believe that they are paying too much tax. Paradoxically, taxpayers
do nothing about it until tax time. By then, most tax savings
opportunities are lost until the following year.
Many taxpayers are not very proactive with respect to tax planning.
It has been suggested that most taxpayers only take advantage
of one tax deferral mechanism: RRSP's. Many have never seen
a tax advisor. The sad truth is that too many people pay more
tax that the law requires. For example:
miss out on many tax deductions and exemptions available
to both the self-employed and employees.
don't take full advantage of many RRSP strategies available
do not use legal tax shelters
are not aware of the many income splitting techniques
that are available to families.
do not consider restructuring their debt in order to make
their interest payments tax-deductible.
are not aware of the options available to them in the
area of education planning and how education planning
techniques can result in effective income splitting with
Generally, the main objective of tax planning is to ensure that
income is taxed at the least cost. This usually involves leveling
yearly fluctuations in taxable income, deferring taxation of
income to a later year, maximizing deductions and credits, and
coordinating tax strategies with family members.
Almost every financial planning question has a tax element to
it. Tax planning strategies should be considered in the context
of your overall financial strategy.
As with any financial goal, the proper approach is to focus
on planning first, not just from one viewpoint, but by considering
all aspect such as your retirement plans, education plans, goals,
and major purchases.
The information contained in this commentary
is designed to provide you with general information only, and
is not intended to be comprehensive advice applicable to the
circumstances of any individual. We strongly urge you to seek
professional assistance before acting upon information included