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Tax Time

 

Tax time is around the corner so in this lesson I thought that I would share with you some helpful hints to think about.  Most people work until June for the government before they begin working for themselves.  Remember it’s not what you make it what you get to take home and keep in your pocket that’s most important.  Tax strategy number one is utilizing the Tax Free Savings Account.  The TFSA allows Canadians to set money aside in eligible investment vehicles and watch those savings grow tax-free throughout their lifetimes, there is no other tax free plan like it.  The investment income, including capital gains, earned in your TFSA is not taxed, even when withdrawn.  You can withdraw funds available in your TFSA at any time for any purpose — and the full amount of withdrawals can be put back into your TFSA in future years.  You can provide funds to your spouse or common-law partner to invest in their TFSA.  TFSA assets can generally be transferred to a spouse or common-law partner upon death.  The TFSA is a powerful tool that can be used to build a tax free retirement.  Here’s an example if we assume that I have contributed my maximum TFSA allowance which is $20,000 and that I’ll be adding an additional $5,000 a year for the next 25 years at an assumed interest rate of 8% that will grow to $516,839.  If my spouse does the same that is a total of $1,033,678 tax free… wow.   Tax strategy number 2 is setting up a small business and corporation.  Tax on income from your small business up to $500,000 could be as low as 14% as a opposed to taking money personally at 39% plus.  Also by owing a small business every Canadian resident could be eligible for a $750,000 capital gains exemption during their lifetime, tax free, from dispositions of certain types of property provided that they own a qualified small business corporation shares.  In order to pay less in taxes and keep more if your pocket call us now at 1-877-741-8910  to be directed to one of our coaches or Google solidfinancialsolutions.ca to watch the full story.

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by Brad Fisher on June 18, 2013 in

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