Explore Managing Your Personal Taxes: a Canadian Perspective for helpful tax‑saving ideas
How can you turn tax complexity into tax savings?
It‘s no secret that tax can be pretty pervasive and complicated — personal taxes perhaps the most of all. But despite these challenges, Canada‘s tax system offers a range of opportunities for you to realize savings. The key is to know where to find them and which are available to you.
That‘s where we can help. Our tax professionals advise many of Canada‘s and the world‘s largest and most complex organizations, and now we want to share that insight with you to better manage your personal taxes.
Of course, it depends on your personal situation — your age, stage in life, province or territory of residence, whether you‘re a business owner or an employee, if you have investments, how often you travel for business and many more factors.
Achieving your tax-saving goals requires you to step back and ask yourself some important questions. How can I sort through the myriad tax credits to find the ones that are right for my situation? What tax deductions can I make for my kids? What do I need to know before buying a house or making any other major investment? Is an RRSP or a TFSA the better plan for retirement?
In the following pages, you‘ll find tips, strategies, suggestions and important updates to help you generate these questions. Finding the answers can help you understand your unique tax situation, plan for the future, benefit from government incentives and — perhaps most important — save you time and money, and hopefully stress.
For more tax-planning ideas and savings, visit us at ey.com/ca/tax, or contact us at the EY office nearest you, listed at the back of this book.
In this helpful guide you’ll find the following topics:
- Your financial legacy: sharing generational wealth: Higher interest rates and inflation have been causing financial challenges, especially for many younger Canadians. If you are a founder of a successful family business, you may be considering business succession planning along with other ways you can share wealth with your children and grandchildren during your lifetime. A case study identifies several tax planning opportunities to help you achieve these objectives.
- Selling your business: Selling a business can be a complex and emotional process. Learn about the tax and business considerations to help make the sale a success.
- Investors: When you’re making investment decisions, think about the after-tax real rate of return of investment alternatives in relation to their associated risk. From interest and dividend income to capital gains and losses, charitable donations to RRSPs, TFSAs and more, find out how you can benefit from proper planning.
- Professionals and business owners: There are many valuable tax-planning opportunities available. Whether you’re considering the use of a personal vehicle or the deductibility of travel expenses, incorporation, use of a partnership or other issues that affect professionals and business owners, learn how you can keep more of your hard-earned money.
- Employees: From benefits such as company cars, to stock options and sales tax rebates, employees of Canadian companies can take advantage of some helpful tax-saving opportunities.
- Principal residences: The principal residence exemption is an attractive feature of the Canadian tax system. Find out how you may be able to earn the capital gain you realize on the sale of a principal residence in a way that is free from tax.
- Families: There’s virtually no area of family life in Canada that’s not affected in some way by tax. But there are many tax credits and planning strategies you should be aware of that could help you and your family find significant savings.
- Tax assistance for long-term elder care: Populations across the industrialized world are aging more rapidly than ever. In recent years, the proportion of persons aged 65 years and older has grown in every G7 country. Learn about tax credits available for individuals, tax relief for assisted care and medical expenditures.
- Retirement planning: Whether you’re just starting your career or have years of service under your belt, you need to plan for retirement. And tax planning should be at the center of your retirement strategy.
- Estate planning: While we may not like to think about the inevitable, an effective estate plan can minimize tax on and after your death and provide benefits to your surviving family members over the long term.
- US citizenship: US citizenship and nationality law can be complex, so it’s not surprising that many people have no knowledge of their US citizen status. Such people are often referred to as “accidental Americans” because an individual can obtain US citizenship “accidentally” by birth in the US, through birth abroad to a US-citizen parent or as the result of a parent’s naturalization. If you may find yourself in this position, it’s vital to know the potential tax consequences.
- US tax for Canadians: If you’re a Canadian (but not a US citizen) who spends significant time in the US for either work or leisure, you may be required to file US federal income tax returns. Learn how you can make effective tax planning a part of your cross-border life.
- Emigration and immigration: If you immigrate to Canada, you’ll likely be treated as a Canadian resident for the period you’re resident in the country, and as a nonresident if you emigrate from Canada for the period you’re a nonresident of Canada, but the concept of residency is elusive. Both situations carry tax consequences, so you need to be aware of the rules. If you’re thinking of moving to or from Canada, consider this chapter.
- Canadian tax for nonresidents: If you’re not a Canadian resident but you receive Canadian-source income, it may be subject to Canadian income tax. Find out how planning strategies can help you save on that tax.
- Tax payments and refunds: Once you’ve put your tax plan into place and have prepared your returns, we offer helpful guidance on making the last part of the process as efficient as possible.
