Introduction

Tax Planning involves a process of devising strategies throughout the year in order to minimize tax liability. Having these strategies working for you and your financial plan is extremely important given that Canada remains one of the highest taxed nations in the world. In fact, the average Canadian loses almost half of his or her income to taxes each year, representing a major obstacle to accumulating wealth. Tax Planning is an ongoing process that should be reviewed every year along with your financial plan.

Tax planning a system put into effect so as to minimize tax liability through personal financial planning , investing in tax deferred investments, tax exempt securities, or tax shelters offsetting capital gains from passive investments, such as real estate investment trust. It is an arrangement of discretionary income, expenses, and investments in a way that enhances after tax wealth. Insurance policies can be used to increase after-tax income through the tax deferral features of cash value life insurance and to reduce estate taxes through the preferential tax treatment of the life insurance death benefit Contrast with tax evasion, the willful nonpayment of taxes legally owed.

We all know the old adage “nothing in life is certain but death and taxes”. However it is not completely correct. Death of course remains a destiny not to be avoided, but some taxes can be postponed for your entire life or shifted beyond your life to people who will have actual amounts payable to government that may be negligible. Taxes can also be minimized by investments that postpone amounts payable, investments in assets that have relatively low tax rates, income splitting with a spouse or children, and changes in the nature of income or how business is organized.

What is required to achieve these tax savings is careful control of investments, employment income, and bonuses in order to achieve income averaging where possible and, for investments, cash flow shifting where it is lawful. More..

Table of Contents

1. Tax Planning
2. Investing With Taxes in Mind
3. Capital Gains
4. Not All Dividends are Created Equally
5. Tax Changes for 2007 Return
6. Tax Advantages of Family Trusts
7. Cascading Life Insurance as a Tax Shelter!
8. A New What? Oh, Annuities!
9. Keep the Taxman at Bay
10. Tax Cuts, the Quick List of To Dos
11. Minimize RRSP Taxes at Death
12. Your Personal Tax Planning Calendar

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