Did you know your taxes can be reduced in several ways? Thankfully, while the concept of paying taxes is a necessary “evil,” and as a contributing member of society in Canada, you’ll need to pay yours, there are ways to reduce your tax bill, even if it’s just by a little!
Long-Term Capital Gains
One of the nice ways to reduce your tax bill is by using long-term capital gains. Profits you generate from selling assets you’ve had for a year or longer are considered long-term capital gains. As a result, these gains are then taxed at a lower rate than any short-term gains and regular income you have.
Start A Business
A business owner and their spouse can legally save thousands in taxes on their full-time job incomes by starting a business. This is because business income can offset computer equipment, travel, utilities, transport, and even housing costs.
Contribute Health Savings Accounts/ College Fund
Health savings accounts in Canada provide a great tax-saving advantage. You can use health savings to reduce your taxable income. Money can be withdrawn from a health savings account tax-free; at the end of a year, the leftover won’t be forfeited. You can exclude any contributions made to health savings from your gross income. Earnings in the account won’t be taxed. Much the same; when there’s a 529 plan in place to save for college, any earnings in the account can grow without being taxed, and when you withdraw the money to pay for college, it will not be taxed.
Making a charitable donation to a registered charity will enable you to claim non-refundable tax credits. Tax credits are reductions in taxes you owe the government. Tax credits for eligible donations can reach up to 33% of the donated amount but can also have an additional 24% added, depending on the province where you live.
Contact us today for more guidance on the various ways to reduce your tax bill!
Nour Private Wealth Inc. do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.