Taxes are an integral part of every Canadian’s financial and professional life. Every citizen is affected by taxes in one way or the other. An average Canadian pays taxes that sum to approximately $35,000 a year. A common accounting of your personal taxes would never show you such high percentages but to know exactly one must consider all the kinds of taxes deducted on your income, both visible and hidden. Paying taxes throughout the year to federal, provincial and municipal governing bodies in different shapes such as Value Added Taxes (VAT), sales tax, fuel tax, and import tax all combined together as Goods and Services Tax (GST), burns away a significant amount of an individual’s earnings. Tax planning is important for an individual or family so that they can save some amount of taxes deductible on their bank account and have a more financially secure future.
What is tax planning?
The Acts passed by the government regarding taxes and their control have a set of rules and regulations that you can use for your benefit to save on your taxes. Accounting companies near you in Edmonton can help you in employing these rules and help you save a lot of money on taxes. The proper method of allocation and investment of your money in different markets and investment policies to decrease the amount of tax deducted from your paycheck is called tax planning. Waiting for April when you have to deal with your taxes is a wrong decision. There are a number of financial decisions you can make during the year that will help you reduce your taxation and you won’t have to look for ways to support your finances when the taxes affect your earnings. Accounting companies in Edmonton are experienced in providing financial solutions to professionals with tax accounting problems.
Are there any tax planning tactics that can help me?
Accounting companies in Edmonton can help you with schemes and tactics that can ensure you save on taxes and have a better financial condition. There are investments and allocations you can make to evade extra taxes and keep a good amount of your earnings to yourself.
Pension income splitting
If you’re a senior citizen, splitting the income that you earn from your pensions is a good idea to reduce the overall load of taxes on your family. Any Canadian eligible for pension income that qualifies for tax credits can split up to 50% of their pension income with their spouse or common law partner. Accounting companies will help you minimize taxation from your pension income without posing risks to your old age security benefits.
A Registered Retirement Savings Plan is a beneficial investment platform that not only helps you save money for your retired life but also ensure savings on taxes. The incomes and earnings that you gain in the form of interests or dividends on your investments do not come under tax deduction. This makes RRSP a truly beneficial method of tax planning.
Tax Free Savings Account
Open a tax free savings account. Although the funds that you invest in such an account are not tax deductible, the income that you make on those investments remain tax free. The amount of funds you can invest in the account is renewed with every withdrawal you make from the profits on the funds.
Registered Education Savings Plan (RESP)
A child’s education is the concern of every parent. Saving for your children’s education using a registered saving plan will not only ensure your child’s uninterrupted education, but also saves taxation on your account. The profits and incomes made on the registered education savings account are free of taxation and the government also provides a grant of up to $500 a year or 20% of the total investment you’ve made.
If you have not yet made any decision as to what plans and investments are best for you to reduce your taxes, contact our accounting and tax planning experts at Integrated Accounting Business Solutions. Our accountants and planners will serve you with quality solutions for all your financial problems.