ThinkTalk Newsletter - Apr 2023

ThinkTalk - Apr 2023 Newsletter

April 28, 2023

Hello!

Just like your payroll deposit, we’re in your (email) account early, since 30th is over the weekend. 😄

Our Think Team has *almost* managed to survive yet another tax season despite the CRA strike. And yes, thank god for no deadline extension (yet)!

Let’s get to it with this month’s update.

Under the “immediate expensing” rules passed in Budget 2021, most assets acquired after April 19, 2021 can be depreciated 100% in the first year.
Total immediate expense for a year can be up to a total of $1.5 million.
Some asset classes are disallowed (for e.g. Building and Goodwill).
For some classes, like Vehicles, this is still limited to the overall limit of the class (for e.g. $36,000 for a passenger vehicle for 2023).
The limit of $1.5 million is shared between “associated” businesses - for e.g., if you or a group control multiple businesses, this limit is shared.
If you don’t spend $1.5 million in the year, the remainder does not carry forward.
You do not need to do anything special to claim this. This is claimed directly on your tax return.
Would you like to discuss how this impacts your capital spending and tax planning? Reach out to us!

When you contribute to RRSP, you get a deduction on your personal tax return, and when you withdraw from your RRSP, it gets added to your income.
The idea behind RRSP is to contribute during your high income years to get the deduction when your tax rate is high, and withdraw in your lean years when you are sipping iced tea at the beach.🍹
So, what do you do when you have a high income and have plenty of RRSP contribution room, while your spouse is in a lower tax bracket?
Let’s take Jessica and Jack as a couple. Jessica makes $150K/year and Jack makes $50K/year. Jessica has has plenty of RRSP contribution room.
Under Spousal RRSP, Jessica can contribute to Jack’s RRSP and get a deduction on her tax return at her high tax rate, while Jack is the beneficiary!
They have to leave the money in Jack’s RRSP for at least 3 years. If they take the money out before 3 years, it will get added back to Jessica’s income.
After 3 years, the money is all Jack’s to withdraw whenever he wants. And better yet, it will get taxed at his, presumably, lower tax rate. We’ve effectively done income splitting from higher income spouse to lower income spouse.

Congrats to our client - Stratosphere Technology - who launched their own “ChatGPT for Finance” called Finchat.io 🥳. Check it out! (Link)
The Coach to Silicon Valley CEOs made his curriculum available for free. (Link)
5 Reasons to start collecting CPP at 60. (Link)
Someone made TaxGPT for your Canadian Tax questions 😎 (Link)
Tweetstorm - How to avoid burnout as a business owner. (Link)

Lie - People care which company they work for.Truth - People care which team they’re on. Because that’s where the real work happens.
Lie - The best plan always wins.Truth - The best intelligence wins. Because the world moves too fast for plans to matter much.
Lie - The best companies cascade goals.Truth - The best companies cascade meaning. Because people want to know what they all share.
Lie - The best people are well-rounded.Truth - The best people are spiky. Because for humans, uniqueness is a feature, not a bug.
Lie - People need feedback.Truth - People need attention. Because we all want to be seen for how we are at our best, not our worst.
Lie - People can reliably rate other people.Truth - People can reliably rate their own experience. Because that’s all we have.
Lie - People have potential.Truth - People have momentum. Because we all move through life differently.
Lie - Work-life balance matters most.Truth - Love-in-work matters most. Because when you look at it, that’s what work is really for.
Lie - Leadership is a thing.Truth - We all follow spikes. Because strangely enough, spikes bring us certainty.

Do you have a book recommendation for next month? Let us know!

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