Anyway to protect income before being taxed?

you find a good answer for that question, you don't post about it - you fricken' SELL IT!!!

then you'll have the kind of tax problem that i would like to have...

you can put 5,000 a year in a tax free savings account

oh and then there's Heroin, I hear it pays pretty good, no taxes there either

become governor general, no taxes on that income

Get paid in cash and not report all of it.

chilli said:

Where could I get more information on that?

And is it really income that is not taxed at all?

Thank you.

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The income is taxed when you get payed by your employer, but if you take $5K after you've been initially taxed, any gains on that $5K is tax free. Since's it's been in place for 2 years now, I think you should be able to put in $10K total and whatever you make off that $10K is tax free.

there are a few ways, all of which will get you audited. I tried and was moderately successful at incorporating myself, having the company (which I owned) pay the corporation, of which I paid myself a nominal monthly salary $1. At the end of the year I was below the threshold and combined with RSP contributions, I was supplied with a very healthy return. I of course did not spend a dime, expecting to be audited, and about 5 months later, I received 'the letter'. Although I didn't break any rules, I was forced to show that I wasn't spending the 'corporations' money. It probably would have worked better if a) I had a contract with the corporation for living expenses, i.e. car, dwelling, meals etc, and then kept receipts of such, but it was my first attempt at screwing the government

chilli said:

Where could I get more information on that?

And is it really income that is not taxed at all?

Thank you.

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A fetish and Bondage site.

These review boards aren't that helpful when it comes to investment advice. lol

Try the Gov't of Canada Websites or your local accountant, or there again any bondage and fetish site, lol

I've always wondered how Brain Mulroney pulled off his tax scam. Remember when he got 300K in an envelope then neglected to declare it as income because he was so preoccupied being an ex Prime Minister? After his misdeed came to light he and his lawyers managed to find a CRA regulation that required he only pay 1/2 of what he should have because the effort to collect would be too much of a burden on the CRA. Perhaps you must have money for lawyers to take advantage of these loopholes.

do what all the politicians do ....cheat.
dont declare until they actually find it,
and then when they do , its time to negotiate, but most times they wont find it.
if you are joe average and actually pay your normal taxes , you will be okay to cheat on alot of stuff.

All taxes are deducted at source. How can you cheat? By the time I get my paycheck, half of it is already gone into taxes, cpp, epp, etc. I do save a bit in RRSP but if I take money out of RRSP, it's taxed as income. So, the question is: how does an employed person keep more of his money?

magicmystery said:

All taxes are deducted at source. How can you cheat? By the time I get my paycheck, half of it is already gone into taxes, cpp, epp, etc. I do save a bit in RRSP but if I take money out of RRSP, it's taxed as income. So, the question is: how does an employed person keep more of his money?

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First of all, I will not advise you on how to cheat on your taxes. If the taxes from all of your income are deducted at source, there is no way to hide any income.

As to your second question, how does an employed person keep more of his money? Well let’s start with maximizing your RRSP contribution. Potentially a RRSP can result in tax savings in two ways. For most people, the premise is that they will be earning more in their working years and less in their retirement years. When you earn more your tax rate goes up and when you earn less it goes down.

Firstly, if you were to put $10,000 a year into an RRSP during your working years at a tax rate of 36.5% and take it out when you retire at a lower tax rate of 29.7%, you would be keeping an additional 6.8% of your money.

Secondly, with money invested inside of an RRSP, any investment income or capital gains is not taxed on an annual basis and is allowed to compound tax-free until you withdraw your money from the RRSP. It is through the “magic” of compounding, that your savings will increase much faster than without compounding. You only pay tax when you make withdrawals from your RRSP. In most cases, you will then be retired and your income and tax rate will probably be lower than when you were working.

With money invested outside of an RRSP or TFSA (Tax Free Savings Account), when any investment income or capital gains is made, the taxes are due and payable by April 30th of the following year. In this case, your money is not compounding.

With money invested in a TFSA (Tax Free Savings Account), the annual contribution maximum of $5000.00 is not deductible from your income. However, any investment income or capital gains made within your TFSA is never subjected to tax and you can withdraw any or all of it tax-free at any time.

