Should you purchase investment personally or corporately? Passive income in a corporation or those investments held in a corporation is taxed at the highest rate. Therefore, investing personally is more tax effective unless the individual is already at the highest marginal tax rate. We should also consider that investing through a corporation allows you to maintain control of your assets without ownership of them. This allows for creditor protection.
For an investor, there are different tax considerations to take note of when investing in the different asset classes: Real Estate: remember only 50% of capital gains are taxed. The capital gain of selling your personal residence is exempt from taxes. Paper: Interest income is taxed at the highest tax rate of all investment income so make sure you are making a good rate of return. Business: Both dividends and capital gains have preferential tax treatment
Home renovations – Now is the time to collect your Home Renovation Tax Credit for the home renovations you did before February 1, 2010. Child Amount – parents can claim $2,089 for each child below age of 18 in 2009. Children’s fitness tax credit – parents can generally claim up to $500 per year for eligible fitness expenses paid for each child. Tuition, education & textbook amounts Child Care Expenses Canada Employment Amount – claim any employment-related expenses such as computers and supplies.
Aside from Pension Income Splitting, seniors can consider these tax saving techniques when filing for their tax returns: Remember to claim all non-refundable tax credits including your basic personal amount Claim credits for eligible medical expenses paid that ended in 2009 not claimed in 2008 File CRA form T1213, Request to Reduce Old Age Security Recovery Tax at Source, if your OAS has been clawed back due to too much income made from one-time income-generating event.