Spring Into These Tax Advantages

Monday, 04 April 2016 04:26 Written by  Published in Money Read 1507 times
I am an advocate for paying one’s fair share of taxes, after all, for the most part we do get value for our tax dollars in Canada.

Especially when compared with other countries in the world where citizens pay taxes and don’t see a fraction of the value that we enjoy here.

I do not believe, however, that anybody should pay more taxes than they are legally obliged to, and thought I’d use this forum to point out some tax advantages (some of which will disappear on January 1, 2017) that you can take advantage of now:

Participating Whole Life Insurance – This strategy is a good alternative investment to, or can be implemented in addition to having an RRSP. It is an excellent retirement & estate planning tool because the funds grow tax free; however the tax laws relating to permanent life insurance policies will change on January 1, 2017, and the changes will restrict the amount of money that will be allowed to grow tax free in these policies. Many astute Canadians are taking advantage of this tax deferral strategy now because plans put in place before January 1 2017 will be grandfathered.

Tax free Health Spending Account – HSA’s allow you to pay for medical & dental expenses including expenses not covered by traditional health plans (e.g. fertility & autism treatments) using pre-tax dollars and essentially converting these expenses into a tax free benefit.

Life Annuity – provides guaranteed income for life, however the taxable portion of annuities will increase significantly on January 1, 2017, so if you are thinking about purchasing an annuity now is the time to do it.

Individual Retirement Plan – IPP’s essentially allow business owners and incorporated professionals (e.g. lawyers, dentists, doctors, paralegals, accountants etc.) to make contributions that are fully tax deductible to the employer and are a nontaxable benefit to the employee; and they can be set up for one or a group of employees. They can only be set up for “active” Canadian business corporations and the employee (who can be the owner of the business) must be a Canadian resident paying taxes in Canada. Saving using pre-tax dollars and withdrawing that money tax free is a better option than an RRSP.

Tax Free Savings Account – Sounds like a no brainer, however, too many Canadians use their TFSA like a checking account, making frequent deposits and frequent withdrawals. A good strategy would be to use your TFSA as a retirement savings tool because every dollar earned is Tax Free. You can set up your TFSA to ensure that it pays you guaranteed income for life.

If you are thinking about paying less taxes legally, now is the time to spring into action and implement strategies that will keep more of your money in your hands rather than the Government’s coffers. You can do it, I can help.

Last modified on Monday, 04 April 2016 04:33
Karl Marshall

Insurance and financial services professional with over 20 years experience.

I specialize in helping business owners and self employed professionals protect their business, families and income with the wonder of life, health, disability, critical illness, property and auto insurance, and investments.

I pride myself in helping my clients protect their assets and develop wealth, and most importantly; I love helping them protect the most important asset that is often overlooked - Themselves.

Many business owners tend to overlook that they are in fact the heart and soul of their business, or in many cases, they are the business, and if anything happens to them, their business and families can be devastated financially.

Let me protect what's really important so that you can focus on growing your business.

Click below to follow Karl on:

Twitter

Website: www.karlmarshall.ca/
Login to post comments