I received a reader question from Blake the other day about how a sole income earner can reduce their taxes. Here is the question:
I was thinking, have you written about the ability to pay less taxes? For example, I'm investing a decent amount of money each year in registered/non-registered and life insurance plus my work pension plan. I have a new family and I'm the sole earner but I'm not aware of areas of reducing taxes because of my income I'm sending much of it to Ottawa. Just curious what avenues someone has to discuss lowering the amount of taxes they pay as opposed to going to H&R block each spring.
There aren't a lot of tax loop holes for a regular corporate Joe to reduce their taxes besides using RRSP's. However, I have written numerous articles about different methods of reducing taxes for a single bread winner:
- Use Spousal RRSP's – the goal is for your and your wife to retire with the same size nest egg.
- Make sure to take advantage of all your child care tax credits. Check out a case study that I wrote about.
- When you get more comfortable with investing, consider investing a small portion of your portfolio in Flow Through Shares. Here is another article on Flow Through Share examples.
- If you have any interest bearing investments like GIC's etc, make sure that they are held within your RRSP.
- This is not really about tax savings, but check out Ed Rempels article about Universal Life Insurance. If you are currently using it, you may want to reconsider.
- If you are comfortable with leverage, consider using The Smith Manoeuvre strategy. This is where you can convert your mortgage into a tax deductible investment loan.
Anything to add to help Blake out?
Disclaimer: The articles posted on Million Dollar Journey are the opinion of the author and should not be considered professional financial advice. Please consult a financial professional before using any information provided by this site.
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