Year-End Tax Planning for BC Business Owners

As the year winds down, many business owners in British Columbia are focused on finishing projects and closing out the books. But year-end is also the perfect time to reduce your tax bill, protect profits, and plan for the year ahead.

At EverStone CPA in Abbotsford, we help businesses across the Fraser Valley make tax planning straightforward and stress-free. Here are seven practical strategies that go beyond the basics.

1. Make Family Income Work Smarter

If your spouse or adult children help in the business, consider paying them a reasonable salary.

• This shifts income into lower tax brackets

• Reduces overall family taxes

• Builds RRSP contribution room for retirement

✅ Key takeaway: Salaries must reflect actual work performed to remain CRA-compliant.

2. Explore a Holding Company or Family Trust

When profits start to build, think long-term structure:

• Holding company: Protects retained earnings and provides flexibility for investments.

• Family trust: Allows for income splitting with family members and supports estate planning.

👉 Not every business needs these, but for many incorporated BC businesses, they’re worth considering before year-end.

3. Time Gains and Losses Carefully

Planning to sell an investment, property, or shares? The date matters.

• Sell before Dec 31: Use a capital loss to offset gains this year.

• Sell in January: Push the gain into a lower-income year to save tax.

💡 Even a few weeks’ difference can save thousands.

4. Go Beyond Salary vs. Dividends

Compensation planning is more than choosing between the two. Consider:

• Bonuses: Deductible for the company now, but only taxable if paid within 180 days.

• Health Spending Accounts (HSAs): Convert personal medical expenses into business deductions.

• Individual Pension Plans (IPPs): Allow higher retirement contributions than RRSPs for high-income owners.

✅ Smart mix = lower taxes today + stronger retirement later.

5. Watch the Passive Income Trap

If your corporation earns over $50,000 in passive investment income, your Small Business Deduction (SBD) could shrink, raising your tax rate on active business income.

Solutions may include:

• Moving investments into a holding company

• Using corporately-owned life insurance

• Paying out dividends strategically

  
  

6. Spend Smart, Not Just Fast

Yes, buying equipment before December 31st can accelerate write-offs. But:

• Only spend on assets that add real value to your business

• Avoid unnecessary purchases just to save tax

👉 The best tax savings come from investments that grow your business.

7. Tidy Up the Books

Before CRA takes a closer look, make sure you:

• Reconcile GST/PST accounts (especially tricky in BC)

• Review shareholder loans to avoid income inclusions

• Balance intercompany transactions if you own multiple companies

✅ Clean books today = fewer headaches tomorrow.

Final Thoughts

Year-end tax planning isn’t just about cutting this year’s tax bill — it’s about building a smarter, more resilient business.

At EverStone CPA, we guide BC business owners through these strategies so they can pay less tax, protect assets, and grow with confidence.

📞 Ready to get started? Contact EverStone CPA today and let’s create a plan that sets you up for success in the new year. 604-832-1743