| Taxes in Canada are a real financial issue for many | | | | Structure program, one of the main reasons for this |
| Canadians. As a Canadian you pay out large amounts | | | | decision was: |
| of cash every year for Income Tax and will usually | | | | · This shelter uses fair market value, which means |
| see little or no return. Very few of us are financially | | | | that, when an item is donated to charity, they get an |
| free and you may well have to consider extending | | | | independent evaluator to make an appraisal of the |
| your working life or, worse, having to deny your family | | | | item, rather than someone connected to the program. |
| those little important things on a daily basis just so you | | | | So far, only tax shelters that have not followed this |
| can meet your mortgage payments. | | | | rule have ended up in court. Make sure your program |
| Ring any bells for you? It did for me. | | | | does not have this issue. |
| During the last 5 years, together with my wife, I have | | | | Below I will try and outline the principle as I understand |
| been researching ways to be financially free. That is, | | | | it: |
| to find ways for me to live the kind of life I want and | | | | · I want to buy 100 laptops for children in India. So, I go |
| deserve. We started looking into the ways we could | | | | to a bank and I ask loan for the money for the 100 |
| maximize our income and reduce our expenses, which | | | | laptops. |
| is when we came across the figures outlining the | | | | · The loan will be for 4 years and I will immediately |
| crazy tax burden of Canadians. | | | | pay off the interest for 3 years of the loan. I then go |
| Whereas most Canadians pay $500,000 in tax over | | | | to a technology company who give me 100 laptops. |
| their lifetime, their average savings stand at only $5000 | | | | · I get an agreement from them that I can return the |
| at the age of 65. Does this seem right? I am not | | | | same item back to them and get the full money I |
| saying we should not pay taxes; we have a | | | | spent returned to me. |
| healthcare and education system most of the world | | | | · I now donate the 100 laptops to a registered |
| does not. It is just that during my research I also found | | | | Canadian charity and get a donation receipt for the |
| out that 99% of Canadians are not using the tax | | | | amount I paid. I attach this to my tax return and get |
| system legally to get everything we are entitled to. It is | | | | 50% tax credit. |
| this that made us focus on reducing the Canadian | | | | · 3 years and 1 day later I take my 1 year's worth of |
| Income Tax burden for us. | | | | interest payment I have remaining and go to the |
| Your money....in your pocket | | | | overseas market and buy 100 laptops much cheaper |
| Although the Canadian Revenue Agency does not | | | | than I could get from the Canadian technology |
| advertise this fact, if Canadians make charitable | | | | company. |
| donations intelligently they can maximize Income Tax | | | | · After returning these to the technology company, |
| returns for their benefit. This really blew my mind at | | | | they give me back my money which I use to pay |
| first so I will explain it as clearly as I can. I discovered | | | | back my loan in full. |
| tax shelters. This is NOT tax evasion, which is entirely | | | | · My tax benefit is bigger than my cost, which is the |
| illegal (otherwise known as tax fraud); this is tax | | | | definition of a tax shelter in the Income Tax Act of |
| avoidance, which is what the rich use to get richer. | | | | Canada. |
| The details...how it works | | | | Actually, the tax shelter program does all of this |
| Basically: | | | | process for me, so all I really had to do was to pay |
| · Tax shelters are ways, thought up by very smart | | | | the pre-paid interest on the initial loan. |
| lawyers and accountants, to use the tax system | | | | It worked for me!! |
| legally to benefit you. | | | | This is the system me and my wife used last tax year |
| · Under the terms of Canadian law we are all | | | | and received a big, fat cheque from the Canadian |
| expected to save as much tax as possible, even if the | | | | Revenue Agency for our efforts! |
| tax man doesn't like it. | | | | I chose this system after a lot of due diligence |
| · This is the legal principle which allows tax shelters to | | | | research, a lot of which I have included in my blog |
| function, much to the frustration of the Canadian | | | | (details below), so please feel free to use this as a |
| Revenue Agency. | | | | spring board for your own research! |
| There are many different types of tax shelters, as | | | | Remember the only thing stopping you from being |
| with any industry, some are really not a good idea and | | | | financially free is your dedication to being financially |
| you should really do some good research before | | | | free; use financially intelligent solutions to increase your |
| deciding on a particular shelter. After a lot (really a lot) | | | | income and minimize your expenditure. Live the life you |
| of research my wife and I went for an Open Market | | | | deserve! |