We all know that we have to pay taxes and once we do this expense basically becomes out of sight out of mind. We comfort ourselves in knowing that our tax dollars are going to fund the services and conveniences that we have in our daily lives for the most part.
Then when we hear that some of the movie productions made here in Canada project huge tax breaks for that industry it does make our blood boil perhaps just a little. Going back in time like back to 1974 the feature film industry was not that prominent here. In fact, there were only 3 made during that year. Then all of a sudden in 1979 there were 77. This wasn’t because we suddenly became recognized as a hot spot for film making, but was because a tax loophole was discovered that was known as Capital Cost Allowance. The investors in movies discovered some great savings in regards to their investment.
There were many horror movies that were produced as a result of this very lucrative tax break. For some that are really into this type of film making they are not too upset by the fact that movie investors were getting amazing tax breaks and they weren’t.
Now realistically speaking it isn’t just the film industry that has capitalized on tax breaks that result as tax loop holes. Many tax dollars have been lost as a result of this tax flaw. However, the CRA has become very astute at blocking these holes as soon as they are discovered. They are not near as prominent or lucrative as they once were.
Instead of wasting your energy on trying to determine tax loop holes, you time is better spend on creative and totally legal tax planning. This is where you need to rely on the professionals like your accountant.
You want to really focus on all the potential tax breaks that you may be eligible for. Then you need to think about your potential tax situation whenever you are going to make a substantial change that is likely to affect your financial situation. We tend to only think about taxes at tax time and this could be one of our biggest weaknesses.
