Tips and ideas
In this section, you will find various tips or ideas to reduce your taxes or simply improve your financial situation. We will gradually be adding more information so that it is more complete.
We invite you to visit this section regularly to stay up to date. Before undertaking any tax changes, we suggest checking with us whether these general points apply to your situation, as each situation is unique.
RRSP QFL (or CSN):
We suggest you start contributing only 5 years before your retirement as the average return on these investments is generally lower than the market return.
If you have a spouse and your income is much higher than his or her's, you should contribute to his or her RRSP. You will become the contributor, and your spouse will become the annuitant. This way, the RRSP withdrawal at retirement will be taxed less.
If you receive investment income (interest income, dividend or capital gain), you may want to contribute to a TFSA. This way, you will not have to pay taxes on your investment income. The maximum annual contribution is $5,000 for years 2009 to 2012 and $5,500 for 2013 and 2014.
QUEBEC PENSION PLAN INCOME (QPP):
If you or your spouse receive QPP income, you might want to split your income at source. A simple call to the QPP is all it takes.
PENSION TAX CREDIT:
If you are 65 years old and do not receive pension income from your employer, you should convert part of your RRSP into an RRIF, so you can withdraw $2,000 annually, free of tax.
A UNIQUE ACCOUNTANT:
If you and your spouse (or child with tuition fees) each have your own accountant, you may not get the most out of the returns. By combining your returns with a unique accountant, you may reduce your taxes.
If you have a child or children under the age of 6, you are entitled to the UCCB at a rate of $100 per month until your child turns 6.
If you have children planning to study at CEGEP or University, the RESP program will give you a return of at least 25% (the federal bonus). Furthermore, if your family income does not exceed $80,000, other premiums may be added. It is best to start contributing to this program 4 or 5 years before the child turns 21.
If your couple's income is less than $126,000, childcare tax credits for a private daycare centre can easily reach 72% of the amount paid for childcare. There is therefore no longer any significant difference between a private daycare and a $7 daycare if your income as a couple is less than $126,000.
It is in your best interest to get paid for the actual hours you work with the charity and then donate your salary. You will be entitled to a tax refund because you will be taxed less on your salary than what your tax credit for donation will bring you.
NEW HOUSE OWNER:
If neither you nor your spouse has owned a home over the 5 years preceding the purchase of a house, you may be eligible for a non-refundable tax credit of $750 at a federal level, the year in which you purchase your house.
NEW HOUSE OWNER:
If neither you nor your spouse has owned a home over the past 5 years, you will benefit from withdrawing money from your RRSP under the HBP program. This will allow you to repay your RRSP interest-free for 15 years.
You may want to pay Revenu Québec as instalment payments before you pay Revenue Canada because penalties and interests are higher at a provincial level.
RRSP OR NON-RRSP INVESTMENTS:
To get the most out of your investments, it is important to first rank your investment returns according to their priority, before choosing the suitable type (RRSP or Non-RRSP). The return outweighs the tax benefits. The RRSP is after all only a tax deferral. And remember that a capital gain is fully taxable in an RRSP while it is only 50% taxable if it is in a Non-RRSP account, and not taxable at all if it is in a TFSA.
If your profit (your total income minus total expenses for the year) exceeds $20,000, you will benefit from incorporating yourself economically. In addition to economic advantages, there are also several benefits in terms of personal assets protection. In fact, incorporation allows you to benefit from a lower tax rate. For more information, just ask us!
It is vital that you and your spouse have your taxes processed by the same accountant. This will allow you to take full advantage of pension income splitting, which can save you a few thousand dollars a year.
When your marital status changes (you separate or become a spouse), you must notify Revenue Canada (form RC65) for the GST credit and Revenue Québec (form 1029CS3) for the solidarity credit. By notifying them promptly, you will avoid that they return to you several months later with a hefty bill.
DISABILITY TAX CREDIT:
If you know someone who is eligible for the disability tax credit, tell them about the RDSP (Registered Disability Savings Plan). Through this program, the government will pay them a grant of $1,000 to $3,500 annually, as well as a Canada Disability Savings Bond of up to $1,000 per year, in some cases. This is a generous program for those who qualify for the disability tax credit.
It is better not to include dividend-bearing stocks of American companies in the TFSA since you will pay foreign withholding tax anyway. Focus on Canadian stocks with good dividends in your TFSA
If your family income is less than $40,000 annually and you have children under the age of 15, ask your financial planner to open an RESP in your children's name. Without you contributing anything, you may be entitled to the Canada Learning Bonds, a cumulative contribution of $2,000 per child to be paid by the government.