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 Canadian Tax Planning
Every year, approximately 25% of Canadians do their tax planning for the year – they make their yearly contribution to their RRSPs. In some cases, this is actually not tax efficient for some people. However, the main issue here is that there are dozens of simple things that investors can do to minimize their tax burden on a year after year basis. Whether an individual is still working, is approaching retirement, or is retired, a simple review of ones investments and investment strategies can potentially save a family thousands of dollars per year.
Things to Consider in Tax Planning
Individuals need to consider asset allocation strategies, investment selection strategies, income splitting strategies, estate planning strategies and much more in deciding what types of investments to hold in either their non-registered investments or registered investments including RRSPs, or RRIF (Registered Retirement Income Funds). Individuals either working for a company or whether they are self-employed need to educate themselves and investigate some of the benefits of investing into guaranteed investment funds, segregated funds, prescribed annuities, back to back annuities (also known as insured annuities) and other types of investments at Guaranteedinvestments.com that can provide immediate and deferred tax relief.
Tax Planning Canada
- Consider maximizing RRSP contributions if financially possible only if you are in high tax bracket – in some cases investing and contributing into RRSPs when you are in an extremely low tax bracket makes little if any sense
- Consider paying down your mortgage prior to investing into non-registered investments. Mortgage interest is not tax deductible and the income you earn in non-registered investments including dividends, interest and capital gains are taxable. If you have non-deductible interest, considering paying off this debt first
- If you invest outside of registered plans such as RRSPs and RRIFs, consider tax efficient investments which provide for dividend type income or capital gains. When possible, if in line with your investment objectives, consider investments which provided potential deferred capital gains only
- If you have a non-registered portfolio, but also have an existing mortgage – consider if possible paying down your mortgage with these funds and then setting up an investment loan thereby allowing you to write off the associate interest costs in some cases. It is important that you obtain professional financial and accounting advice from accredited professionals before you consider this action
- Consider investments which are tax effective such as prescribed annuities, guaranteed minimum withdrawal benefit plans, guaranteed lifetime withdrawal benefit plans and other types of investments which provide income tax relief in some cases – visit Guaranteedinvestments.com for additional information
- If you are self-employed, consider the benefits of setting up an Individual Pension Plan which may provide greater contribution room than a RRSP allows for
- If you are a senior who is facing Old Age Security Clawbacks, then structure you investments in a way to reduce your income thereby helping you restore some if not all of your Old Age Security
- Consider various income splitting techniques which enable one to split income with lower income family members in some cases
- Look at the benefits of establishing informal and formal trusts for your family members including spouses and children
- Consider withdrawing income from registered plans in years where ones income is minimal and expected to increase if contribution rooms exists to add funds back into the plan at a later date when one is in a higher tax bracket
- Consider investments offered through life insurance companies as in most cases if there is a named beneficiary, the funds will bypass probate, therefore saving you or your heirs potentially thousands of dollars
Tax Planning & Guaranteedinvestments.com
Canadians can save thousands of dollars every year by implementing a few simple tax planning strategies. Ensure your financial advisor is familiar with tax planning strategies and has access to products and services that can save you thousands of dollars. Most financial advisors are not tax experts and most are not allowed to provide tax advice. Visit Guaranteedinvesmtents.com for access to a variety of products and services for risk adverse conservative investors. The professionals at Guaranteedinvestments.com provides expert financial advice and can help you reduce your tax burden.
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