The Tax Trimmer

By: Tax Trimmer  09-12-2011
Keywords: Tax Returns, Personal Tax, Personal Tax Returns

Peace of Mind:

You likely realize how difficult it has become to navigate through the ever changing tax laws, even for low and middle income Canadians. (if you’re not convinced, please see below, under Tax Strategies and Tax Traps)

How can we help?
  • I’ve been preparing tax returns, designing and implementing tax strategies successfully, since 1982, so that you don’t have to lose sleep over it.
  • Is your tax return a red flag? We’ll help you audit proof it.
  • I am not a fill in the box accountant. I will steer you through the system, so that you pay the least taxes possible under your circumstances. (as far as the law allows it)

Friendly Professional Service:

A friendly smile and clear, understandable explanations, in laymen’s terms, are my trademarks.

We prepare:
  • Personal Tax Returns
  • Small Business Tax Returns
  • Rental and other Investments
  • Small Corporations
  • Tax Returns for Deceased Individuals
  • Trust Tax Returns (resulting from a will)

We serve you in English, French, German, and Romanian.

Government Benefits:

Did you notice the heading on page 1 of your tax return?

It’s called an “Income Tax & Benefits Return”

Through it you can claim your:
  • GST Credit
  • Child Tax Benefit
  • Supplement for Children under 7
  • National Child Benefit Supplement
  • Ontario Child Care Supplement
  • Guaranteed Income Supplement (for seniors)
  • Spousal Allowance (for seniors)
  • Ontario Tax Reduction
  • Ontario Sales Tax Credit
  • Ontario Property Tax Credit

In addition to saving you taxes, I look on it as a personal challenge, to make sure you get the most of these benefits.

Tax Strategies:

Tax strategies for low and middle income Canadians? Believe it or not there is such a thing. I specialize in that and also for higher income Canadians.

Some examples for low and middle income situations: 
  • Tax free zones! Does something like that exist? Yes although there are fewer than in the past. Better yet, do you know if they apply to you, or how to exploit them?
  • Income Shifting! You can shift income from one year to another and pay less tax. Or you could shift income to your spouse and save on taxes.
  • Do you have children? Do you know how to create some tax free income?
  • Did you know that charitable donations are good for 5 years and increase in value if you carry them forward? You could even use this to your advantage and possibly trigger one of the tax free zones or some other extra benefit.
  • Did you know that medical expenses can be carried forward to the next year? Or that you could straddle years?
  • Creating tax deductions! If you don’t have a pension, do you know how to create a yearly $2,000 pension deduction?

Tax Strategies - RRSPs:

When it comes to RRSPs, do you think only of the tax deduction? Did you know that there are a multitude of bonus savings you could achieve?

Let’s see how many possible areas you can think of:
  • NCTB (National Child Benefit supplement)- an additional 12.2% or 23% or 33.3% in savings, depending on if you have 1, 2, or 3 children or more
  • CTB (Child Tax Benefit) basic benefit 2% or 4%
  • GST Credit 5% in extra savings.
  • Seniors can trigger or increase the GIS (a 25% or 50% benefit depending on if married or single)
  • Age Amount
  • Spousal Amount
  • Medical Expense Claim
  • Refundable Medical Expense Supplement
  • Spousal Transfers such as Pension Amount etc.
  • Caregiver Amount Claim
  • Tuition and Education Transfers
  • Old Age Security Pension Claw-back
  • Employment Insurance Benefit Repayment
  • Disability Amount Transfer
  • Ontario Tax Deduction
  • Donation Amount Claim
  • Ontario Health Premium
  • Ontario Sales Tax and Property Tax Credit

Tax Strategies – Businesses

This is one of my specialty areas. There are just too many to mention. Besides each situation is a unique one, so I will design something especially for you, if that is your desire.

See below for some specifics on tax traps for businesses.

Tax Traps:

Caveat Emptor! Is Latin for “Let the Buyer Beware!” Do you know all the traps you can fall into when dealing with the tax system?

A few of the areas you need to be careful about:
  • When is the best time to put money into an RRSP and when is the best time to pull it out? Most people make their major contributions when the children are grown up and pull it out after they turn 65. For more and more people this has turned into a tax trap, so much so that some are demanding a change in the laws. Do you know the system well enough to understand why it’s a tax trap?
  • In the above caption “Tax Strategies with RRSPs” you noted how many additional areas an RRSP deduction affected. Well guess what - the reverse is true also. When you pull out RRSPs many or all of these areas could be affected, but this time it will cost you extra (not save you extra). Do you take this into consideration when you pull money out of your RRSP? Most people don’t.
  • I am 54 years old and I have already started to pull our money out of RRSPs. If you’ll ask me why, I’ll be more than happy to explain.
  • In about 2 years I will turn around and put that money back into RRSPs but I won’t claim the deduction for a number of years. If you ask me why I’ll be more than happy to explain that one also. It’s all part of a fine tuned strategy. I’m going for a nice big bonus benefit.

Tax Traps - Businesses

Did you know that if you paid your wife a salary you have to pay WSIB premiums on that? It may well cost you more than the tax savings. Do you know how to get around that?

  • Is your tax return a red flag? Do you know what CRA (Canada Revenue Agency) is looking for? You could be attracting undue attention to yourself.
  • Are you loosing out on tax deductions unnecessarily? Do you know how to turn non deductible personal interest expenses into a deductible expense for your business? I would be happy to show you.
  • Should you always take full depreciation? Or are there times where it’s better to carry it forward to another year?
  • Should you incorporate? For many it will help to save on taxes, for some it’s a tax and money trap.
  • Should you make your wife a partner in your business? What are the pros and cons on that one?
  • Just saying your workers are self employed or sub-contractors does not make them so. Do you know how to setup your dealings with them in such a way as to protect yourself. Some have not been careful and have paid dearly.
  • Plus there are many more. Each situation is unique.
The information in this article was current at 06 Dec 2011

Keywords: Business Tax, Business Tax Returns, Personal Tax, Personal Tax Returns, Small Business Tax Returns, Tax Deductions, Tax Returns,