If you consider ONLY the income tax (BC Personal tax and the Active Small Business Corporate tax rate), you should be indifferent what form your income takes - either salary or dividend.  Our tax system is designed so that there is close integration of tax on these two sources.  However, there are several other factors that should be considered when making the salary versus dividend decision including:

• CPP
• EI
• RRSP Contribution Limit
• Income splitting
• Old Age Clawback

Procrastinating doesn't always pay off.  For those of you who are still gathering your tax papers, we suggest that you make a tax instalment by April 30.  Tax returns that arrive at our office after we break for Easter weekend, may not be filed by the end of the month.  To minimize interest and penalties charged, you may want to consider making a tax instalment.  Refer to our Tax Brochure on the home page for an estimate of tax at various levels of income.

The following are 4 commonn made mistakes that can problems on tax returns in Canada.

RRSP Contributions not claimed

RRSP contributions made in the first 60 days of the year (Jan 1 – Mar 1 2010) must be reported on the personal income tax return for the previous year (2009), even if not claimed as a deduction.

Contributing to non-registered charities

Contributions made to Canadian registered charities may be claimed on your tax return.  Check your receipts for a RR# indicating the charity is registered.

Appliances do not qualify for the Home Renovation Tax Credit

There are many other expenses that qualify – for a complete list, check the Canada Revenue Agency website.

Income slips missed

Compare the slips you received in the current year to your Slips Summary from the previous tax year.  Failure to include all your income could result in interest and penalties.

Tuition transfer not correctly calculated

Ask your children for their T2202A OFFICIAL receipt.  They MUST sign the back to designate the transfer.