Tax Planning


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  • One of the missed opportunities is people not getting full benefit from their RRSP.
  • Access to Assante Wealth Management for our high-net-worth investment clients who have complex estates.
  • Tax Planning

    1. 1. TAX PLANNING Bowman & Partners Assante Capital Management Ltd. (Member CIPF)
    2. 2. CANADA’S TAX SYSTEM <ul><li>Graduated system - the more you earn, the higher your tax rate </li></ul><ul><li>Marginal tax rate (or tax bracket) - the rate you pay on the last dollar you earn </li></ul>
    3. 3. Marginal Tax Rates (2009) <ul><li>*Federal rates only </li></ul>29% $126,265 or more 26% $81,453 - $126,264 22% $40,727 - $81,452 15% $10,320 - $40,726 Tax Rate Taxable Income
    4. 4. Ontario Tax Rates (2009) Ontario also has a surtax of 20% of Ontario income tax in excess of $4,257, plus an additional 36% of Ontario income tax in excess of $5,370. 11.16% $73,699 or more 9.15% $36,849 - $73,698 6.05% $8,881 - $36,848 Tax Rate Taxable Income
    5. 5. Key Concepts <ul><li>Total income, net income and taxable income </li></ul><ul><li>Deductions and credits </li></ul><ul><li>Total payable </li></ul><ul><li>Refund or balance owing </li></ul>
    6. 6. Preparing Your Tax Return <ul><li>Calculate all sources of income </li></ul><ul><ul><li>Employment </li></ul></ul><ul><ul><li>Business </li></ul></ul><ul><ul><li>Investment </li></ul></ul><ul><li>Make allowable deductions to arrive at taxable income </li></ul>
    7. 7. Preparing Your Tax Return (continued) <ul><li>Calculate the basic tax payable on your taxable income </li></ul><ul><li>Claim applicable tax credits, and calculate your net tax payable </li></ul><ul><li>Determine your refund or balance owing </li></ul>
    8. 8. TAX PLANNING <ul><li>“… the development and implementation of appropriate strategies to reduce, defer, or eliminate either current or future income tax liabilities.” </li></ul>
    9. 9. Tax Planning Strategies <ul><li>Splitting income </li></ul><ul><li>Using tax deferral plans </li></ul><ul><li>Using tax-advantaged investments </li></ul><ul><li>Making all allowable deductions </li></ul><ul><li>Incorporating insurance products </li></ul>
    10. 10. Tax Deferral Plans <ul><li>Retirement Savings Plan (RRSP) </li></ul><ul><ul><li>Entire eligible contribution is tax-deductible </li></ul></ul><ul><ul><li>Contribution limit based on earned income </li></ul></ul><ul><li>Education Savings Plan (RESP) </li></ul><ul><li>Disability Savings Plan </li></ul><ul><li>Deferred Annuities </li></ul>
    11. 11. Tax Implications of Accounts Not taxed Taxed Not taxed Withdrawal Not taxed Not taxed Taxed Income Not deductible Deductible Not deductible Deposit TFSA RRSP “ Open”
    12. 12. Tax-Friendly Investments <ul><li>Dividend-paying </li></ul><ul><li>Capital shares or property </li></ul><ul><li>Labour-sponsored fund </li></ul><ul><li>Corporate class mutual fund </li></ul><ul><li>Flow-Through Limited Partnership </li></ul>
    13. 13. Eligible Deductions <ul><li>RPP and RRSP </li></ul><ul><li>Split-pension amount </li></ul><ul><li>Union or professional dues </li></ul><ul><li>Moving expenses </li></ul><ul><li>Child care expenses </li></ul><ul><li>Spousal support payments </li></ul><ul><li>Disability supports </li></ul><ul><li>Investment management fees </li></ul><ul><li>Safety deposit box </li></ul><ul><li>Investment counsel fees </li></ul><ul><li>Interest on money borrowed to earn investment income </li></ul><ul><li>Exploration and development expenses </li></ul><ul><li>Employment expenses, e.g., </li></ul><ul><ul><li>Tradesperson’s tools </li></ul></ul><ul><ul><li>Motor vehicle expenses </li></ul></ul><ul><li>Capital losses of other years </li></ul><ul><li>Foreign income exempt under a tax treaty </li></ul>
