Tax TipsTax is the nuisance of modern life. Tax tips will reduce that nuisance part. Whether the tax regime we live under is equitable or not is a debate for another time.The tax system we live under is one we have to accept thus some information about tax tips. Think of tax like rain; if you are caught in the rain it’s better to have an umbrella and a raincoat rather than just blue-jeans and a T-shirt (If your plan is to stay as dry as possible). This page is short synopses of some of the little things you can employ to defer, reduce and eliminate tax, when dealing with different investment vehicles, income strategies, and estate protection. Registered Retirement Savings Plans (RRSPs)–will give you a ‘Tax Deferral'.When you place investments inside an RRSP and allow those investments to grow, they grow tax sheltered until they are withdrawn. It’s upon withdrawal that you are hit with Tax--at your full marginal rate. RRSPs are a useful tool--if used correctly. One terrific way to use them is to save for a first-time home purchase. Under current regulation a couple is entitled to withdraw up to $25,000--per person--from an RRSP, no tax, no penalties for a down-payment on their first home. (For more info see first time home buyer). Tax Free Savings Account (TFSA)– as the name implies there is no tax deduction going in and no tax owning on any withdrawal regardless of how much income the account has earned. A great tax tip is to use a TFSA as an emergency fund. (Remember you can use anything in a TFSA that is eligible for an RRSP).Universal Life Policy– over funding into a UL is 100% tax sheltered – if you need the money you can borrow it out with no tax issue.Flow through shares-- (issued by natural gas, oil and mineral exploration companies) – these entities are given generous tax incentives to explore and search for these natural resources. By issuing flow-through- shares these companies can pass these tax incentives along to the investor while raising the necessary cash they need for the exploration.This is an awesome tool for someone who has ‘maxed-out’ their RRSP room and is looking for a way to reduce their tax that year. Sidebar: If you have had the misfortune of losing your job, but are getting a big severance package and you have no place to put the severance, because your RRSP is maxed out. Flow through shares could be one way to save you a ton of tax. Home BusinessNow’s the time to start a home based business , to take advantage of all the tax deductions available from your home.Terry Johnston J C Mitchell Financial Services Inc. Phone: 866-721-7781 ext. 232 Return From Tax Tips To Home Page
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