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The principle is incontestible: if you're making money -- and sometimes when you're not! -- the government is going to want a share of it. However, in practice you have a legal right to take advantage of the ways in which you can minimize the amount you're required to pay. Indeed, in some circumstances it's possible to avoid paying tax altogether -- but note that the word is avoid not evade.
For example, it's useful to understand the difference between income and capital. Regardless of who gets your tax return, the two aren't viewed -- or treated -- in the same way. In fact, this leads to some sophisticated ways of affecting what your tax bill is going to be and when it will fall due. In turn, there are also subtle differences between paying personal and corporate taxes, a factor that should also be given appropriate consideration when you're acquiring or leasing non-residential property.
Of course, much of what you can -- and cannot -- do is governed by the jurisdiction you fall under. For example, there are decided differences in the ways that the Canadian, American, and British tax authorities operate. Their rates will vary, of course, but there are also political aspects to them -- and these, too, can change when the ruling party brings in a budget (or, gulp, loses office). It's therefore by no means certain that what's allowable today will be permitted tomorrow.
In any case, you are certainly advised to use an accountant, and the more complex your situation the more you need someone who's familiar with the rules, regulations, and legitimate methods of minimizing your tax liability. It's also useful to find out what people in a similar position to yours are doing -- information that's likely to be published in newsletters, at trade association meetings, and by the business press in general.
Searching the web
Both your personal location and the locale where your money is invested will tell you what country's tax rulings you should look for. It may be useful, though, to make the site at http://www.cch.ca/tax/ a starting point. It just so happens that way back when (very much so!) I was their Sales Manager, and much has happened to them in the past forty years. They're now part of a conglomerate that publishes tax information related to Canada, USA, UK, and several other countries, all of it giving you -- and your accountant -- access to a great deal of relevant information.
Any questions? Something not clear? Need more information?
Please feel free to contact me:
Phone: (905) 468-3154 / Cellular: (905) 704-9037
e-mail: ebb@iciniagara.com
Or use the feedback form on the Contact Me page.
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