“Help – I am paying too much tax!”

Do you feel that you are paying too much tax? – Part 1

In the big picture I would always agree that we do pay too much in tax when you consider the various levels of tax that we pay into, from the

  • Federal income tax
  • Federal G.S.T. and for many an H.S.T.
  • Provincial income tax
  • Municipal property tax
  • The hidden taxes on Gas, liquor and other special products
  • The hidden cycle of tax in which corporations pay tax and then pass on the expense to the retail store.  Then the retailers also collect GST from the individual customer.
  • Direct pay as you go taxes which are government services in which we pay user fees for. Fees for services such as the fee for a drivers licence, for federal parks and municipal recreation services, parking tickets and city transit fees and other user fees for business licences and passports etc…

We could get carried away on the morals of taxes and the difference between:

  • Income taxes,
  • Property taxes,
  • Consumer goods taxes and the
  • user fee taxes.

I would enjoy a good debate asking the questions of:

  • Is it better to pay for the service offered as you choose to use it or is it better to pay the government a large sum each year to have the service always available to every one for free?
  • Is it better to have a “Free” health care system or should we pay for it with personal insurance premiums?

This could be an interesting debate for another day.   For now, let us just accept that taxes allow the government to provide very necessary services to us such as medical, security and fire protection.   Therefore it is good to pay taxes to have these services provided to us.

It is our responsibility to pay our fair share and to make use of the tax rules provided to us which allows us to manage our own money and keep more money in our pocket.  

We encourage you to be assertive and to take advantage of the rules and incentives offered in the tax rules.   We do advise you to NOT be aggressive with the tax rules, as that leads to a potential Tax Audit and potential fraud charges or charges of Tax evasion, which is a criminal offense.

If you want to take control of your tax bill, then you need to speak to a tax planning advisor and ask about the following options.
  1. Tax deferral

    1. R.R.S.P.

  1. Tax avoidance
    1. T.F.S.A.
  2. Tax shelter
    1. R.E.S.P and an R.R.S.P. are tax shelters as you do not pay tax on the funds while the money is “Sheltered” in the registered plans.
    2. Special projects – We DO NOT recommend special projects.
  3. Tax Transfer
    1. Gift to family
    2. R.E.S.P. allows you to save for your future family education expenses and the future student withdraws the money and reports it as income.
  4. Tax evasion
    1. We DO NOT recommend Tax Evasion…
    2. Quote from the CRA website “Tax evasion, unlike tax avoidance, has criminal consequences. Tax evaders face prosecution in criminal court.”
  5. Tax Credits
    1. “It Depends…  there are too many to list.”
    2. The most common are:
      1. Medical Expenses
      2. Donations for charities and for political organizations
      3. Child expenses – day care, camps, recreation and art programs
  6. Tax Deductions
    1. Business income losses
    2. Investment –  Capital losses
    3. R.R.S.P. contributions.
  7. Tax reporting – income Splitting.
    1. Pension income may be shared with a spouse
  8. Income source review
    1. Employment income
    2. Commission income
    3. Sole-proprietor business income
    4. Business owner of an Incorporation…
    5. Investment income
      1. Capital Gains
      2. Dividends
      3. Interest income
    6. Income from a Life Insurance Policy
    7. Income from family support payments
  9. Finally the TOP item of advice…
    1. Receiving advise from your experienced tax return preparation advisor and your business bookkeeper…

As this is long list and it only just introduces the main questions to ask, we strongly recommend that you set up a visit with Spears Bookkeeping to discuss these options and how you can reduce the tax that you pay each year.

In order to have accurate answers to your questions we recommend that you hire Spears Bookkeeping to first complete all of your business bookkeeping tasks.  Then SBFC will prepare a trial or test tax return for you to consider the results of these options.

Call Tania @ 403-831-7821

But wait there is more…

Check out our next blog for more information…



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