Tax Planning

The rate of return we obtain on our investments is a very important element in the formula to build wealth as explained  in my CAPS section. The rate of return we obtain on our investments is only one of three variables in our wealth formula however. The first element is how much we SAVE. (the 3rd variable is TIME)

Savings are generated by the income we earn but also by spending less.  One of our chief expenses as Canadians is income taxes no doubt. Any steps we can take to reduce our tax burden can have a great impact on the amount we can save for retirement. Nearly half of all those dollars that have slipped through our fingers over the years have been in the form of income taxes.

Find attached a chart of the total average tax that would be paid by an individual in Quebec with only the basic personal exemption claimed. For example someone, single with a salary of $100,000 would pay $32,000 in tax and therefore net only $68,000!

Below it find a chart of the marginal tax rates that a person would pay given an existing level of income. For example someone with taxable income of say $100,000 who contributes $20,000 to an RRSP would receive a tax refund of 47.7% of the $20,000 contribution for a total saving of $9,540!

 

 

 

 

 

 

 

 

 

 

 

 

In 2002 fiscalist and chartered accountant Tim Cestnick in his book ” the tax freedom zone” set out his five pillars for saving tax as being what we can Deduct, Divide, Defer, Disguise and Dodge. Using these five pillars I have constructed a grid based on the acronym FORM, which I define as Family, Occupation (employed or self-employed), Retirement and Money (investments) to help us categorize tax savings strategies that are available today.

Using this grid presented herein can help us to identify tax saving opportunities which we can then turn into a source of savings in helping us to build wealth and meet our retirement objectives.  I am available to meet at all times with my clients to discuss tax savings opportunities that may exist.

Tax Savings

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