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Year-End Tax Planner – 2010

What individuals and owner-managed businesses need to do now to save tax

How to Use this Planner

This Year-End Tax Planner is designed primarily for individuals who have accumulated some wealth or who own their own businesses (large or small). Contact your PricewaterhouseCoopers LLP (PwC) adviser or any of the individuals listed on page 22 to discuss how this Year-End Tax Planner applies to you.

This edition is current to November 2, 2010, and provides year-end tax planning checklists for:

Owner-Managed Businesses..........................3 Employees ....................................................... 7 Investors ..........................................................9 Parents and Spouses......................................11 Students ......................................................... 12

Seniors ......................................................... 13 Individuals and Businesses with:

International Connections................. 13 U.S. Connections ................................ 14

Other features include:

  • a calendar of upcoming tax filing and other deadlines (inside front cover);

  • integration tables relating to active business income and investment income (page 16);

  • key personal and corporate income tax rates (pages 17 to 19);

  • titles of additional PwC publications, which are available at www.pwc.com/ca/publications (page 20); and

  • a list of PwC podcasts, which are available at www.pwc.com/ca/taxtracks (page 21).

Of course, tax is only one aspect of a complete financial plan. Other elements should reflect investment philosophies, sound business practices, cash flow management and motivational considerations. Given that uncertainty in the economic environment persists, cash flow management remains especially important. When making decisions on remuneration and cash flow management, owner-managers should ensure that sufficient funds are retained to meet business objectives.

What is New for 2010? Federal

  • Corporate income tax rates – general and M&P rate dropped from 19% to 18% in 2010 and will decrease to 16.5% in 2011 and 15% in 2012; small business rate remains 11% in 2010 and subsequently.

  • Eligible dividends – personal taxes increasing in stages from 2010 to 2012.

  • Employee stock options – for stock options disposed of after 4:00 pm EST on March 4, 2010:

    • only the employer or employee (not both) can claim a tax deduction for cashed-out stock options; and

    • employee elections to defer the payment of tax on stock option benefits until the shares are sold are no longer allowed.

  • Partnership information returns – the Canada Revenue Agency (CRA) has changed its administrative policy on the filing criteria for partnership information returns, for partnerships with fiscal periods ending after December 31, 2010.

  • Avoidance transactions – must be reported after 2010.

November 4, 2010

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