Tax Deductions

Many Tax Deductions can be split between spouses. For example moving expenses can typically be split between spouses, as long as it is a family move and a legitimate moving expense claim. Child Care expenses are typically claimed under the lower income earner except for in specific circumstances. The RRSP deduction is claimable by the contributor, but the other spouse (the Annuitant) may receive the income when you withdraw the RRSP. This is very beneficial when the spouse in the higher tax bracket has large RRSP contribution room and can “Shift” income to the lower income spouse. Interest and Carrying Charges is another example of a tax deduction that can be split. To do this you must structure your transactions compliantly from the loan to the investment.

Income Splitting

Many types of income can be split, only a few of them can be split at the time of filing the tax return if you have not yet done what is required prior. Business income can be split in many ways, by paying wages, dividends, bonuses and more. Wages can be paid for work the spouse has done, dividends can be utilized if the spouse is a shareholder, and bonuses can also be paid to spouses. Capital Gains income can be split by either purchasing the asset jointly, or flowing the Capital Gain through a Family Trust. Dividends can also be split easily using the family trust. CPP and Pension income may also be split. With CPP you must apply with Service Canada to split the income, however with other pensions you can typically just split it right on the Tax return. RRSP income may be attributed to the other spouse if they are made the Annuitant. Some RIFF income can also be split between spouses. So as you can see much of the income from investments, businesses and Pensions are able to be split between spouses. Don’t forget to include your kids in income splitting where possible.

Minimum 10% Down?

Jared Chamberlain video blogs (vlogs) about his experience in a conversation with another realtor in calgary and how they thought that buyers needed to put down minimum 10% for a personal residence. Jared talks about how this is NOT the case and nothing of the sorts has been passed thus far. For any comments or questions or if you don’t care for Jared’s thoughts please email him at jared@tcgroup.ca and visit wwwChamberlainGroup.ca for more info.

Tips on Tax Planning

The problem with most people’s tax planning is that they do it last minute or try to do it when it is too late. Although you are currently completing your taxes for 2009 there is not much you can do to save taxes for 2009 now! Planning happens early, that’s why it’s called planning. Planning for 2010 should be happening as you complete and file your 2009 tax return, and followed through right until December 31^st. That being said, what can we do to still save taxes for last year? There are still some things you can do now, such as income splitting, deduction splitting and credit splitting. In the next blogs I will briefly discuss each.

Core Consumer Price Index Inflation Vs. True Inflation

http://www.statcan.gc.ca/subjects-sujets/cpi-ipc/cpi-ipc-eng.htm

On this latest release from Statistics Canada it is stated that “Overall, energy prices went up 8.2% between January 2009 and January 2010, following a 5.9% increase in the 12 months to December 2009.” Yet at the same time the Media continually states that Inflation never seems to be more than 2-3%? That’s because they are going by the Core Consumer Price Index which is a complicated calculation that does not seem to give us a clear picture of true inflation in Canada. How much have fuel, groceries and taxes gone up over the last 10 years, 2% per year? When I ask many people the question of how much they think true inflation is, they reply that they believe true inflation has to be at least 6%, and I’ve even had some reply that they think actual inflation is closer to as high as 9%. What do you think True Inflation is?

Next Page »