Tax questions you need to ask

Master your Retirement

Part 3

by Douglas Nelson

- How much after-tax income do I (we) need to live on each month?

- What are the marginal rate zones in Canada? In my province?

- Which of the three tax zones am I in today?

- What is my ideal tax zone (to reduce taxes and/or clawbacks?)

- Are we taking advantage of all of the available tax credits?

- Do I need to restructure my current portfolio design and income strategy so as to reduce my tax payable?

Things you need to do

- Review your last two years to tax returns to assess if you have missed claiming certain credits. If you have, refile your returns.

- With your advisors, discuss and review alterative ways by which you can draw income from your investment portfolio to reduce taxes on the tax return.

- Plan ahead by looking at where you are investing money today. If you continue to add to your RRSP investments are you inviting the OAS clawback to appear?

Decisions you need to make

- Identify the income you need to cover basic living expenses as well as enhanced lifestyle expenses.

- Categorize your income into monthly and annual expenses.

- Educate yourself on the tax credits and clawback zones.

- Adjust your portfolio structure to meet your income needs in the most tax efficient manner.

Tips

- Taxes, fees and inflation are three of your greatest enemies in retirement. Pay attention to these three on a regular basis.

- Different advisors, due to their education, experience and category of license wll have access to different types of products. If your current advisor doesn't have the product you are looking for, ask around and seek it out.

Traps

- Don't accept your situation as it is, do everything possible to manage your tax return to its greatest level of effiency.

My next post will be some updates from the Knowledge Bureau's website. A recent poll was done on how well children are being educated on finances. Stay tuned.