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Tax Tips to Increase Your Savings

October 8, 2015

Remember inflation is higher than the Bank of Canada Prime Rate.

  1. Maximize R.R.S.P. contributions: 18% of earned income. Money saved outside R.R.S.P. vs. inside R.R.S.P. The rate of return inside your R.R.S.P. over 25 years, assuming 4% interest, is more than double that outside. If you have contribution room from prior years, use it.
  2. Maximize your Tax Free Saving Account (TFSA). For 2014 invest $5,500.00 per person; you can catch up on prior years too. R.R.S.P.’s are more beneficial if you are incorporated and have to pay tax to draw money out of your Corporation.
  3. Maximize your C.P.P. contribution – if self-employed, you need a salary of $53,600.00 to maximize your C.P.P. which results in an annual contribution of $2,479.95.
  4. Watch which investments are in which investment vehicle. Foreign investment dividends are not eligible for the dividend tax credit so it is best to have your Non Canadian portfolio in your R.R.S.P or TFSA.
  5. Invest within your corporation or, personally outside your registered investments to receive Capital Gains and Eligible Canadian Dividends.
  6. Better than all of the above – Invest in Real Estate or Businesses – especially farmland. If land is actively farmed it qualifies for the Capital Gains Exemption – which has been increased for 2015 to $813,600.00.
  7. Review your Capital Gain Exemption Balance, and plan to use other family members to maximize tax free capital gain.

We can help you maximize your savings for retirement.