Taxes are a fact of life. They affect every Canadian in most aspects of their lives. Whether it’s earning an income, making a purchase, owning real property, investing, running a business, or transferring your estate, life is full of taxable consequences that, if left unchecked, could consume an ever increasing amount of one’s livelihood. While the Income Tax Act was created specifically to ensure that everyone pays their fair share it also affords all taxpayers the right to organize their financial affairs in such a way so as to minimize their taxes whenever and however possible within the legal confines of the Act. And that is the objective of tax planning.
15% on the first $47,630 of taxable income,+
20.5% on the next $47,629 of taxable income (on the portion of taxable income over 47,630 up to $95,259),+
26% on the next $52,408 of taxable income (on the portion of taxable income over $95,259 up to $147,667),+
29% on the next $62,704 of taxable income (on the portion of taxable income over 147,667 up to $210,371), +
33% of taxable income over $210,371
Taxes are a fact of life. They affect every Canadian in most aspects of their lives. Whether it’s earning an income, making a purchase, owning real property, investing, running a business, or transferring your estate, life is full of taxable consequences that, if left unchecked, could consume an ever increasing amount of one’s livelihood. While the Income Tax Act was created specifically to ensure that everyone pays their fair share it also affords all taxpayers the right to organize their financial affairs in such a way so as to minimize their taxes whenever and however possible within the legal confines of the Act. And that is the objective of tax planning.
15% on the first $47,630 of taxable income,+
20.5% on the next $47,629 of taxable income (on the portion of taxable income over 47,630 up to $95,259),+
26% on the next $52,408 of taxable income (on the portion of taxable income over $95,259 up to $147,667),+
29% on the next $62,704 of taxable income (on the portion of taxable income over 147,667 up to $210,371), +
33% of taxable income over $210,371
5.05% on the first $43,906 of taxable income, +
9.15% on the next $43,907, +
11.16% on the next $62,187, +
12.16% on the next $70,000, +
13.16 % on the amount over $220,000
15% on the first $48,535 of taxable income, plus
20.5% on the next $48,534 of taxable income (on the portion of taxable income over 48,535 up to $97,069), plus
26% on the next $53,404 of taxable income (on the portion of taxable income over $97,069 up to $150,473), plus
29% on the next $63,895 of taxable income (on the portion of taxable income over 150,473 up to $214,368), plus
33% of taxable income over $214,368
|
Ontario |
5.05% on the first $44,740 of taxable income, + |
The biggest mistake many people make is to wait until the TAX season or time, most Canadian only think about TAX when they get their T4 Tax Slip, unconcern themselves with their taxes. Throughout the year there are many financial decisions that can be made that could significantly impact the amount of taxes owed. The Act is full of income exclusion rules, key tax credits, retirement plan contribution options, and investment rules that are easy to miss or miscalculate without the organization and foresight that tax planning provides.
And, if there is any certainty beyond taxes, it is that the tax rules will change as they seem to do nearly every year. Because these changes usually affect such important things as exclusion amounts, credit eligibility, retirement plan contribution limits, and the tax rates themselves, they will almost certainly affect spending, saving, investment and borrowing decisions made throughout the year, as you see from the above Tax brackets.
At its core, tax planning is the process of organizing your finances in such a way to take advantage of the many rules that allow you to maximize the amount of income you keep each year or defer into the future. While the process is essentially the same for any taxpayer, it may be different types of tax strategies depending on your particular financial situation. Strategies for deferring or splitting income, deferring or maximizing retirement contributions, capital gains or losses, property ownership, charitable giving are applied differently in each situation, so they must be developed specific to your needs.
Tax planning and tax strategies involve the application of the rules and provisions of the Income Tax Act, which is voluminous and in a constant state of change. Because their effective application can result in hundreds or even thousands of dollars of tax savings each year, it is strongly recommended that you seek the guidance of a financial professional with experience in income and investment planning strategies for minimizing personal income taxes. As we all earn income and the earning is put into three (3) Category 1) Interest Income, 2) Dividend Income, 3) Capital Gain Income. These are treated differently when calculating the Tax. If you do not understand, then you tend to loose money every year, Year after Year.
Call our office today at Goldmax, we are here to help you, if you have questions about your own tax strategy.