By George E. Dube, CPA, CA, LPA
January is a great time to start fresh and set down a plan for the year, take advantage of tax planning opportunities, and ensure you are meeting your filing obligations. You might even feel it’s time to outsource your accounts to an accounting firm, because you can get cpa for tech business, retail, real estate, any business you have you can have access to this handy option. Now is also a good time to answer any tax-related questions you may have. If you’re filing your taxes for the first time, you may wonder what is a tax reference number? Or perhaps you’re not sure what’s deductable or whatnot. Whatever your query is, now is the time to figure it out and put your plan into action. Here are five tips to make 2014 more streamlined, pay less in taxes, and avoid filing penalties.

1. Get the right plan

As a New Year’s resolution, make sure you take the time to meet with your advisors at some point during the year. Address with them whether your existing structure, accounting system and expectations for profits are:

• Reasonable for your current situation
• Capable of adapting to future plans

The right structure, and a flexible remuneration plan, is critical to ensuring your taxes are optimized. Avoid locking in choices, such as monthly salaries, that restrict tax planning decisions. And consider getting a tax estimate to help with your cash flowing planning.

2. Save the date

Use a tax calendar to plan over the year. This makes it easier to meet your filing requirements for Canada Revenue Agency. In turn, this can save you money and ensure you receive less attention from the CRA by meeting their deadlines and paying on time. You can find a tax calendar on our web site at dubecuttini.com.

3. Get organized

To have the right plan and meet your CRA filing requirements, you must get your bookkeeping in order. This isn’t really a ‘sexy’ part of real estate investing, but is critical to your success. If you find bookkeeping tedious, making use of the Tax Accountants Melbourne has to offer might be a wise idea, plus leaving it to the professionals would help avoid any mistakes. Being caught up and organized means:

• Your accountant can receive your information in a timely manner, and in turn prepare the financial statements and tax returns on time
• Your JV investors can get timely information
• You can better analyze what is going on with your properties, and make improvements to your portfolio

For tips on getting organized, talk to your accountant about a well-documented organizational system. A good accountant (see www.oneclick.accountant to learn more) can help you get this set up so you have easy access to any important documents you may need. Consider making your system digital for even easier access. When you can access your documents via your smartphone if your banker is asking for details to finalize a mortgage, the banker will be impressed how quickly you can provide information. And, imagine the confidence this can inspire in current and potential investors.

4. Take advantage of family income splitting

One way that the CRA allows families to split income is using loans between family members or other entities. The lower income family members use the loan to invest and in turn are eligible for income from the investments. Real estate investors often use this strategy in two ways:

• With corporations, where a higher income spouse contributes funds to the company, which in turn buys real estate. When properly structured, profits can often be directed to the lower income spouse, provided that the higher income spouse receives, as a minimum, an interest rate on the loan. This rate is determined quarterly by the CRA. (Currently, this interest rate is waffling between 1% and 2% and is likely to continue to do so for a period of time.)
• Loans provided to family members of age who use the funds to acquire all or a portion of a personally owned property.

A word of warning though: failing to pay the interest between family members, trusts, corporations, etc. on time in one year can put a structure permanently off side, particularly with family trusts. This interest is due on January 30^th (not January 31^st).

5. US Investors: Ensure foreign assets meet new tax reporting requirements

If you have invested in the US, or another country, either personally or through other entities, you need to know that foreign asset disclosure forms have changed from last year. The CRA requires more information to remain in their good books. Before the rush, find out what you need to provide. So far, it appears that the CRA intends on strictly following the disclosure requirements, which means stiff penalties if you fail to fill out the right forms, with the right information, on time.

George Dube is a veteran real estate investor and accountant (CPA). He has spoken,

written various articles, and co-authored two books on real estate accounting. (georgedube@dubecuttini.com)