business investment losses

Taxes and Your Business Investment Loss

A loss on an investment in a company you own or made in another person’s small business can qualify for some advantageous tax breaks. This helps ease the impact on your finances for the year. Whether the investment was in shares or a loan to a small business, it may qualify for a full deduction against your personal income.

investment loss tipsTypically, only half of an investment loss would be deducted and only against its capital gains. The ability to deduct a business investment loss against any type of personal income can substantially reduce your income tax for the year. It’s important that the nature of the investment be properly analysed to ensure it meets the criteria. Many small businesses will meet the criteria.

Furthermore, if the loss exceeds your income for the year, it is possible to carry back the loss against income you earned in the three previous years. Likewise, you can carry them forward to apply against future income.

The Canada Revenue Agency will typically ask for some documents to support your claim. If this occurs, consult with your advisor to make sure that you can at least minimize your income taxes. Your Padgett advisor can also help you determine if the loss can be claimed even though the investment still exists, but the likelihood of recovery is very low.

If you have questions give us a call. We have three locations for your convenience. Click here to find the one that works best for you. 

equipment

Accelerated Write-off of New Asset Purchases

Who doesn’t love write-offs? Did you purchase new assets after November 20, 2018?

In the November 21, 2018 Fall Economic Statement, the federal government proposed three important and immediate changes to Canada’s tax system. In order to enhance business confidence in Canada and stay competitive with the United States:

  • The immediate write-off for tax purposes of the cost of machinery and equipment used for the manufacturing or processing of goods (Class 53).
  • The immediate write-off of the full cost of specified clean energy equipment (Class 43.1 and 43.2).
  • An accelerated capital cost allowance (i.e., larger deduction for depreciation) for all capital property other than manufacturing & processing and clean energy equipment. The Accelerated Investment Incentive will provide a deduction in the first year equal to 3 times the amount that would otherwise apply. It is subject to a maximum write-off of 100% of the cost.

“Part of what contributed to widespread concern about Canada’s competitive position was efforts in the U.S. to lower the overall tax rate on new business investment. Those measures were ultimately very costly. The federal government’s actions today are an attempt to both respond to those immediate pressures, while not completely ignoring their fiscal situation.” said by Francis Fong, CPA Canada’s chief economist.

Go ahead and make new investments with these new write-offs.

For more information contact us at 250-744-3854.

RRSP and Tax Planning

2018 is almost upon us as the year draws to a close. It’s time, once again, to take advantage of the many personal and business RRSP and tax-planning opportunities that are still available. Read more

Estate Planning

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When estate planning, your consultant may suggest that the RRSP/RRIF holder designate a beneficiary of the plan. There are many advantages that most people are unaware of. Some of these include:

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Lifetime Capital Gains Exemption (LCGE)

On January 1st, 2017, the LCGE increased to $835,716 of capital gains realized by an individual on qualified small business corporation shares. The LCGE has been indexed to inflation for the years following 2014. The new limits apply to any taxpayer who has claimed the LCGE previously.

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