In Part 1, readers were introduced to four practical tax-saving ideas. Continue on below with an additional five ideas – all aimed at saving you many hard-earned dollars.
|5.||Technical Service/Hygiene Services Corporation (T/HSC)|
|A Technical Service Corporation/Hygiene Service Corporation (T/HSC) is an entity that operates the hygiene or technical service component of a dental or specialty practice, for example, orthodontic. Such corporations are separate businesses from one’s dental or specialty practice and therefore the T/HSC employs its own hygienists and pays its fair share of rent, dental supplies, telephone, receptionist and other business expenditures. The Royal College of Dental Surgeons of Ontario (RCDSO) issued their position on the subject of TSCs in the form of a Practice Advisory in May 2000. T/HSC like a Professional Corporation (PC) also enjoys the low rate of tax of 18.62$.
In addition to the tax deferral benefits as described under a PC, the T/HSC also facilitates income splitting, as shareholders of the T/HSC may include non-dentists such as spouses, children, parents, etc., who may be in a lower tax bracket. Hence, tax savings can be achieved because individuals 18 years or older may receive approximately $31,000 in dividends and pay virtually no taxes, assuming they have no other income.
To illustrate note the following example:
* Assumes dividends of $81,380 are paid to three or more individuals who have no other source of income – i.e., each individual receives $27,127 in dividends.
|6.||Timing of your major purchases|
|Buy equipment, computers, and software or renovate your office before the end of your fiscal year. Ensure that your supplier invoices you and installs or delivers the above items before the end of your fiscal year.|
|7.||Timing of revenue recognition|
|Defer placing implants for your patients until next fiscal year. This will shift income from this year into next year.|
|8.||A six-month recall|
|Instead of seeing your accountant on a yearly basis, perhaps you should have a recall every six months. Why? Your accountant will have more accurate information to provide you with a tax estimate well ahead of April. No more surprises and you will have enough time to save/plan for your tax payment.|
|9.||Deduct all eligible expenses|
|Remember that six meals are 100 per cent deductible (not subject to the 50 per cent deduction rule) provided you invite all your staff to these meals.
Where the total cost of such gifts and awards is $500 (inclusive of applicable taxes) or less, the employer may give and receive tax deductions for up to two non-cash gifts per year per employee (including family members who are employees) for special occasions including Christmas, Birthday, and Hanukkah etc. In addition, the employer may give two non-cash awards per year and receive deductions for such awards. These awards are in recognition of service rendered. For example, the employee of the month, long service award or suggestion award. The employee receives these gifts and awards tax-free.
Saving taxes requires planning. The nine strategies presented in Part I and II should add to your arsenal and on-going quest to reduce taxes.