Wealth Creation Strategies and Tax Saving Tactics

Wealth Creation Strategies and Tax Saving Tactics
There are many wealth creation strategies of varying sophistication and complexity.
Some of the main reasons why many people fail in their attempts to accumulate wealth are income taxes, inflation, procrastination and lack of knowledge.
Two fundamental tax saving strategies areSave and invest in tax efficient productsUse tax savings and tax deferral strategies
This list outlines some of the more common tax saving strategies and is by no means exhaustive. A knowledgeable financial or tax advisor will be able to help you in your wealth creation strategies, according to your own particular circumstances.
Borrow for investments to make interest tax deductibleUse weekly or bi-weekly mortgage payments Create dividend income rather than interest income if it produces a higher after tax return with equivalent investment risk*Plan to contribute maximum RRSP each year at beginning of the year to maximize tax free compounding.
Early contributions, made in the first 60 days of the year, may also be claimed on previous years return.Alternately monthly contributions will generate more money in your RRSP than waiting until year end. If positioned properly, you can even get the government to help you make your monthly payments.
Establish bank accounts in children's name (or in trust for minors) to deposit child Tax Benefits and any income which the child earns or is givenHigh income earners may consider discount bonds for the capital gains and interest combination.
Purchase prescribed annuities to maximize returns.Own a piece of the mutual fund management company that owns your mutual fundsHave spouse who will receive greatest tax benefit claim medical and charitable donations.
When charitable donations do not exceed $200, consider carrying donations forward to future years to take advantage of higher tax rate.
Use insurance as part of estate planning to protect the transfer of assetsTurn your passion or hobby into a business ventureEstablish a home based business to take advantage of deductions derived from a portion of your rent or mortgage, property taxes, utilities, telephone, maintenance, etc.
Employ your spouse and children in your businessIf you are incorporated select mix of salary and dividend compensationWhere applicable, consider use of labour funds, flow through resource shares, limited partnership tax shelters