If you run a business and want to inflate your business expenses (legally) enough to reduce your taxable income, hiring your child or spouse into the business is a smart way. Be warned that this is something the CRA monitors closely, and you can`t just pay your family members a salary based on a fake position. You need to provide valuable services to the company (even if it`s your assistant), and they need to be fairly compensated. These methods are completely legal and primarily use protection and compensation to reduce your tax burden. It goes without saying that you should stick only to legitimate options, otherwise the CRA could kick you down. Jennifer Poon, director of advanced planning at Scotia Wealth, said it`s a generally preferred option for high-net-worth Canadians because it`s a long-term investment. “You can`t always lock all your money into a life insurance policy because it`s a tax haven,” she said. If you want to hold your hand a little more, you can always turn to TurboTax Online, where real experts can help you with your taxes or even do them for you. You can also talk to experts online and get unlimited tax advice as you submit.

Beyond the expertise that professionals have acquired, the stamp of an accountant on a business tax return increases the level of quality and accuracy of quotes. When working with professionals, it`s important to work with people who have a long history in the field and who can help you and your business seamlessly navigate tax law to help you ensure full legal and regulatory compliance while benefiting from a tax reduction. Generally, there is no applicable tax credit or deduction to file your advance income tax and benefit return. However, if you file your tax return on time, you will avoid paying any associated fees or penalties and keep your money in your pocket. There are a number of (legal) ways to pay less tax in Canada. But relatively fewer people use all the credits and deductions the CRA allows, which can significantly reduce your tax bill. This is mainly because many people don`t even know where they can save taxes. Here`s what this guide will help you reduce your income tax. Read on to find possible ways to maximize your income tax and benefit return.

Here are 30 practical ways to pay less income tax in Canada for 2022. You can`t avoid paying taxes (and you wouldn`t, they`re the ones who help Canada run pretty well, after all), but there are plenty of smart — and mostly legal — ways to make sure you don`t pay more taxes than you need. Your Tax-Free Savings Account is a tool that allows you to increase your income without having to pay tax on it. While you don`t get tax deductions for your contributions to a TFSA like a registered pension plan, you can significantly reduce your income tax if you increase your income through a tax-free savings account. Since your TFSA contributions come from your after-tax income, if you accumulate capital gains in your TFSA, you can receive that income tax-free. It`s important to check if you have enough contribution room for your TFSA before you contribute to avoid a 1% tax on the excess amount for each month it remains in the account. Canada`s deficit exploded during the COVID-19 pandemic, with the government borrowing nearly $225 billion to pay for emergency services. Many experts speculate that the government will start raising taxes to repay this huge sum. These experts believe that the capital gains tax is ripe for targeting.

The capital gains tax has always been fluid – it didn`t exist before 1972. It then rose to 50% in 1990 and then to 75%. It is only in the last 20 years, since 2000, that the integration rate has fallen to 50%. There is little to prevent the capital gains tax from rising again, especially if the government needs higher revenues to pay off its debts. You can see how much extra tax you owe when rates go up using this free online tax calculator. The TFSA was introduced in 2009 and each year the government sets a maximum amount you can contribute (you can learn more on the Government of Canada website). Annual deposit amounts established for TFSAs ranged from $5,000 to $10,000 in 2015. Note that since 2019, the annual contribution limit is set at $6,000.

The TFSA is an incredible boon for Canadians seeking tax relief because no tax is levied on the interest income, capital gains or dividends you earn in your account. This is the easiest and best legal way to thwart the tax officer – so if you don`t already have a TFSA account, get one! Registered pension plans (RRSPs) are the government`s poor excuse for tax performance. You might as well take advantage of the bone they throw at you and get the most out of this tool. When you talk about borrowing to invest, maximizing your RRSP is usually a reasonable approach, as long as you can repay the loan within a reasonable amount of time. Make it a habit to pay for all business-related expenses with a separate business credit or debit card. They simplify your files and perhaps avoid a red flag with the CRA. If an expense falls under a gray area, such as a bathroom problem for your home office, be sure to note on the receipt how it relates to your business. Be diligent in your file to avoid lost receipts that may miss tax deductions. Keeping electronic copies of scanned receipts can help you stay organized on the go, but also help you drop off your paper copies in case you are checked. It can be difficult to know which depreciation applies to your situation. For most people, finding the right accountant is the most important step in reducing your taxes.

All of the above strategies are legal, but your accountant will be able to look at your finances and tell you which ones are achievable. Look for an accountant through friends and colleagues whose tax profile is similar to yours. Most importantly, you stay on top of your tax situation and keep an eye on everything your account has missed – accountants are always people. The more you understand your own tax situation and ways to reduce your risk, the better prepared you will be to take full advantage of your accountant`s expertise. Taxes are a curse for almost everyone except accountants, but they are an inevitable fact of life. The rules are constantly changing and it may seem like the dice are stacked against the honest taxpayer. However, do not despair; There are still easy ways for Canadians to limit their tax burden. In this article, we are going to look at some of them. What Canadian doesn`t want to be able to legally keep a little more of their income for themselves? Here are some smart ways to pay less tax without incurring the wrath of the Canada Revenue Agency. Even if you`re not a freelancer, there are many deductions or other types of allowances that are easy to miss if you pay taxes yourself. If you don`t want to spend money on an accountant, you should turn to top-notch software to help you. The right software can help you find many ways to pay less tax while ensuring you don`t have to pay with the CRA.

Fortunately, there are ways to avoid paying capital gains tax in Canada. While there are many (legal) ways to reduce your taxes, Dale Barrett, a Toronto-based tax lawyer at Barrett Tax Law, said the ones available to the average taxpayer depend on how much money they work and their employment status. Self-employed individuals have until June 15 to file their taxes, but note: If you owe money to the Canada Revenue Agency (CRA), you will have to pay your tax bill by April 30 to avoid late fees. If you file your return after the June 15 deadline, you will pay a 5% late payment penalty each month thereafter, according to the CRA website. There are several ways to reduce your tax obligations in Canada. Find out which tax credits and deductions apply to you and claim them accordingly. It is important to keep receipts when claiming tax credits and deductions. As the year draws to a close, there`s no better time than now to think about ways to pay less income tax and maximize your tax return. Filing your income tax and benefit return doesn`t have to be intimidating. This could be done easily, such as through online software like TurboTax, and in this way to reduce the taxes you have to pay.