Strategic Tax Planning for Self-Employed Workers: Tips on Tax Deductions, Emergency Account Repayment, and Installment Payments

2023-11-26 10:00:00

The party The office of a self-employed worker is rarely very busy. In return, he could give himself the gift of wise tax planning.

Posted at 5:00 a.m.

The urgency of repaying the emergency account

At the height of COVID-19, some self-employed workers obtained loans from the Canada Emergency Business Account (CEBA). They were distributed in two tranches of $40,000 and $20,000, for a potential total of $60,000.

“If we repay $40,000 before December 31, 2023, the remaining $20,000 becomes a form of subsidy,” explains Sylvain Gilbert. You will have to pay for this portion, but it is not refundable. »

The government has postponed the repayment deadline to January 18, 2024.

If the worker is unable to meet this deadline, he or she can submit a refinancing request to the financial institution that granted the loan by January 18, 2024. He will then have until March 28, 2024 to conclude this agreement, repay the loan and obtain a partial write-off.

It is therefore better to take these steps as soon as possible.

A logical deduction

The economic update presented at the beginning of November by the Minister of Finance, Eric Girard, was accompanied by an adjustment to the capital cost allowance, a measure that also affects self-employed workers.

The depreciation deduction allows you to deduct the depreciation of manufacturing and processing equipment and computer equipment acquired during the year.

“We can deduct up to 100% of the expense in the first year,” indicates Sylvain Gilbert.

Quebec granted an additional deduction of 30% applicable in the second year.

Minister Girard announced that for all acquisitions of property made after December 31, 2023, this additional deduction of 30% has been abolished.

Sylvain Gilbert, tax partner and regional vice-president at RCGT

His deduction: “It could be an incentive to buy the equipment in 2023 and not wait until 2024.”

Christmas deposit

Depending on the amount of their income, self-employed workers must pay their taxes with installments, the payments of which are due on March 15, June 15, September 15 and December 15.

“Often, in December, people keep their money for Christmas gifts and they don’t make their installment payments,” notes Sylvain Gilbert.

Financing yourself from the installment payments that you don’t make to the government is a financing rate that is very high. Maybe it’s best to put our purchases on the credit card, and find a way to pay it off in January.

Sylvain Gilbert, tax partner and regional vice-president at RCGT

Surprising?

“It’s quite common, I tell you. »