"A comprehensive tax strategy is integral to a sound financial plan. Our plans are constructed with tax efficiency in mind"
- Mitch McLean
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Tax planning is the process of organizing your financial affairs in a manner that reduces your tax liability within the limits of the law. It involves analyzing your financial situation, identifying tax-saving opportunities, and implementing strategies to minimize your tax bill.
Tax planning is typically performed by individuals, businesses, and financial advisors and involves keeping up to date with changes in tax laws and regulations. The goal of tax planning is to reduce the amount of taxes owed, allowing for more efficient use of financial resources.
Optimizing your taxes through tax planning in Canada involves utilizing a comprehensive approach to ensure all elements of your financial plan work together to legally reduce your overall tax burden. By minimizing taxes, your investments are able to grow at a quicker pace.
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Mitch McLean is an Ottawa based financial advisor with over 16 years experience, offering financial planning services across the entire province of Ontario including Ottawa, Toronto , Mississauga , Brampton , Hamilton, Markham, Vaughan and Kitchener.
If you are interested in scheduling a call with Mitch to discuss your financial planning and personal finance needs, then simply contact him below and please feel free to connect with him on on LinkedIn, Twitter and Facebook, or schedule and appointment below.
Tax planning is important because it helps to minimize the amount of taxes owed. For example, through tax planning, an individual may identify deductions and credits that they are eligible for, reducing their taxable income and ultimately the amount of taxes owed.
Tax planning is a crucial component of overall financial planning. By reducing taxes, individuals and businesses have more financial resources available for other purposes, such as saving for retirement, investing, or paying off debt.
Tax planning helps individuals and businesses to comply with Canadian tax laws and regulations. For example, through tax planning, a business may identify and address tax obligations, such as withholding and remitting payroll taxes, reducing the risk of penalties and interest charges. Tax planning also helps individuals to avoid mistakes in filing taxes, reducing the risk of audits and fines.
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There are a number of strategies that can be implemented in Canada to minimize tax. Here are a few.
Registered Retirement Savings Plans (RRSPs) are a tax-deferred savings vehicle in Canada. Contributing to an RRSP reduces taxable income and can result in significant tax savings.
Tax credits such as the basic personal amount, age amount, and disability amount can be claimed to reduce the amount of taxes owed.
There are several deductions available in Canada, such as home office expenses, moving expenses, and child care expenses, that can be claimed to reduce taxable income.
Income splitting allows individuals to transfer income to a lower-income spouse or family member, reducing the overall tax bill.
Deferring income until a later tax year can result in a lower tax bill, especially if the individual's tax rate is expected to be lower in the future.
Charitable donations made to eligible organizations can be claimed as a tax credit, reducing the amount of taxes owed.
Capital gains are taxed at a lower rate than regular income. Individuals can realize capital gains in years when their overall taxable income is lower, minimizing taxes owed.
Taxes can also be minimized by investing in assets that have lower relative tax rates, and by changing the nature of the inflow of income or how a business or trust is structured.
By contributing to an HSA, you can reduce your taxable income, which in turn reduces the amount of taxes you owe.
Deferring tax payments can have a significant impact on your wealth. By delaying the payment of taxes, you allow your assets to grow, which can result in a larger overall wealth. One way to defer taxes is by participating in strategic investments that postpone the amount due.
In some cases, taxes can even be deferred for an individual's lifetime and even beyond, potentially reducing the actual amount payable to a negligible amount. Our goal is to help you minimize your tax bill through effective tax planning and management.
Deductions are an important aspect of tax planning. By identifying and utilizing eligible deductions, you can significantly reduce your annual tax bill. This can be done through various means such as claiming business expenses, charitable donations, and investment losses.
It's important to keep accurate records and to be familiar with tax laws and regulations, as deductions can vary from year to year and by jurisdiction. Our tax planning services include a thorough examination of your financial situation to help you identify and maximize your deductions, ensuring that you pay only what is necessary in taxes.
By utilizing deductions to their full potential, you can increase your overall wealth and financial stability.
Income splitting is a powerful tool in tax planning. By dividing your income between you and your spouse or common-law partner, you can potentially reduce your combined tax bill.
This is because each individual's tax bracket and rate can vary, and by spreading your income between multiple taxpayers, you may be able to take advantage of lower tax rates. This can result in significant tax savings on an annual basis.
It's important to note that there are specific rules and regulations regarding income splitting, and it's important to seek professional advice to ensure that you are complying with all applicable laws and regulations.
Our tax planning services include an examination of your financial situation and a review of income splitting opportunities to help you take advantage of this valuable tax planning tool and reduce your overall tax burden.
Additionally, don't overlook the opportunity to convert assets. By investing in assets with lower relative tax rates, or adjusting the structure of a business or trust, you can minimize your tax liability.
Tax-efficient asset distribution is a crucial aspect of comprehensive financial planning and is incorporated into each client's plan. Shareholders in a corporation have the added advantage of utilizing tax planning strategies at the corporate level, such as deferring, deducting, and dividing income.
Decisions such as receiving a salary or dividends can greatly affect your bottom line, and strategic investments in your corporation can help defer taxes and mitigate the impact of taxes like TOSI (Tax on Split Income).
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Mitch McLean is an Ottawa based financial and tax planning advisor offering tax planning services across the entire province of Ontario including Ottawa, Toronto , Mississauga , Brampton , Hamilton, Markham, Vaughan and Kitchener .
If you are interested in scheduling a call with Mitch to discuss your financial planning and tax planning needs then simply contact him below and please feel free to connect on LinkedIn and Twitter too!
Get in touch
Tax planning is the process of managing one's financial affairs in a way that minimizes their tax liability. It involves evaluating and organizing financial activities to make the most of tax-advantaged opportunities and minimize tax exposure.
Legal fees for estate planning are tax deductible in Canada if they are incurred to earn income from a business, property or employment.
Yes, contributions to a pension plan are tax deductible in Canada, up to certain limits, as they are considered a form of tax-deferred savings.
Health plan premiums may be tax deductible, depending on the specific plan and the tax laws in the jurisdiction where the individual resides.
Defined benefit plans are taxed differently depending on whether they are provided by the employer or the employee. Employer contributions to these plans are tax-deductible, but benefits received are taxed as income in the year they are received.
Tax planning is important because it helps individuals and businesses to legally minimize their tax liabilities and maximize their after-tax income. By taking advantage of tax-saving opportunities, individuals and businesses can improve their overall financial wellbeing.
Employee stock purchase plans may be tax deductible, depending on the specific plan and the tax laws in the jurisdiction where the individual resides.
Estate planning fees may be tax deductible in certain circumstances, such as if they are incurred to earn income from a business or property.
Estate planning legal fees are tax deductible in Canada if they are incurred to earn income from a business, property or employment.
Medical plan premiums are tax deductible in Canada, up to certain limits, as they are considered a form of tax-deferred savings.