Our Taxation Solutions

We know that Canadian taxation may be both complicated and stressful. Here is some of our taxation advice that we commonly offer our clients in order to save them both time and money.

Reduce the impact of your potential tax hit on realized capital gains by following the steps listed:

1. Create tax deductions

  • Claim tax deductions to offset increased income

  • Lessen your tax liability created by the realization of capital gains

  • Eg. Divert extra cash flow from the sale of an investment towards a larger RRSP contribution

  • Eg. Purchase a tax-favored investment (flow through shares) to defer tax payable the year a large capital gain is generated

2. Take advantage of tax-deferred roll-overs

  • In share-for-share exchanges involving Canadian companies, defer tax on accrued gains on the old shares through tax election forms prior to deadlines

  • Eg. Corporate takeovers that allow shareholders to exchance a pertion of their shares for shares of the acquiring company

  • Be aware that a share acquisition where the consideration received is cash will result in a tax liability

3. Apply capital losses strategically

  • Reduce your tax liability on a capital gain by realizing capital losses in the same taxation year that a significant gain is triggered

  • Consider the sale of certain investments with accrued losses to offset earlier capital gains

  • Be aware of when the superficial law rule will apply (usually during a period 30 days before and 30 days after the disposition you acquired the same or identifical property

4. Be charitable: donate your securities

  • Donate qualifying publicly-traded securities to gain significant tax savings

  • Be aware that the 2006 federal budget rules eliminates taxation on capital gains realized on the disposition created when transferring securities to a charity

  • Donate appreciated securities instead of the after-tax cash proceeds from an external sale due to the combined benefit of charitable donation tax credit and the above rule

  • Note that charitable donation claims are limited to 75% of net income, with unused donations carrying forwards up to five years

5. Plan for capital gains

  • A significant capital gain from the sale of an investment may impact your quarterly income tax instalment requirements

  • Investors with a sizable non-registered investment portfolio are required to make quarterly tax instalments

  • Large capital gain late in the year could impact the required amount of all quarterly tax instalments for the year, creating assessment of interest penalities for insufficient instalments

  • Review instalment requirements to plan for capital gains

6. Split retirement income

  • Retirees have a large increase in taxable income from significant capital gain

  • Old Age Security can be taken back at higher levels of income

  • Use the pension income splitting legislation to manage income levels

  • Split sources of income between spouses to reduce OAS claw-back and loss of old age tax credit

  • Use a tax-Free Savings Account to shelter future investment income tax

We look forward to meeting with you to discuss our taxation solutions further. With our extensive tax planning experience, we can help protect your capital gains and your future investments.