Court Case Reveals Tips & Tricks on Income Splitting for Tax Savings

Hello fellow Canadians!
In today's video, we are diving deep into the world of income splitting. As Canadian taxpayers, I'm sure you're all curious about how you can use this strategy to potentially lower your family's overall tax liability!
You see, we operate under a progressive tax system here in Canada - meaning the more you earn, the more you pay. But what if there was a way to distribute that tax load more evenly? Spoiler alert: There is, and it's called income splitting!
Don’t forget to subscribe to my channel for more videos on Canadian real estate and tax-saving strategies so you don’t miss a thing!
Key Moments In This Episode
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00:00 Introduction to income splitting
02:10 Understanding the progressive tax system
04:21 How income splitting lowers Family tax liability
06:29 Case study: Claiming employment expenses
08:30 Impact of income splitting on tax payable
10:22 Rules and documentation requirements for income splitting
12:24 No monetary exchanges in expenses offsetting
14:14 The importance of documentation and money transfers in income splitting
If you have any questions or thoughts after watching this video, leave a comment below, and I’ll respond as soon as possible.
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Please make sure to speak to a professional that knows your personal situation before making a decision.
If you need to talk to someone on my team, email us at [e-mail].
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DISCLAIMER:
Real estate Tax planning is a personalized decision and will depend on your situation, priorities, and risk tolerance. Consult with your legal and tax advisors to ensure you get the best personalized advice.Real Estate Accountant, Real Estate Investor, Real estate agent, Small business owner, Tax Planning, Tax Tips, Tax Advice, CRA, Canadian tax, investor tips, Real Estate Tax Tips, Cherry Chan
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[@RealEstateTaxTips]

Want to stay up-to-date with all the latest news about Real Estate Tax Tips, receive weekly tax tips and free real estate investment resources? Subscribe to our newsletter here: realestatetaxtips.ca/youtube

[@TriniTheo]

Very informative! Was always under the impression income splitting is no longer a thing… good to see there’s ways depending on your family / work situation

[@RealEstateTaxTips]

Glad it was helpful!

[@RealEstateTaxTips]

Glad it was helpful!

[@prasadm3]

Great video! Does this apply to corporation business owners who want to split income with family a well? If not, a video on that would be useful. Also, can business owners take both a dividend and salary? Thanks!

[@RealEstateTaxTips]

Yes this can be applied to corporation business owners but remember there needs to be actual work done and proof of payment, it cannot be just on paper. Business owners can also take both salary and dividend, to their benefit.

[@mihajlosimko7046]

Thank you for the video. Can be split income between husband and wife if wife receiving disability benefit É (Wife do not involving i the business)

[@RealEstateTaxTips]

Generally that wouldn't work if wife isn't involved in business... but we have very limited information available to make a proper recommendation. Pls check with your own accountant - that person would be the best person to advise you. As always, if you don't have one, feel free to connect with us at [e-mail] or call us at 416-548-4228

[@mrnchristou]

Thank you for this. Could effective splitting take place via a contract for service instead of an employment contract?

[@RealEstateTaxTips]

Possible, as long as you have proper documentation. Service contracts can get tricky if the lower income spouse only work for your business. Employee vs. subcontractor is a topic of another day.

[@CanadianOptionsTrader]

In the case of paying dividends to a family member (who is a shareholder), I was under the impression that you can do that without any work being done by the shareholder. Would you say that is correct?

[@egdcuyagecuysadgcuys]

I'm not a professional, but based on my research it used to be possible prior to 2017, but not anymore. Based on the new rules, the shareholder must be actively involved in the business to receive any dividends. All the advice from this video would still apply. Hopefully Cherry can answer this and correct me if i'm wrong.

[@RealEstateTaxTips]

That is a correct assessment of the situation.

[@emmanueltronco923]

I would love if you can also convert your content to a podcast format!!!!

[@RealEstateTaxTips]

Didn't think people would want a podcast on boring tax content 🤔

[@jo-ainajucutan4707]

Please have a podcast.

[@mindfulmagician7550]

@@RealEstateTaxTips Actually having a podcast is very useful for people on commutes (driving or public transit) and don't have time during the day to watch content. If it's something interesting but I don't have time, I always save it on my Spotify list to listen to later. Plus, we can easily forward your content to someone else to listen to as well! You'll definitely get more listeners and reach to your youtube channel :) BTW, I really appreciate all your great content, it's so valuable!

[@craigfaille3190]

I’m located in Hamilton. How can I make arrangements for my wife and I to come see you

[@RealEstateTaxTips]

Hi, You can reach out to us on realestatetaxtips.ca/contact-us/ Thanks!

[@thebigpotato4175]

After watching and understanding the Canadian tax rules, $200k husbands should divorce the wives and hire them back as babysitters and exc assistants, and get them paid properly, vice versa.

[@RealEstateTaxTips]

ahahahaha yes, not much *tax* benefit being in marriage