Tax Planning Reminders For The End Of 2011

With the end of 2011 fast approaching, it is useful to keep in mind some key deadlines.

1. ACCRUED BUT UNPAID EXPENSES

Where a taxpayer owes an amount to a non-arm's length person that is deductible for tax purposes, there is a limit to how long it can go unpaid before the deduction gets reversed. An amount incurred by the taxpayer to a non-arm's-length person in one taxation year must be paid by the end of the second following taxation year of the payer. If it remains unpaid by that time, the amount is added back into the taxpayer's income in the immediately following taxation year, effectively reversing any deduction taken. This means that if a taxpayer incurred a deductible expense to a non-arm's length person in its 2009 taxation year, the taxpayer must pay the expense by the end of the 2011 taxation year to avoid having to add back the amount in income for the 2012 taxation year. Alternatively, the taxpayer and non-arm's length person can file a joint Form