Five Fundamental Tax Minimization Strategies

THE FIVE FUNDAMENTAL TAX MINIMIZATION STRATEGIES

1. INCOME DEFERRAL:

• RPP
• RRSP
• Capital Gains Deferral
• Retained earnings in Corporation
• Universal Life Policy

2. INCOME SPLITTING:

• Spousal RRSP
  
• High income earner pays bills, lower income earner invests
• Loans to spouse
  
• Business owner splits income with spouse/children
• Second Generation Income (1+1)
  
• Primary Residence on sale (for couple)
• Estate Freeze
  
• Registered Education Savings Plan
• Trusts
  
• CPP Split
• Spousal Debt Repayment
  
• Spousal Investment Loan Repayment

3. INCOME SPREADING:

• Capital gains spreading
• Business or commission income delayed
• Income Rocking (RRSP/RRIF)
• Severance Pay Spreading
• Rental property: own into Retirement - C.C.A. Ù ie. Reduced income taxes post-retirement
• U.L. Policy Ø (watch that highest income years from property are not also highest MTB years.)

4. INCOME/TAX SHELTERING:

• Capital Gains (principal residence, 50% non-taxable portion, $500,000 exemption)
• Dividend vs. Interest Income
• Carry Costs on Leveraged Investments
• Specialized Tax Shelters (Ltd. Partnership, Venture Capital, Flow-Throughs)
• Leveraged Life

5. TAX CREDIT PLANNING:

• Personal Tax Credit n Medical - dental/eyes
• Canada Child Tax Benefit n Disability Credit
• Age Credit n Charitable Donations
• Pension Income Credit n Dividend Tax Credit
• Equivalent-to-Spouse n Tuition/Education

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