Save tax wherever you can

Published On January 16, 2017 | By Carey Dotson | Business

Anyone with a source of income has to pay taxes. And every time you get an increment your tax also increases. There are however quite a few options that will help you save taxes in honest ways.

Choose the correct types of accounts

Set up a TFSA or tax free savings account at your earliest convenience. Whenever you have money that you want to save, you can invest it here. The money will grow and you will have to pay no taxes on the earnings. The withdrawals are also completely tax free. Once you start earning, regularly contribute to your retirement fund or RRSP and you will save some tax for the contribution. The income is not taxable. However you will have to pay tax when you withdraw from the account. Once you start a family and have a child, set up an RESP with a company like Knowledge First Financial to ensure a brighter future for your child and tax savings into the bargain.Image result for Save tax wherever you can

Take investment loans not personal ones

Personal loans can drag you down, so avoid them as much as possible. But that doesn’t mean loans are out of the question completely. Take out investment loans, they are tax deductable. It is a far better option to buy your car with the money you have saved over the years and take a loan of the same amount for investment purposes than taking a car loan.

Invest in RESPs and RRSP to the upper limit

In an RESP like Knowledge First Financial, you can invest up to $50,000. This is completely tax fee and even the government contributes a total of $7,200. Similarly RRSPs help you grow tax free wealth. So, you might as well take advantage of that and concentrate on maxing out this two types of savings so that you can earn better returns.

Save tax by splitting income

Splitting your income with your spouse can help you save tax, the spouse with the higher income can contribute to his or her partner’s rRRSP and ease the tax burden a little. But this needs to be done in a way that is considered legal. So, seeking professional help is advised.

 

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