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Seniors 101 Article – February 2019

When it comes to tax planning, it’s the little things that really add up. Here are 5 ways in which you can save big at tax time:

1. Have a plan – it is very important that you know where your income is coming from today, tomorrow and many years down the road. At each stage of your retirement, your primary income source may change. Having more than just a vague idea of where this money is going to come from helps make better decisions now.


2. Create income from multiple sources – the saying “don’t have all your eggs in one basket” rings true when it comes to taxation too. Some income is treated as fully taxable, where others can be non-taxable. Having a healthy mix of both can help maintain a level amount of income while creating the least amount of tax possible. RRIFs and pensions will always attract a high level of taxation, it is nice to offset these fully taxable sources with additional funds from a non-registered portfolio, a life insurance policy or even your TFSA.


3. Hold the right investments in the right accounts – When structuring which account holds what, it is important to consider how different kinds of investments are taxed. Accounts which attract no tax (RRSPs, RRIFs, LIRAs, LIFs and TFSAs) should hold the least tax efficient assets. This would usually include any interest-bearing assets such as bonds and GICs. Assets with preferential tax treatment, typically Canadian Equities, can be held outside of these registered investment vehicles.


4. Split pension income - Even the tax burden out between spouses by splitting income. Many of the rules surrounding pension splitting are age specific. Pensions derived from work can typically be split after 55. RRIFs, LIFs, annuities and deferred profit-sharing plans can be fully split after 65. This strategy can significantly lower the total tax bill between two spouses.


5. Withdraw capital rather than growth – talk to your advisor about T-Series mutual funds. These funds are designed to payout a fixed amount, i.e. 5% or 8%, of the investment on an annual basis. The main reason why these are so tax efficient is that this payout is, in most circumstances, a return of capital (giving your own money back) in doing this you are not taxed on the portion that was already yours. This can drastically decrease the taxable amount in any given year.


Talk to your advisor and get started with a tax savvy retirement!

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This information has been prepared by Carol Plaisier Investment Advisor for HollisWealth®, a division of Industrial Alliance Securities Inc. and does not necessarily reflect the opinion of HollisWealth®. The information contained in this website comes from sources we believe to be reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any the securities mentioned. The information contained herein may not apply to all types of investors. The Investment Advisor can open accounts only in the provinces where she is registered. For more information about HollisWealth®, please consult the official website at ww.holliswealth.com.

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