What is Tax Planning?

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What is Tax Planning?
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• Tax Planning is far more than just saving up for
  your taxes, or keeping your fingers crossed
  youll receive a tax refund so you can buy that
  coveted something. Tax Planning is about being
  fiscally strategic, and using the rules in the
  Income Tax Act to pay the least amount of tax
  possible while maintaining compliance with the
  law. For most people, the single largest
  expenditure in their life will be income tax.
  Take for example a person earning 125,000 per
  year. Based on 2016s tax rates and some
  reasonable assumptions, they would pay 33,962 of
  tax in one year. Take that over a working career
  of 30 years, and thats 1,018,860 of personal
  income taxesyikes! Proper (and legal!) tax
  planning can significantly reduce the amount of
  tax you pay.

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• Diving into tax planning takes knowledge and
  organization the overall goal is to manage your
  effective rate of tax, and to keep that rate as
  low as possible. We have created a chart to help
  you understand where your effective rate of tax
  currently sits to give you a baseline to work
  from. Using the chart, find your income in the
  column called Personal Income Wages and see
  what your effective rate of tax is (the column on
  the far right). A healthy tax plan has an
  effective rate of tax around 20.
• To improve your effective rate of tax, at Kent
  Accounting Tax, we start by using the basic
  concept to defer, deduct and divide income where
  possible.

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• Defer Do you have the ability to defer income so
  that it is earned over many years, as opposed to
  in a single year?
• Deduct Have you been using all of your deduction
  opportunities, like RRSPs, capital gain
  exemptions, small business deductions or others?
• Divide Have you considered dividing your income
  between trustworthy family members (for example,
  if you earn 200,000 a year in your small
  business, can you share that income between
  yourself and your spouse, so that you both make
  100,000 a year and have lower overall taxes?)

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• At Kent Accounting, we ask questions that lead to
  solutions contact us today for more advice on
  how to optimize your tax planning opportunities.
• While there are many straight forward tax
  planning opportunities, its not as easy as
  shifting figures from one column to another. The
  law on tax planning is complex and difficult to
  understand Make sure youre making the right
  moves for tax planning book a consultation with
  Kent Accounting.

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• You may think that you have followed the letter
  of the law when creating your tax plan, but even
  the CRA can get confused. Even more frustrating
  is that the CRA rules change on an annual basis,
  and as accountants, its our job to stay educated
  and up to date on changes. Incorrectly assessed
  taxes can lead to issues with your tax planning,
  making it even more important to work with a
  qualified accountant. Let Kent Accounting take
  care of the minutia of tax planning.

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• The more time you invest in building a strong tax
  planning strategy, the lower your effective tax
  rate can be and the more you can save. If you
  pay 20 tax instead of 25 tax over the term of
  your career, the amount of money left on the
  table is staggering. If you were to save 25,000
  per year, from age 35 to 55, and invest those
  savings at 6, you would have 974,818 of extra
  money to spend in retirement. To get started on
  your Tax Planning Strategy, contact Kent
  Accounting Tax today.

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• Kent Accounting is a full-service accounting firm
  located in Calgary, Alberta. The firm is led by
  Kent Greaves, a Chartered Professional Accountant
  in Calgary with over 18 years of experience
  working with privately owned companies. Our
  Calgary accountants believe in prompt, accurate
  service at affordable rates. Hiring Kent
  Accounting for your tax planning in Calgary will
  allow you to rest assured and will free up your
  time to engage in your business in the activities
  that you are best at.