Tax Help

When it comes to managing your taxes, we feel very confident in our abilities to help out with taxation issues related to your income earnings, your retirement income from pensions and your investments and finally, the potential for huge estate losses upon your death. Let’s look at these three areas individually.

Taxation Of Income Earnings:

Almost everyone is familiar with the advantages of Registered Retirement Savings Programs (RRSP) and Spousal RRSP’s. Yes, you save taxes today at your earning’s marginal tax rate and you pay taxes at your marginal tax rate as you withdraw those savings in your retirement years. What we have seen is that folks with lower income streams purchasing RRSP’s today when, perhaps Tax Free Savings Accounts (TFSA’s) might be a better option. Remember, when you withdraw your RRSP’s; they are taxed at a rate of 100% of the amount withdrawn (at your marginal tax rate)

We have even seen folks using GIC’s inside their TFSA’s and have their other assets at a much higher risk level – that makes no sense to us and when we get a chance to explain why, a change is often implemented to our recommendations. If this sounds familiar, set up an appointment to chat about your personal situation.

That being stated, there is another option for consideration and that is known as a “Leverage Loan” – this is only for those with a minimum time frame of 10 years before needing those “retirement funds” and involves the use of a “loan” from a line of credit or similar. This is riskier than normal investing but normally, more tax effective. If this sounds of interest to you, let us know.
Finally, there is the option of life insurance which provides another tax-sheltered and possibly tax-free financial vehicle worthy of consideration. Even if you don’t qualify for insurance for health reasons, you can achieve huge tax savings by having the life insurance on a spouse, child or even grandchild. Again, if this is of interest to you or want more details, just let us know.

Taxation of Retirement Income:

The biggest complaint we hear is that we pay too much income tax in our retirement years. And to be honest, if you have not done your “tax planning” earlier in life, there are not a lot of options to save taxes (of course, Charitable donations always does the trick if you can afford the cash flow).
However, we have to remember that there are different tax brackets in our Canadian tax laws and so, we analyze your situation wisely to ensure we are taking advantage of your taxable assets for later in life. As one example, we have many clients that have accelerated their retirement income from their RRSP’s/RRIF’s, etc knowingly bumping them to a slightly higher tax bracket today, to save their estate a much higher tax loss. In reality, will your retirement assets outlive you? We find that is “YES”, in a lot of cases.

Taxation of Your Estate:

Not being rude, but we don’t hear a lot from our deceased clients about their huge tax bill they have left behind. It is too late for that discussion. What we do hear from, is the heirs. “Is there nothing our parent(s) could have done to reduce this tax loss?” . And the answer is “YES”, with advanced tax planning, we can show you ways to reduce that tax loss or some of it AND, with wise use of life insurance on themselves, have a tax-free death benefit to offset that tax loss. You will always find it is “cheaper” to pay the insurance premium than to pay CRA’s tax bill.

We are proud to have access to some high-quality professionals that we can draw on to assist with advanced tax planning concerns via our connection with Canada Life. When needed, we can draw on a variety of individuals to assist us in the development of integrated tax strategies. That combined with our own Tax expertise, allows us to be proud to provide access these resources on your behalf.