Lesser-known year-end tax tips

You have a month to make 2016 your — and your clients’ — most tax-efficient year yet. That takes insider know-how, like these lesser-known tax tips from Grant Thornton LLP’s year-end tax planning guide:

Read: Golombek gives you 4 year-end tax tips

For businesses

Instead of the ubiquitous — and taxable — gift card or gift certificate, get creative and give arm’s-length employees non-taxable holiday gifts, which include:

non-cash gifts and awards with a total aggregate value less than $500 annually
non-cash long-service or anniversary awards of $500 or less; to qualify, the award cannot be for fewer than five years’ service, and five years must have passed since the employee last received such an award (performance awards are taxable to employees)
gifts of nominal value (coffee, T-shirts and mugs, for example)

The amounts paid for these gifts can be deducted as business expenses.

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Business owners should also keep a logbook to support the business use of a vehicle. Follow CRA’s guidance on documentation, which allows the option to establish the business use of a vehicle in a base year and then keep detailed records for only one three-month period in subsequent years.

For those who owe a debt to their corporation, it must be repaid within a year following the end of the corporation’s taxation year in which the loan was made. There are exceptions, so it’s best to review the tax consequences with a tax advisor, suggests the Grant Thornton guide.

For employees

Employed tradespeople may be entitled to a tax deduction of up to $500 for new tools required for employment (not applicable for most electronic communication devices and electronic data-processing equipment).

For 2016, the deducted amount is the amount by which the cost of the eligible tools acquired in the year exceeds $1,161 (up to $500). For tradespeople who haven’t yet hit that threshold, planned purchases should be acquired before year-end. Apprentice mechanics also are eligible for their own specific deduction for new tools.

Read Grant Thornton’s full year-end tax-planning guide here.

Also read: Essential tax numbers