As much as we wish that tax was not something that we had to pay it is a reality, so rather than looking at it with distaste and dreading that tax time of year, perhaps a different approach will make it an easier task in more ways than one.
Know where you stand with your tax situation:
No doubt the Canada tax system is most difficult to understand. This contributes to why so many people really hate tax time aside from the fact that they may have to pay even more money. If you are going to take control of something that affects you financially then first you need to know what you are dealing with. Using a professional like a Toronto accountant to formally assist you with your tax filings is a wise choice, but you need to go one step further. You need to know and understand what your particular tax situation is. For example what tax bracket are you in, and what puts you in that bracket. Only then can you determine what steps could you take to make your tax situation a little better.
Knowing what you have to pay is the starting point to potential tax reduction:
There may be many different steps that you can take to help reduce your tax obligations just by changing a few ways that you do things. For example, you may be in a situation where you can take advantage of income splitting.
What incentives are applicable to you?
The Government really does offer a lot of tax incentives and these often get ignored simply because many people don’t take the time to learn about them. All too often it is assumed that incentives to reduce taxes is only applicable to families with children, or Corporations. There may be more tax breaks than you realize, and this is something that you can discuss with your tax preparer.
Invest with tax strategy:
If you are going to invest, then not only do you want to feel confident that you are going to get a good return on your investment, but you should look at what it will do from a tax point of view. You may have other investment alternatives that will bring you the same return, but give you a greater tax advantage.
Think ahead for your tax situation:
When you are planning for your future, think also about what your tax situation at that time will be as well. It is true that the tax rules do change quite often, but that shouldn’t stop you from doing some tax planning for both the near and distant future.
