As a Canadian professional, managing income taxes both on a personal and professional level poses a continual challenge for Canadian professionals, especially those within the health industry. Keeping abreast of the dynamic tax landscape is crucial. This is a summary of the topics that will be discussed in this post:

Effective planning and seeking guidance from a professional advisor are indispensable in maximizing after-tax benefits and facilitating a seamless transition amidst the constantly evolving tax environment.

Canadian professionals encounter an ever-shifting tax terrain, making it daunting to stay updated. To offer support in this regard, we recently conducted a webinar aimed at providing valuable insights into the latest tax developments affecting professionals like yourself. You can access a recorded session below, inclusive of an overview of the current mergers and acquisitions market. Alternatively, continue reading for a concise summary of the webinar's most crucial takeaways.

1. Recent updates to taxation rules and regulations

General Anti Avoidance Rule (GAAR)

Canada's General Anti Avoidance Rule (GAAR) serves as a measure to prevent potential misuse of tax planning by scrutinizing transactions that may challenge tax regulations against their original intent. Starting January 1, 2024, proposed legislative revisions will set a lower threshold. The responsibility will now lie with individuals to demonstrate that obtaining a tax advantage wasn't the primary intent behind their transaction.

While deliberate planning avenues such as Tax-Free Savings Accounts (TFSAs) will remain exempt from GAAR assessments, it's prudent to exercise caution regarding certain past planning strategies that might come under scrutiny with the revised legislation. Penalties for non-compliance can entail a 25 percent penalty on the tax benefit and an extended reassessment period of up to six years unless the transaction had been previously disclosed to the Canada Revenue Agency (CRA).

Alternative Minimum Tax (AMT)

The 2023 federal budget introduces proposed changes that may directly impact individuals realizing substantial capital gains, selling their business utilizing the lifetime capital gains exemption, or planning substantial charitable contributions in 2024 and beyond. These changes could result in additional upfront income tax obligations due to alterations in the alternative calculation methods and their corresponding adjustments.

Trust Reporting Rules Update

The 2018 budget brought forth tax alterations necessitating more trusts to file T3 returns, divulging comprehensive information about the involved parties. These adjustments will impact trusts established in previous years that were formerly exempt from annual filings. The fresh regulations encompass expanded requirements mandating the disclosure of individual particulars concerning trustees, beneficiaries, settlors, and entities influencing trustee decisions.

Bare trusts, entailing a division between legal and beneficial ownership, are now obligated to submit returns. This affects a spectrum of legal arrangements, encompassing real estate, partnerships, and assets where individuals or corporations might have been included in the title purely for legal purposes. It's imperative to scrutinize your trust structure to ascertain your filing obligations, as considerable penalties are applicable for missed filings. If guidance is needed, consider reaching out to your HAS LLP advisor for assistance.

2. Considerations for tax planning relevant to you and your professional practice.

Immediate Expensing

Immediate expensing facilitates a complete deduction of depreciation on newly acquired eligible property, encompassing equipment, furniture, leasehold improvements, and computer hardware and software. Ensure the property is procured and available for use before January 1, 2024, with a maximum cap of $1.5 million per taxation year for you and any associated group of companies.

Estate Planning

Estate planning transcends the realm of a basic will. It involves meticulous business succession planning and asset safeguarding. Crucial legal documentation like wills and powers of attorney should constitute a part of this process, overseen by your lawyer and accountant to mitigate potential tax ramifications.

3. Strategic approaches to tax planning when contemplating the sale of your practice.

Exploring the Sale of Your Professional Practice

When contemplating the sale of your professional practice, there are various potential buyers to consider, ranging from associates, family members, to external investors. The manner in which the sale is structured significantly impacts the overall tax implications and the after-tax cash you receive. The options typically include a share sale, asset sale, or a combination of both. Moreover, integrating earnouts into the agreement can secure additional proceeds based on future performance. It's crucial to ensure that the chosen sale structure maximizes your after-tax cash proceeds.

Assessing eligibility for the lifetime capital gains exemption, which in 2023 stands at $971,190, is essential for you and your family. Evaluating your current corporate structure and assets is crucial to determine qualification for this exemption. Planning to transfer most assets well before the sale can help mitigate immediate income tax implications. However, it's important to note that certain assets, such as life insurance, may necessitate additional planning due to valuation and income tax complexities.

4. The role of CDAP in aiding professionals

Canada Digital Adoption Program (CDAP)

The Canada Digital Adoption Program (CDAP) has emerged as a significant initiative designed to assist small and medium-sized businesses in adapting to an increasingly digital-first business landscape. This program extends a grant of up to $15,000 to aid in retaining a digital advisor, whose role is pivotal in guiding your transformation journey.

Additionally, the program offers interest-free loans of up to $100,000 to facilitate the acquisition of necessary software, hardware, and equipment required to execute your digital transformation plans. An effective digital transformation strategy can streamline operations, elevate client experiences, and enhance overall operational efficiency.

At HAS LLP, we stand as trusted partners, offering precision-driven accounting services tailored to the unique needs of each client. Our commitment to excellence is evident in our comprehensive range of services, from detailed financial statements to advisory and consulting services.

To learn more about how HAS LLP can elevate your financial management, please click here. If you have questions or would like to book a consultation, feel free to call our office at (905) 332-4275 or email or Take the first step towards financial success – book a consultation today!