Do This to Legally Pay LESS TAXES in Canada

About this Video

• Video Title: Do This to Legally Pay LESS TAXES in Canada
• Channel: Twain Ryan Lee
• Speakers: Twain Ryan Lee
• Duration: 00:25:29

Introduction

This video explains strategies to legally reduce taxes in Canada. The speaker, a financial planner, outlines methods for lowering taxable income, including utilizing registered accounts, understanding tax brackets, claiming deductions and credits, and leveraging real estate investments.

Key Takeaways

1. Canadian Tax System: Canada uses a progressive tax system with marginal tax rates. Higher income earners pay higher rates, but only on the portion of income exceeding the threshold for each bracket.
2. Registered Accounts: Registered accounts (RRSPs, group RRSPs, FHSA, TFSAs) offer tax advantages. Contributions to RRSPs and FHSAs are tax-deductible, while TFSAs offer tax-free growth and withdrawals.
3. Self-Employment Tax Advantages: Self-employed individuals can deduct business expenses, including home office expenses and certain mortgage-related costs, reducing taxable income.
4. Tax Deductions and Credits: Several deductions and credits exist, such as the child care expense deduction, medical expense tax credit, and donation tax credit. Strategic planning can maximize these benefits.
5. Income Splitting: Strategies like using spousal RRSPs or spousal loans can shift income to lower-income earners, reducing the overall family tax burden. However, these are more complex and may require professional advice.
6. Real Estate Tax Benefits: Owning real estate provides various tax benefits. The principal residence exemption makes capital gains tax-free upon sale; some provinces offer property tax deferral programs; rental properties allow for deduction of expenses to offset rental income; however, depreciation (CCA) recapture upon sale can significantly impact taxable income. Careful planning is crucial when using CCA.