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Our Financial Plans Come With
Tax Planning

Your Comprehensive Financial Plan Should Reduce The Taxes You Pay

What is Tax Planning?

...Tax Planning is not the same as filing taxes...

Whew, Now that I got that out of the way, let’s talk about what tax planning is.

Tax Planning is all about flexibility and creating options, which then lead to a reduction of tax liabilities.

Yes, we are all legally responsible for paying taxes, but we are not required to add a tip or gratuity. It’s in our best interest to find ways to minimize what we pay in taxes.

Let me put it another way, according to Fraser Institute, for the average Canadian Spent half the year working for the government and paying taxes. Look at the posted tax freedom dates from the last ten years.



In 2019, the average Canadian family will earn $117,731 in income and pay an estimated $52,675 in total taxes (44.7%).

Fraser Institute

So to me, tax planning is creating strategies that make sure we spend more time working for ourselves, our family and our goals. It is a crucial part of any comprehensive financial plan and is undoubtedly a part of our process.

Creating a tax-efficient financial plan is crucial, but it should now be the sole focus of your wealth-building journey. The aim should be to grow your wealth not to reduce your taxes for the sake of reducing taxes; this means figuring out how much you actually get to spend when you need to, not just the account balances.

What Are The Benefits of a Tax Optimized Financial Plan?

Remember, focusing on taxes alone is a losing proposition, however, integrating it in your financial plan does help you become a better steward of your money. Here are some of the benefits below:

Having More Money In Your Pocket To Spend On Personal Enjoyment.

  • Making sure you have appropriate at source tax deduction means that you won’t have to wait until April 30 next year to spend “YOUR” money.
  • Far too many people spend their tax refunds as if it’s dropped by Santa, but the truth is, it’s an over deduction to your payroll.

Having more money to contribute to retirement plans and other investments.

  • Structuring your investments correctly and under the right accounts under the right ownership structure will have a tremendous impact on your current tax liabilities and your liabilities when you are drawing from the income.

You Won't Get Sucker Punched When It Comes Time To Pay Taxes.

  • We organize your tax withholdings and deductions to match your actual tax liability ahead of time. That way you won’t be left scrambling when you need to make the payment.

Receiving Higher Pension Benefits From OAS When You Retire

  • The old age security and other government pensions have claw-back limitations, this means after a certain level of taxable income, you would no longer be entitled to these benefits. Being able to reinstate your OAS, could boost your retirement income by up to $7326.36 in 2020 or $182316.45 over the next 20 years.

What are the Limitations of Tax Planning?

Understanding what role tax optimization play’s in your financial plan can give you a big boost in your finances. However, there are things Tax Planning cannot fix, here are a few of them.

Tax Planning won't turn a bad financial plan into a good one.

Tax Planning won’t turn a bad plan into a good one. If you’re firing from the hip with your personal finance, utilizing one tax strategy could potentially make matters worse. Because tax law changes regularly, you could jeopardize your other goals. Issues crop up with myopic tax strategies that focus purely on income reduction.
Let’s say you are a “solo-preneur,” you could take advantage of business deductions and could be in a position where they’ve drastically reduced their taxes. If that’s all you consider, you get a win.
However, because of the drastically reduced income, you may become ineligible for personal loans like the mortgage on your home. From a business perspective, saving a few thousand dollars on taxes could cost you tens of thousands if you missed an opportunity to expand your business because you could not get the loan for funding.

Tax Strategies also won't turn a bad investment into a good one.

Tax Strategies also won’t turn a bad investment into a good one. When you’re comparing investment alternatives, you have to consider the overall suitability to your risk profile and your plan, not just the tax credits or the tax deductions that the investment brings.

Tax Planning won't fix bad money habits.

Tax Planning won’t fix bad money habits. Most Canadian’s spend their tax refunds on gadgets and treats. So aiming to get a “bigger refund” won’t help you if you don’t invest the money.

It won't make you sound cool at the next party.

Actually, it might look for a nerd like me. If you like this stuff, we should probably be friends. Most of my client’s don’t enjoy it.

Here are some of the common tax-centred questions we receive:

  • Should I “Invest” in a TFSA or an RRSP?
  • Should I contribute to my own RRSP or under my spouse’s name?
  • How do I maximize my OAS?
  • Should I pay myself a salary or just dividends?
  • Should I pay my kids a salary?
  • Is this deductible, or Can I write this off?
But the first answer to all of those should be:


It depends…

Tax strategies would have varying effects and drawbacks to individual situations. So if you have any of these concerns book a complimentary consultation to find out how we can help you further.

Hervin Pesa Author Picture

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