减税方法
- 主题发起人 wyandywja
- 开始时间
no
If you earn 6% interest rate and your tax rate is 40%. and the prescribed rate is 3% and your spouse is in 20% tax rate. lending 100,000 can save you 600.
but you should know how to lend and what is prescirbed rate.
call andy 274-0779 or 798-7700 ext 452. i can offer a free consultation.
If you earn 6% interest rate and your tax rate is 40%. and the prescribed rate is 3% and your spouse is in 20% tax rate. lending 100,000 can save you 600.
but you should know how to lend and what is prescirbed rate.
call andy 274-0779 or 798-7700 ext 452. i can offer a free consultation.
fsfs
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correct me if i was wrong
one spouse is in a higher tax bracket, it may be beneficial to lend money to the lower-income spouse. Money can also be loaned to a child. The funds can be used to purchase investments, and tax on the investment income will be paid by the lower-income spouse at a lower marginal rate. A promissory note should be written for the loan, with the interest rate and principal amount specified. Interest must be paid on the loan by January 30th of each year. The interest rate charged must be greater than or equal to the prescribed rate set by Canada Revenue Agency (CRA) at the time the loan is made. The prescribed rates are subject to revision each calendar quarter, and can be found on the CRA Prescribed Interest Rates page. The rate to use is the one for calculating taxable benefits from low-interest and interest-free loans to employees and shareholders.
The interest received by the lender must be included in income, but is deductible as carrying charges by the borrower.
Example:
Mr. A earns $80,000 per year, and has a marginal tax rate of 40%
Mrs. A earns $34,000 per year, and has a marginal tax rate of 25%
Mr. A has accumulated savings of $100,000, he and Mrs. A have no debt, he has used his maximum RRSP contribution room, and he would like to purchase investments outside of RRSPs.
Mr. A lends the $100,000 to Mrs. A on January 1, 2005.
A promissory note is written up, specifying that the loan is made at the current prescribed interest rate of 3%.
Mrs. A invests the $100,000 50% in Government of Canada bonds yielding 5%, 50% in Canadian stocks yielding 10% (2% dividend, 8% capital gain).
Bond interest income of $2,500 in 2005 is reported by Mrs. A on her 2005 tax return.
Canadian dividend income of $1,000 in 2005 is reported by Mrs. A on her 2005 tax return, which adds $1,250 to her income because Canadian dividends are grossed-up by 25% to include in income.
Mrs. A pays $3,000 (3%) interest expense to Mr. A on December 31, 2005. This interest expense is deducted on line 221of Mrs. A's 2005 tax return.
Mrs. A's taxable income is $34,750 (34,000 + 2,500 + 1,250 - 3,000).
Mr. A includes the $3,000 interest income on line 121 of his 2005 tax return.
Mr. A's taxable income is $83,000 (80,000 + 3,000).
Approximately $110 in tax is saved by Mrs. A investing the $100,000 instead of Mr. A, assuming the Canadian stocks are not sold, so there is no capital gain included in taxable income. If the Canadian stocks are sold and 8% capital gain realized, approximately $300 in tax is saved. If Mrs. A has no income other than the investment income, the tax saved changes to approximately $55 with no capital gains, and $410 with capital gains.
- The lending to spouse strategy saves very little tax if $100,000 or less is invested.
one spouse is in a higher tax bracket, it may be beneficial to lend money to the lower-income spouse. Money can also be loaned to a child. The funds can be used to purchase investments, and tax on the investment income will be paid by the lower-income spouse at a lower marginal rate. A promissory note should be written for the loan, with the interest rate and principal amount specified. Interest must be paid on the loan by January 30th of each year. The interest rate charged must be greater than or equal to the prescribed rate set by Canada Revenue Agency (CRA) at the time the loan is made. The prescribed rates are subject to revision each calendar quarter, and can be found on the CRA Prescribed Interest Rates page. The rate to use is the one for calculating taxable benefits from low-interest and interest-free loans to employees and shareholders.
The interest received by the lender must be included in income, but is deductible as carrying charges by the borrower.
Example:
Mr. A earns $80,000 per year, and has a marginal tax rate of 40%
Mrs. A earns $34,000 per year, and has a marginal tax rate of 25%
Mr. A has accumulated savings of $100,000, he and Mrs. A have no debt, he has used his maximum RRSP contribution room, and he would like to purchase investments outside of RRSPs.
Mr. A lends the $100,000 to Mrs. A on January 1, 2005.
A promissory note is written up, specifying that the loan is made at the current prescribed interest rate of 3%.
Mrs. A invests the $100,000 50% in Government of Canada bonds yielding 5%, 50% in Canadian stocks yielding 10% (2% dividend, 8% capital gain).
Bond interest income of $2,500 in 2005 is reported by Mrs. A on her 2005 tax return.
Canadian dividend income of $1,000 in 2005 is reported by Mrs. A on her 2005 tax return, which adds $1,250 to her income because Canadian dividends are grossed-up by 25% to include in income.
Mrs. A pays $3,000 (3%) interest expense to Mr. A on December 31, 2005. This interest expense is deducted on line 221of Mrs. A's 2005 tax return.
Mrs. A's taxable income is $34,750 (34,000 + 2,500 + 1,250 - 3,000).
Mr. A includes the $3,000 interest income on line 121 of his 2005 tax return.
Mr. A's taxable income is $83,000 (80,000 + 3,000).
Approximately $110 in tax is saved by Mrs. A investing the $100,000 instead of Mr. A, assuming the Canadian stocks are not sold, so there is no capital gain included in taxable income. If the Canadian stocks are sold and 8% capital gain realized, approximately $300 in tax is saved. If Mrs. A has no income other than the investment income, the tax saved changes to approximately $55 with no capital gains, and $410 with capital gains.
- The lending to spouse strategy saves very little tax if $100,000 or less is invested.
zhongguxin
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thx
thx fsfs. you are wonderful and I learn a lot from you.
I have a friend who are married soon. His wife does not work. and he earn 140,000 one year. Could you give me some ideas to help him to reduce tax excpet Spousal RRSP and Spousal Income Splitting.
Thanks again.
and also want to make friends with you. Call me: 274-0779
finally, when I say save, I think we use different criteria to do it. so we get the different results.
Andy
thx fsfs. you are wonderful and I learn a lot from you.
I have a friend who are married soon. His wife does not work. and he earn 140,000 one year. Could you give me some ideas to help him to reduce tax excpet Spousal RRSP and Spousal Income Splitting.
Thanks again.
and also want to make friends with you. Call me: 274-0779
finally, when I say save, I think we use different criteria to do it. so we get the different results.
Andy
you need a purpose for the loan, you cannot just say, I loan to my wife, and deducted from income tax.
There are many ways to reduce taxes, but might not every method is suitable for everybody. Just loan to spouse without a reason ( and need proves ) is illegal.
There are many ways to reduce taxes, but might not every method is suitable for everybody. Just loan to spouse without a reason ( and need proves ) is illegal.
