Ernst & Young, EY Canada has published its latest advice for private companies interested in unlocking capital, preserving wealth and supporting the bottom line. “Tax planning for the year ahead should be a no-brainer for private companies,” says EY Canada’s senior manager Irina Rakhimova. “Companies that act now will be able to unlock a host of different opportunities to fuel progress.” 

The publication, Four questions private companies should ask themselves now, examines real estate, charitable giving, employee incentives and rising interest rates and how rising rates affect what companies pay to the Canada Revenue Agency (CRA).

Its first suggestion is for company owners to ask themselves if the cooling real estate market is the right time, possibly, to consider an estate freeze. With real estate valuations dropping, they say the shift could depress corporate valuations. Freezing the estate at this lower valuation can both give the owner certainty about their own tax liabilities on death and allow more wealth to be transferred to successors.

The paper also discusses the tax benefits associated with charitable giving and endowments, and alternative compensation options to recruit and retain talent, such as restricted share unit plans and stock options that offer tax benefits. “There are many unconventional methods private companies can incorporate into their strategic tax planning to develop a competitive advantage in today’s market.

Finally, the paper warns business owners to strategically monitor the installment payments they make to the CRA. “It’s even more important to make sufficient installment payments by the required deadlines,” they write in a discussion about how rising interest rates has affected the penalties the CRA charges. “Otherwise, the arrears in interest may be higher than the possible yield on invested funds.” 

They conclude, saying companies should “get ahead of interest rates and preserve cash by monitoring installment payments more strategically this year. Now is a good time to reflect on how you’re handling tax payments, anticipated refunds and general cash flow plans.”