Did you know, that tax planning at the beginning of the year puts money in your pocket?
Ideas are endless and many of you would have already found different ways to further increase your wealth.
Excluding these opportunities, the critical aspect in developing and maintaining your wealth is planning your taxes.
Tax is a source of profit and tax planning is also very productive in cost savings.
Some tax savings tips include:
- Taking advantage of all income-splitting and pension sharing opportunities
- Transferring any unused credits between spouses
- Making RRSP contributions throughout the year as opposed to making contributions at the end of the year
- Combining medical expenses for the entire family and claiming them on one return may be more advantageous
- Claiming your donations every 2nd, 3rd, 4th or 5th year may be more advantageous to you
Are you anxious when it comes to preparing your taxes?
Most of us ignore planning our taxes in advance and it is not until the very end of the tax year that we get into real tax planning. Tax planning is actually not meant for the end of the year, but is a year-round activity.
Our goal is to minimize income taxes payable to the Canada Revenue Agency – CRA.
The objective of personal tax planning is to minimize or defer income taxes payable, as part of a long-recognized right for taxpayers to organize their financial/taxation affairs in the most beneficial way possible within legal confines. This requires a thorough understanding of Canada’s Income Tax Act, as well as bulletins, circulars and rulings put forth by the Canada Revenue Agency (CRA), along with other occurrences such as tax rulings in the courts.
I’ve always said that good tax planning far exceeds good investment planning. While taxation gets more and more complicated with every budget, the fact remains that you must understand the basic concepts of tax deductions, tax deferral and income splitting.
Sometimes tax planning brings immediate benefits but often the benefits of tax planning take some time to before one can reap the rewards. People scramble to get their taxes done for the current year, but in all probability it is too late to do any planning for the previous year.
The key building blocks to effective planning include:
- Maintaining and retaining good records
- Keeping informed and up to date
- Knowing your needs and your goals
- Assembling a team of good professional advisers
There’s an excellent quote by tax lawyer and consultant Marc Denhe. “Anyone who believes that Canada’s only two official languages are English and French has never read the Income Tax Act.”
If you are confused with the tax act and all the different rules, then seek the help of a qualified professional to help you accomplish some effective tax planning.
At Fred Albi, Chartered Professional Accountant we offer personalized tax-planning strategies for a wide range of clients. Please contact us today for a free half- hour consultation and learn about the benefits of having a solid tax planning strategy.