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President's Choice Financial services are provided by the direct banking division of CIBC.
President's Choice Financial MasterCard is provided by President's Choice Bank.
The PC points loyalty program is provided by President's Choice Services Inc.
minimizing the tax you pay
Taxes are one of the things we've all come to accept as an inevitable part of our lives. Yet, while taxes may be inevitable, they don't have to be insurmountable. There are ways to minimize the amount of tax you pay and to make sure more of your hard-earned money stays where it should. In your pocket.
Consider these tips for reducing your taxes:
- Take full advantage of all tax-reducing opportunities. Tax deductions (like union or professional dues and Registered Retirement Savings Plan (RRSP) contributions) reduce your taxable income. That means the tax you owe is calculated based on a smaller amount of income. Tax credits are deducted from the amount of tax payable. Examples include charitable donations and property tax credits. Tax exemptions offer opportunities to earn income on a tax-free basis. For instance, any profit you make when you sell your principal residence is usually tax-free.
- Invest in an RRSP. When you contribute to an RRSP, not only do you get a tax deduction for the amount of your contribution up to your RRSP contribution limit, but the money you invest grows on a tax-free basis as long as it remains in your RRSP account. You may even be able to lower the amount of tax deducted from your paycheque when you set up automatic contributions into your RRSP.
- Determine whether income splitting is an option for your family. With income splitting, income is transferred from a high-income earner to a person with less income. As a result, the entire family unit could pay a lower amount of tax. For example, by using a spousal RRSP, the spouse in the higher tax bracket makes the contributions and receives the tax deduction, while the investment grows in the lower income earner's RRSP. Upon withdrawal, the money is taxed at the lower income earner's tax rate.
- Seek professional advice. Of course, it's important to remember that everyone's situation is different. The information set out in this article is for informational purposes only and reflects the tax rules in effect on June 18, 2002. If you would like detailed tax advice, you should seek professional assistance from an accountant or other tax advisor.
helpful tools and information
† President's Choice Financial services are provided by the direct banking division of CIBC.
President's Choice Financial MasterCard is provided by President's Choice Bank.