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At the moment of yr, there’s no scarcity of “year-end tax-planning suggestions” that present up in articles, social media feeds and your electronic mail. It’s like clockwork: such articles magically seem from about Nov. 1 till Dec. 31 yearly. And related articles on “tax planning” will as soon as once more begin showing round mid-February of the next yr and finish after the April 30 private tax submitting deadline. This previous week, I acquired fairly a number of of some of these articles on my feeds, together with three on Nov. 1 alone.

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Whereas these articles are nicely intentioned — and I definitely don’t begrudge the authors for writing them — they frustrate me. Why? Effectively, it’s easy. Like most essential issues in life, tax planning shouldn’t happen simply earlier than the deadlines. It must be far more proactive than that (as I mentioned in my guide, Making Life Much less Taxing).

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Sure, checklists could be an essential reminder to make sure you don’t overlook issues, however they shouldn’t be an alternative choice to good general planning. Sadly, many Canadians don’t method it that manner. The Nov. 1 to Dec. 31 and Feb. 15 to April 30 tax-planning articles usually situation those who these are the one instances of the yr to plan. For my part, that’s not right.

Let’s use a automobile as an analogy. A automobile is a big buy merchandise for many Canadians, and consists of ongoing prices equivalent to insurance coverage, gasoline and repairs. With the intention to protect the worth and use of the automobile, correct and repeatedly scheduled upkeep is an efficient apply. The issue, after all, is that repeatedly scheduled upkeep could be costly and on this day of age of rising prices, it usually will get put apart in favour of paying different payments. Tax planning is like that.

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For many, taxes are by far the biggest annual expense that they pay. The typical Canadian household spends extra of its annual earnings on taxes — 45.3 per cent — than they do on fundamental requirements equivalent to meals, clothes and shelter mixed (35.6 per cent), in line with a latest Fraser Institute examine.

Take in that info for even a minute or much less and it turns into apparent that taxes deserve ongoing planning and important consideration, not simply throughout the predictable two instances per yr when planning articles seem and one is bumping up towards submitting or different deadlines.

With that in thoughts, right here is my significantly simplified Anti-Yr-Finish Tax Planning Guidelines. It’s essential to know — because the fourth level reemphasizes under — that this guidelines is to not be accomplished solely twice per yr. It’s to be accomplished at the very least month-to-month all year long.

1. Determine how a lot in general taxes (together with earnings tax, GST/HST web of credit, carbon tax web of credit, property taxes and different taxes) you pay per yr. Sure, a few of it will require estimates, however it’s essential to attempt.

2. As soon as computed, do some self-reflection. Has this opened your eyes considerably? What proportion of your general household earnings do tax funds symbolize? For those who’re comfy with the end result or it hasn’t shocked you, then possibly there’s nothing additional so that you can do. In case your eyes at the moment are open and also you’re involved, then begin eager about the way you would possibly have the ability to cut back your tax publicity.

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3. Albert Einstein is usually quoted as having mentioned, “The toughest factor on the planet to know is the earnings tax.” I believe he was right. And in the event you do too after attempting to determine the way to estimate and mitigate a few of your taxes, then think about hiring a tax skilled that can assist you determine it out. Most Canadians’ tax conditions are fairly easy. However in the event you’re coming into into extra tax complexity, then it could seemingly be definitely worth the funding to rent an expert that can assist you perceive your place.

4. Lastly, and that is essential, don’t depart your planning till the 2 instances a yr when all these articles come out.

And there you’ve got it, my Anti-Yr-Finish Tax Planning Guidelines. Tax planning is a year-round train. As famous above, the biggest expenditure — by far — for the typical Canadian household is tax. Give it the eye and year-round consideration it deserves. You’ll profit from a great understanding of how a lot you pay. Higher but, similar to your automobile buy, you’ll be able to then assess whether or not you’re getting good worth to your cash.

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Kim Moody, FCPA, FCA, TEP, is the founding father of Moodys Tax/Moodys Non-public Shopper, a former chair of the Canadian Tax Basis, former chair of the Society of Property Practitioners (Canada) and has held many different management positions within the Canadian tax neighborhood. He could be reached at kgcm@kimgcmoody.com and his LinkedIn profile is www.linkedin.com/in/kimmoody.

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