income splitting ?
9
Concept Checks
 5.
What are the nine fundamental areas of
tax management of which an owner should
be aware ?
 6.
What is the definition of a deductible ?
 7.
List the six government related programs
available to small businesses.
10
Concept Checks
 8.
Why would a company wish to
incorporate ?
 9. From a tax perspective, would it be better
to take a salary or dividends from an
incorporated company ?
11