How can I minimize my taxes? 150K single 21-year-old student?

Question

How can I minimize my taxes? 100K single 21-year-old student Question Details:I'll make between 100K and 200K from a business this year and am a university student living in Ontario. I'm also wondering about the best long-term tax strategy, since I'll be making over 500K for several of the coming years. Can someone answer this in 3 parts?
1. What's the best tax strategy just this year?
2. What's the best strategy for the coming years (e.g. move the business to the Caymen islands, etc.?)
3. What's the best strategy I should take considering where I'm going financially?

A big thanks to whoever can answer this question, and IF YOU’RE AN ACCOUNTANT LEAVE YOUR EMAIL and I may call you about doing taxes if your answer sounds well thought-out!

Answer 1

Did you incorporate your business? I'm assuming that you didn't and are operating as a sole proprietorship.


Question1
The best loophole is to max out your RSP contributions. Your student expenses should help offset a bit of the rest.

Considering that you're driving sales, you should make part of your compensation commission based. That opens up a whole set of deductions to you.

You would have been best off incorporating and only withdrawing what you need. Profits left in a Canadian Controlled Private Corporation (CCPC) are taxed at 20% for I think the first 400k of income. I'm not sure on the actual limit since I keep my business small.

Question2
Moving the business to a tax haven might not be worth it at your size. There's other options too, like lower tax US states, where you may be then able to use the business to emigrate to the US.

Have you looked at income splitting? Hiring your girlfriend, mom, sibling, child would allow you to pay out the same amount of money and but have it taxed at a lower rate.

Question 3
What you really need is a wealth management strategy of which tax planning is only a component. A business is going to have ups and downs and you should prepare for both. Look at what you're spending, saving, and investing so you can set yourself up for future financial success.

Addendum:
Be a little wary of Edward answer below. He's written it from a US perspective. We don't have IRAs in Canada.

Answer 2

1. What's the best tax strategy just this year?

Incorporate for one thing. Before the end of this year, draw all but $1,000.00 or so from the business. Put it savings and live on it. You will pay the going rate of taxes for this year. Do not draw anymore cash for a while.
IRAs are your best hope this year. You can contribute until April 2008. Leave the capital in the business.
Corporate taxes are less than personal.

2. What's the best strategy for the coming years (e.g. move the business to the Caymen islands, etc.?)
Possibility.

3. What's the best strategy I should take considering where I'm going financially?

Invest in rental Real Estate, maybe. Interest and taxes are deductible and you benefit from depreciation on rental property.

I'm sure there are many other methods. Speak to an Investment Counselor.