Tax Tips for the Proactive

March 2, 2019


Although tax season is approaching, proactive tax planning is a year-round affair.  Here are some tax-related ideas we are sharing with clients.

Review your withholding tax strategy to avoid having to fund large tax bills in April
If you’re retired and consistently receiving tax bills in April that are bigger than expected, you may want to review your withholding tax strategy.  A pay-as-you go strategy that avoids surprise bills in the new year may be preferable over the once-a-year lump sum method.  If so, you can easily accomplish this by increasing withholding taxes on your income sources like Canada Pension Plan, Old Age Security, private pension, and your registered account withdrawals.  While it’s true that you could earmark a percentage of each payment you receive and set it aside for taxes, effectively you get the same result with a direct remittance at source.

Position the location of your investments in the right accounts to maximize tax savings
If you hold a variety of different investments, try to match investments in the right account to maximize tax savings.  As an example, RRSP income is 100% taxable.  It won’t matter if your RRSP is stuffed with tax-preferred dividend or capital gain producing stock, it will be fully taxable when withdrawn from your RRSP.  Thus, it may be better to position more of your conservative, income-producing  portfolio in your RRSP, and leave the investments that produce capital gains or return-of-capital in your non-registered account.  Eligible dividend paying investments are in many cases best left in the TFSA, so that the gross-up crediting system leaves your taxable income untouched.   

Integrate the advice you’re receiving by encouraging your wealth and tax advisor to coordinate.  Wealth and taxes are closely related, so why not encourage your financial planner and tax advisor to coordinate on your behalf?  That could be an email exchange, phone call, or even in-person meeting to work on a coordinated approach to your wealth.  If you’re not already working with a CPA, you may want to consider doing so for your T1 General.  A good accountant is worth their fee.  Not only will a professional accountant help keep you out of trouble with the tax man, there’s a good chance they’ll save you enough to cover their fee.

Get a Canada Revenue Agency online log-in
If you’re comfortable with online services like online banking, why not get a Canada Revenue Log in for quick access to tax related information?  Note, if you have an active My Service Canada login, you may be able to access the CRA portal through it.


Warm Regards,

Lorenzo Pederzani, CFA, CFP®, FCSI® | Portfolio Manager
HollisWealth®, a division of Industrial Alliance Securities Inc.

This information has been prepared by Lorenzo Pederzani who is a Portfolio Manager for HollisWealth®. Opinions expressed in this article are those of the Portfolio Manager only and do not necessarily reflect those of HollisWealth.  HollisWealth® is a division of Industrial Alliance Securities Inc., a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.