So if you can afford it, invest the maximum in your RRSP. Use the tax refund to pay down your mortgage (if you have one) or use it towards your annual $5000.00 maximum contribution to a TFSA.

bootyman69

bootyman69 said:

First of all, I will not advise you on how to cheat on your taxes. If the taxes from all of your income are deducted at source, there is no way to hide any income.

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Not that I am a financial consultant, but I also would not advise anyone to "cheat" on their taxes. I agree with you.

bootyman69 said:

As to your second question, how does an employed person keep more of his money? Well let’s start with maximizing your RRSP contribution. Potentially a RRSP can result in tax savings in two ways. For most people, the premise is that they will be earning more in their working years and less in their retirement years. When you earn more your tax rate goes up and when you earn less it goes down.

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RRSP already maxed out. I think RRSP limit (18% of previous year's income) should be removed or at-least increased. If someone wants to save more for retirement by sacrificing some spending today, then it should be allowed. If it were upto me, I'd raise RRSP limit to previous year's 40%. But anyway, that's a different discussion altogether.

bootyman69 said:

With money invested in a TFSA (Tax Free Savings Account), the annual contribution maximum of $5000.00 is not deductible from your income. However, any investment income or capital gains made within your TFSA is never subjected to tax and you can withdraw any or all of it tax-free at any time.

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Actually, I've a question about this: let's say I save $5,000 in TFSA. I start a company and use my TFSA money to buy shares from my company. Now, my company is doing well, so my company is paying dividends on my shares. So, are these dividends tax free? Since I used TFSA money to buy shares to begin with.

bootyman69 said:

So if you can afford it, invest the maximum in your RRSP. Use the tax refund to pay down your mortgage (if you have one) or use it towards your annual $5000.00 maximum contribution to a TFSA.

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yep, RRSP maxed out already.

I found something to answer my question about using TFSA to buy shares. http://www.cibc.com/ca/features/tfsa-proposed-amends.html

Mr.Boggo said:

Get paid in cash and not report all of it.

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ie. Sell your ass for cash!

PM Hunka for details...

magicmystery said:

I found something to answer my question about using TFSA to buy shares. http://www.cibc.com/ca/features/tfsa-proposed-amends.html

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That link has some good info...if you do go with a TFSA do so with a brokerage as most TFSA's offered by banks are just a glorified savings account that pays jack shit.

By going through a brokerage you can invest in stocks/ETF's and other equities with the bonus being that if you pick some really good investments ALL of the profits are 100% tax free...a good friend of mine did this just after the market crashed in 2008...he bought into some of the no brainer blue chip stocks like Alcan and RIM and at my suggestion also bought Teck resources and Grand cache coal for $3.48 and .50 respectively...he sold Tech and Grande cache recently for $50 & $8 and made a shitload of tax free money.

SR

chilli said:

So here's my question.

Is there any way I can take that additional income I make when I earn a bonus ie: that $700.00 - and invest it (in a RRSP or whatever) and not have it taxed?

Thanks all.

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Lotto 649. Casinos. Online sports betting.

There actually are some legal options of reducing taxes. Oil and gas flow-through shares are one option.

I know many years ago I invested in a film tax shelter that worked great, huge write offs in the first couple of years on money THEY financed but the investor was technically at risk for. The firm I was with at the time even insisted that the promoter provide us with an Advanced Ruling from CRA, which they did. We actually invested in about a dozen of these over the years, but unfortunately they did away with that particular investment in one of the budgets several years ago.

MissJasmine said:

RRSPs are so so... you avoid paying taxes now, but you pay later. TFSP better but rather limited with only $5000/year max contribution room.

Charitable gifting/tax shelters are great as long as you don't get intimidated by CRA's harassing letters and the high chance of getting audited. CRA does have up to 3 years to come back on you and if they dont, you are in the clear. The good part is that you can make great returns on the governments money (like using the banks money) by using tax shelters.

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I'd personally stay as far away from those as I possibly could. Essentially CRA is starting to specifically look at these on a number of different fronts. They're going after the promoters, the tax advisors in some cases getting lists of those who these were sold to and they are aggressively going after those who bought these.

If ever there was a case to have an advanced tax ruling prior to buying a tax promoted investment these are it. I'm not sure about the 3 year limit, as it applies to fraudulant tax planning but I suspect they could get that limit waived under certain conditions.