Canada Tax Planning for the Average Family
While you may not think that you have a lot of money or assets to warrant any type of tax planning you really should talk to your accountant about this so you can receive the proper guidance. You may be surprised at what you learn.
Everyone has to give some thought to what they want to happen to whatever they own should they become deceased. The common thought here is simply to have a will and this will take care of everything. While this certainly does help, there still may be some other considerations to keep in mind. For example, if your spouse happens to be a citizen from another country what implication would this have on the estate tax? If one of you happens to be a USA citizen who passes away, then there could very well be US tax laws that are going to have some implication on the estate. This is something that would need to be clearly outlined with your lawyer preparing your wills.
Even if you don’t have a lot of excess income you may still be able to consider split incoming if you meet the criteria. This can be a great way of reducing your total tax payable but you have to meet the guidelines. By talking to your accountant about this, you may find that you could then take the money you save on your taxes and invest this in the name of the individual with the lower income, who would then be possibly subjected to a lower tax rate on the income generated from the investment.
As you are probably well aware, there are tons of rules that apply to Canada tax. One of these is the attribution rules. Your tax pro will be able to help you determine if these apply to you or not. Whenever the CRA implements a potential method for the tax payer to be able to reduce their taxes, more often than not this becomes abused. Over zealous tax planners will look for ways that they can push the tax law to the limit and often cross the line. As a result the tax department then tightens up the rules or puts restrictions on them. One such circumstance is where individuals were creating tax income splitting situations with their children. So the government in order to discourage this placed a top marginal tax on situations pertaining to this.
There are many other forms of Canada tax planning that may be viable for the average income person. This is just one of the reasons why it really pays off to have a professional accountant take care of your tax matters for you.