5 Key Pieces of Effective Tax Optimization

There’s one thing that you can’t avoid no matter how hard you try, and that’s taxes. Tax adherence is a responsibility of every Canadian citizen, no matter how much money you make or what type of work you do. While you can never escape taxes entirely, you can take advantage of methods made to minimize them to reduce the burden on you and your family.

If you’re looking for ways to reduce the amount of tax you pay out to the government throughout your years, review these five components of effective tax optimization and keep them in mind for the future.

Income Optimization

There are a number of income optimization methods that you can utilize to help minimize your taxes. For one, you can engage in income splitting with your spouse to transfer the tax liability from the higher-income earner to the lower one. You can’t legally “split” your income amounts per se, but there are a number of ways to utilize this strategy without penalty such as: creating a spousal loan, contributing to a spousal RRSP, or establishing a family trust.

Tax Efficient Investments

There are a number of registered accounts that you can take advantage of to defer your taxes into the future. If you’ve maxed out on your limits, you need to find other places to shelter your money. An expert financial consultant can help you maximize your tax-efficient investments most effectively by strategically distributing your income and investments across your RRSPs, RRIFs, TFSAs, and a number of other tax-sheltered options like your life insurance policy.

Business Management

One tax efficiency strategy that can help you keep as much of your income as possible is expense management. Learning how to claim expenses correctly can increase your tax efficiency and reduce both your personal and corporate tax bill. Corporate clients can also take advantage of optimizing salaries and dividends, estate freezes, and other advanced methods to minimize taxes.

Tax Deductions

Another effective way to reduce taxes is to take advantage of all the possible deductions and credits on your income tax and benefit return. Deductions, such as retirement and CPP contributions, moving expenses, child care expenses, support payments, student loan interest, and tuition expenses can all be claimed for tax credits. In fact, there are over 90 deductions and tax credits that you can claim in Canada that will put more money back into your pocket each year.

Investment Strategies

Higher net worth Canadians that have a lot of money tied up in investments will often find that the tax on the interest can become substantial if they don’t have a proper strategy in place. A professional advisor can provide you with a number of strategies that can reduce your capital gains and lower your investment taxes to optimize your returns.

A professional and experienced financial advisor can work out the most effective strategy for your personal and corporate tax optimization. Their expertise ensures that your finances will adhere to the newest regulations and follow all legal practices to avoid penalties and unlawful misconduct.

Our experts at The Beacon Group of Assante Financial Management Ltd. will enjoy crafting the best tax strategy for your particular needs to ensure that the best approach is taken to enhance your success.