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Ken Green - TaxEfficientWealth.ca

Ken's Weekly Top 5 - Issue # 98

Published 2 months ago • 4 min read

We’re now officially in the Spring season and just a little over 2 weeks before the deadline for the filing of your personal tax returns. Have you filed yet? In addition, remember that the deadline for the filing of the Underused Housing Tax Return is also on April 30th! As always, I’m here to help and I share more on these in this week’s newsletter. Enjoy this issue and remember to share this with everyone in your network:

1. Have You Filed Your Personal Tax Returns?

The filing deadline is approaching, so remember to file your personal tax return on time. In the recent survey I completed on personal income taxes, 47% of you said you will be filing your taxes yourself, while another 24% plan to use a friend to help file their taxes. As technology continues to improve, we believe that this trend will continue to grow in the coming years. The truth is that filing personal taxes is not the hard part. What may be challenging is getting the appropriate insights from your tax returns that will enable you plan better going forward. As you file your tax returns this year, here are some questions to consider:

  • What’s the dollar amount I paid in taxes?
  • What’s my average tax rate?
  • What’s my marginal tax rate?
  • Why did I get a refund? Why did I NOT get a refund?

And when you have answers to these questions following the filing of your tax returns, you want to consider your next action steps. For example, what steps can you take in 2024 to pay less taxes than you did in 2023? This is where insights come in handy. As I’ve said many times, when you don’t get insights, you end up paying more in taxes than you’re required to and a dollar lost in taxes today will not only cost you a dollar today, IT WILL COST YOU A MULTIPLE OF THAT DOLLAR OVER TIME!

If you’re looking for INSIGHTS to help you minimize taxes, then consider the Personal Tax Services we offer. With our services, we can help you minimize taxes, improve cash flow and get ahead financially. Get the details here.

2. Don’t Forget To File Your Underused Housing Tax Return

For those of you that may not be aware, the Federal Underused Housing Tax (UHT) ws newly introduced last year. This tax imposes a 1% annual tax on the value of residential real estate considered to be vacant or underused that is owned on December 31 of each year. You will likely be required to file this return if you own a residential rental property (less than 4 rental units) as:

  • A non-resident of Canada
  • A Canadian Controlled Private Corporations (CCPCs) that is not publicly traded
  • A trustee of a trust (if you hold a property in your name in trust for a corporation, you will be required to file)
  • A partner of a partnership
  • A joint venture in a joint venture arrangement

The filings and taxes owing for this year are due by April 30, 2024. Penalties for failure to file the return (even where no tax is payable) start at $5,000 for individuals and $10,000 for corporations. To learn more about the UHT, click here.

To determine whether you have any filing obligations or responsibilities under this new Act, I have created a checklist that you can complete. Click here to complete it.

3. Home Ownership is Out of Reach For 75% of Canadians

Recently I came across a survey that suggested that home ownership is out of reach for about 75% of Canadians, principally due to the cost of housing in this country. This is sad given the tax incentives that home ownership offers as well as the opportunity to generate extra income from renting a portion of your home. As I have shared in the past, home ownership is a critical part of building and growing tax-efficient wealth. However, it is important to note that you can still build and grow wealth as a renter. In fact, in some cases, renting may make more sense than owning, particularly in the kind of real estate market we currently have in Canada.

There are many reasons why renting will make financial sense. The biggest is obviously the lower cost of renting compared to owning, particularly in a market like Toronto. When it comes to whether you should own or rent, some experts have suggested that if the value of the house is more than 15 times the value of the annual rent, you should consider renting. For example, let’s say you have a house valued at $650,000 and you can rent the same house or a similar house for $3,000 per month or $36,000 per year. In this case, you can consider renting as the value of the house ($650,000) is more than 15 times the value of the annual rent (15 x $36,000 = $540,000). What do you think? Do you currently rent or own your primary residence? If you rent, why? Let me know by sending an email to ken@kengreen.ca or a text message to 416-706-3491.

4. Three ways to save taxes by changing your facts

Did you know that the majority of tax laws are written to motivate certain behaviors? The government will use tax laws to levy more taxes. But it will also use tax laws as tools to shape the economy by promoting social, agricultural, and energy activities. The government wants the economy to grow. To achieve this goal, the government provides incentives to people to engage in the activities that will drive growth in the economy. The wealthy understand this. So, they take advantage of these tax laws and engage in the activities that provide tax incentives. And by doing this, they save a lot in taxes. The poor and the middle class don’t understand this. They don’t see anything good in the tax law. As a result, they miss out on many tax incentives hidden in the tax law. If you want to save on taxes, you have to model what the wealthy are doing and engage in similar activities. In this article, I share three ways to save on taxes by changing your facts. Read it here.

5. Ready To Build Tax-Efficient Wealth?

There is no doubt that taxes will increase in the coming years with the massive deficit our government is currently running. These taxes will be major obstacles as you plan to build long-term wealth.

In this short video, I share more about the tax-efficient membership network where our overriding goal is financial transformation. Together, we learn how to build a Tax-Smart Plan that will allow us to:

  • Contribute or save money tax-free
  • Grow or accumulate money tax-free
  • Withdraw or distribute money tax-free

Check out the video here to learn more.

Ken Green - TaxEfficientWealth.ca

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