Quebecers has the highest tax bill in North America. Financial planner Natalia Sandjian gives some tips on how to deal with such a heavy tax burden.
No one likes paying taxes. That being said, if you have a good understanding of the tax implications of each financial decision you make, you’ll end up with more money in your pockets.
There’s no secret, but your financial planner can guide you through some essential concepts.
For example, an RRSP loan. There are few people that understand the real savings incentives in a registered retirement savings plan. Sometimes, it’s even worth it to temporarily go into debt to contribute! In fact, since interest rates are low, it can be beneficial to borrow some cash and increase your original contribution amount. You can then pay the RRSP loan back over the next twelve months using your tax return. Lastly, the few dollars that you pay in interest will give you a better RRSP contribution, in addition to reducing the taxes that you have to pay. It’s an investment that pays off!
Absolutely! By then, it’s too late: it’s a done deal and tax strategies are limited, because there’s not enough time left. Instead, you should think about taxes all year round. Even if it’s not one of the most pleasant things to think about, it definitely pays off.
Yes, but according to how complex your personal situation is, unless you’re a tax expert, you might miss out on some opportunities to get a better tax return. What’s more, no one will tell you if you make a mistake or leave out information (who’s going to tell you that you paid too much in taxes?), and you can end up making the same blunders year after year. This can add up to a nice chunk of change.
A lot of people just don’t understand the power of RRSPs from a tax perspective. When it comes to forgotten deductions, there are many. Some of the most common are transportation and medical expenses, children’s cultural and sporting activities, tuition, donations, investments in environmentally friendly renovations, investment fees, and many more.
It’s a shame to miss out on beneficial deductions just because you didn’t know about them.
A good analogy is the difference between a general practitioner and a specialist. As a financial planner, I’m your family doctor. I have a general overview and education in the seven fields of financial planning. I am well versed in these areas, but not an expert.
Financial planners are responsible for raising red flags and encouraging clients to think about certain things, which could lead them to visit accountants or tax specialists. Financial planners work independently alongside these professionals.
Accountants and tax specialists provide strategies that financial planners will assess according to the client’s situation. For example, if an accountant recommends that a client contribute $4,800 to her RRSP to maximize her tax return, the financial planner can assess whether this recommendation is well suited to the client’s plans. In order to optimize the client’s overall situation, we have to make some compromises.
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The opinions in this article are those of the person interviewed. They do not necessarily reflect the opinions of National Bank or its subsidiaries. For any advice concerning your or your business’ finances, please consult your financial advisor or another professional as necessary (accountant, tax expert, lawyer, etc.).
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Views expressed in this article are those of the person being interviewed. They do not necessarily reflect the opinions of National Bank or its subsidiaries. For financial or business advice, please consult your National Bank advisor, financial planner or an industry professional (e.g., accountant, tax specialist or lawyer).