:: Investment Services :: >> Tax Planning

One surefire way to pay less tax is to earn less income. But that’s not a very attractive, or realistic, solution for most of us. Where investment income is concerned, how-ever, you can earn more but report less. Here are four ways to accomplish this.

Hold your appreciating assets. If you can put off receiving a capital gain, you also put off the tax bill that comes with it. With mutual funds, for example, the appreciating unit value of your funds is not taxable until you actually sell or transfer ownership of the fund units. So if you have a fund that has increased significantly in value, you can put off some of the tax consequences by not selling. (You still have to report any annual distributions that your funds pay. These amounts are shown on the annual T-3 statement the fund company sends you.)

Use capital losses to offset gains. If you have an investment that has lost money, you can sell the investment, and then use the capital loss to offset capital gains from other investments. In other words, if you have a $500 capital loss, you can use it to “counteract” a $500 capital gain. Capital losses can be carried forward indefinitely, giving you some control over when you crystallize your capital gains.
Contribute to a Registered Retirement Savings Plan (RRSP). The more money you contribute this year, the less tax you’ll pay. But sometimes it’s beneficial not to claim the deduction. If your income is low in a given year, make your contribution, but put off claiming the deduction until your income is higher.

Minimize withdrawals from your registered plans. Money withdrawn from your RRSP is taxed as income in the year you make the withdrawal. The only exceptions are the Home Buyers Plan and the Lifelong Learning Plan. If you want to pay less tax, don’t tap your RRSP unless absolutely necessary.

Finally, remember that tax rules can be complex and are always subject to change.
Giroux professional advice will help keep you up to date on the strategies that can reduce your tax bill.

Manulife Securities Investment Services Inc. is registered as a Mutual Fund Dealer, or its equivalent, with the provincial securities commissions and as such our Advisors are entitled to sell mutual funds and other approved securities as permitted under our registration. They may also be able to provide other services or products to you through their own business. As a member of the Mutual Fund Dealers Association of Canada ("MFDA"), Manulife Securities Investment Services Inc. is obligated to disclose to you that you may be dealing with companies other than Manulife Securities Investment Services Inc. when purchasing services or products from your Associate (remuneration to your Associate may also come from various sources depending on the services or products purchased). For example, your Associate may offer any one or more of the following through a separate business, which would not be the responsibility of Manulife Securities Investment Services Inc.:

* Deposit Instruments: GICs, Canada Savings Bonds;
* Fee for Service Financial Planning; * Estate Planning;
* Tax Planning or Income Tax Preparation;
* Insurance: Life, Accident, Sickness, Disability, General.

Please be sure that you have a clear understanding of which company you are dealing with for each of your services and products. Your Associate would be happy to provide any clarification you require.

The information contained herein is for Canadian residents only and does not constitute an offer to sell or a solicitation in any jurisdiction in which Manulife Securities or its Advisors are not appropriately licensed or registered or where any Product or Service is not eligible for sale. Details are available on request.