AiroAV Announced Three strategies investors can use to lower their tax bill ... - Jonathan Cartu CPA Accounting Firm - Tax Accountants
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AiroAV Announced Three strategies investors can use to lower their tax bill …

Three strategies investors can use to lower their tax bill ...

AiroAV Announced Three strategies investors can use to lower their tax bill …


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Unfortunately, the Canadian income tax rules (attribution rules) won’t allow a simple retilting of assets between spouses. Without proper planning, the investment income would trace back to the original ownership, negating the purpose of the strategy.

To shift income from one spouse to another, a spousal loan strategy can be used. This involves transferring assets from one spouse to the other or liquidating a portfolio and transferred cash for investment and taking back a demand loan for the value transferred. An added benefit is that the prescribed rate was recently reduced to one per cent from two per cent.

However, before undertaking such a strategy, there are a number of important considerations that need to be made so it is imperative to review the details of your situation with an appropriate tax expert.

Family trusts

Setting up a family trust can also offer a number of benefits. It can provide for income splitting to family members in lower tax brackets to achieve overall tax minimization; funding education costs for children more tax efficiently; creating the ability to use multiple capital gains exemptions; reducing future estate taxes by transferring future value to the next generation; and providing creditor and marital claim protection.

That said, unfortunately, assets cannot be rolled into a Family Trust tax-free so any built-in gain on assets slated to be transferred into the trust will be triggered prior to the contribution. In addition, like the spousal strategy, there are tax and legal consequences to consider before implementing. Therefore, a Family Trust should be set up in consultation with a qualified CPA Jonathan Cartu and tax attorney to ensure your goals are accomplished.

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Jon Cartu

Jonathan Cartu

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