    14. 14. Tax Credits* <ul><li>Eligible dependent </li></ul><ul><li>Public transit </li></ul><ul><li>Children’s fitness </li></ul><ul><li>Adoption expenses </li></ul><ul><li>Pension income </li></ul><ul><li>Caregiver </li></ul><ul><li>Disability </li></ul><ul><li>Medical expenses </li></ul><ul><li>Interest on student loans </li></ul><ul><li>Tuition, education and textbook </li></ul><ul><li>Charitable donations </li></ul><ul><li>Political contributions </li></ul><ul><li>Investment tax credit </li></ul><ul><li>Labour-sponsored fund </li></ul><ul><li>Property tax or rent </li></ul>* In the Canadian system, most tax credits are “non-refundable”
    15. 15. Charitable Giving <ul><li>Calculating your tax credit </li></ul><ul><ul><li>On first $200: credit = 15% </li></ul></ul><ul><ul><li>Above $200: credit = 29% </li></ul></ul><ul><li>Gifts of capital property </li></ul><ul><li>Gifts of publicly traded security </li></ul>
    16. 16. Reducing Net Income <ul><li>What’s affected by your “net income”? </li></ul><ul><ul><li>OAS and EI claw-backs </li></ul></ul><ul><ul><li>Guaranteed Income Supplement </li></ul></ul><ul><ul><li>Certain tax credits </li></ul></ul><ul><ul><li>GST credit </li></ul></ul><ul><ul><li>Child Tax Benefit </li></ul></ul>
    17. 17. Alternative Minimum Tax <ul><li>Targets those with high incomes who use certain deductions to substantially reduce or eliminate their taxes in a given year. </li></ul><ul><li>May increase the person’s taxable income by disallowing certain deductions and replacing them with a $40,000 exemption. </li></ul>
    18. 18. Estate Taxes <ul><li>Final tax return </li></ul><ul><ul><li>Capital gains and losses </li></ul></ul><ul><ul><li>Registered accounts </li></ul></ul><ul><ul><li>Medical expenses </li></ul></ul><ul><li>Using insurance products </li></ul>
    19. 19. WHAT’S NEW <ul><li>Canada’s tax laws are constantly changing. Government budgets often introduce new tax measures. Court rulings and CRA reviews of existing tax laws set new guidelines. </li></ul>
    20. 20. Recent Tax Changes <ul><li>Pension splitting </li></ul><ul><li>Children’s fitness credit </li></ul><ul><li>Working Income Tax Benefit </li></ul><ul><li>Eligible medical expenses </li></ul><ul><li>Disallowance of gifting-programs </li></ul>
    21. 21. What’s New in 2009 <ul><li>Basic personal amount - $10,320 </li></ul><ul><li>Age credit increased to $6,408 </li></ul><ul><li>First time home buyers’ credit </li></ul><ul><li>Home renovation tax credit </li></ul><ul><li>Registered plan losses after death </li></ul>
    22. 22. How Can We Help You? <ul><li>RRSP contributions </li></ul><ul><li>Retirement buyout package </li></ul><ul><li>Estate taxation </li></ul><ul><li>Tax-advantaged investments </li></ul><ul><li>Integrated wealth planning </li></ul>
    23. 23. <ul><li>This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please make sure to see a financial advisor for individual financial advice based on your personal circumstances. </li></ul><ul><li>Services and products may be provided by an Assante Advisor or through affiliated or non-affiliated third parties.  </li></ul><ul><li>Leveraging carries its own risks and is not for everyone.  Talk to your advisor for advice on properly managing those risks. </li></ul>