Taxes are a fact of life. At every stage of our lives, from cradle to grave, the taxman wants his share. So once a year, as taxpayers, we have to file a return.
Tax system
Under the social contract and for the common good, it’s normal to pay taxes to the governments, in return for services and benefits. However, some expenses are tax deductible or give entitlement to tax credits, depending on the type of income and the composition of the household.
Taxable income
Most income is taxable to varying degrees. Taxes are paid:
- by tax deductions at source, if you are a salaried employee
- in instalments, if you are a self-employed person
- at an applicable rate on investment income or operating income
Tax benefits
By using savings vehicles like a TFSA and a RRSP, you can obtain certain benefits. For example, if you contribute early in the year to a RRSP, you can accumulate the maximum investment income, tax-free.
| Year | RRSP contribution limit |
|---|---|
| 2022 | $29,210 |
| 2023 | $30,780 |
| 2024 | $31,560 |
Sound tax strategies
Different tax strategies can help lay the foundation of your financial wealth. According to your situation, you can maximize your deductions, reduce your taxable income, and use all the tax credits for which you are eligible. Your advisor can explain all the ins and outs of taxes and help you make the right choices.
