Canmore lawyer Austin Ward spoke with Jean-Philippe Couture, a corporate and tax lawyer with Field Law, about how smart planning can help owners keep more of what they earn and position their businesses for long-term success.
Why should business owners think about tax planning now?
The earlier you plan, the more options you have. Many owners wait until tax time to consider deductions or restructuring, but by then opportunities are limited. Tax planning isn’t just about saving money this year. It’s about preparing your business for growth and future transactions, like selling or passing it on to the next generation.
What are some of the most overlooked strategies?
One important tool is the use of a holding company. It can protect assets from operating risks, defer taxes, and provide flexibility for reinvestment. Another is structuring your business early to qualify for the lifetime capital gains exemption. This exemption now allows the first $1.25M from a sale to be tax-free. If spouses jointly own a business, that amount can be doubled. To benefit, your affairs must be organized well in advance.
How about income splitting? Is that still possible?
Yes, but the rules have changed since 2017. Income splitting with family members is more restricted but still possible if, for example, a family member is actively involved in the business. Careful documentation is key. A strong tax plan ensures compliance while making the most of legitimate opportunities.
Are there mistakes you see often in the Bow Valley?
Absolutely. Many owners are so focused on running the day-to-day operations of their business that they forget to plan for retirement—what I like to call “Freedom 55”—until they are almost ready to step away. Exiting a business often requires several years of planning. Without that, owners risk leaving behind a lot of money that could have supported their retirement.
I also see businesses that haven’t updated their accounting or corporate records and then face the misfortune of a CRA audit. When documentation doesn’t exist or isn’t done properly, there’s always a heavy price to pay. Another key issue arises when partners don’t have a shareholders’ agreement. Putting one in place early saves a lot of headaches and sets out clear rules.
What is your advice for business owners who want to be more tax efficient?
Don’t wait until your year-end meeting with your accountant. Tax planning should happen year-round. And don’t let advisors work in silos. When your legal and accounting advisors work together, results are stronger and often less expensive. A little planning now can create substantial savings in the future.
