Jacks saves tax

Ms. Jacks, who has written many books on taxation and is founder and president of the Winnipeg-based Knowledge Bureau, was one of the featured speakers at the recent Toronto World Money Show. Here is a summary of some of her tax-saving suggestions.

1. All that really counts is how much money is left in your pocket after the tax department finishes with you. Right now, taxes eat up 21 per cent of the typical household budget.

2. You can avoid tax entirely through the use of Tax-Free Savings Accounts, home ownership and insurance policies.

3. You can go back 10 years to collect refunds you might have originally missed. She described one case of a person who was not aware she qualified for the disability tax credit. She was able to get a refund for five years of eligibility for the credit, which amounted to several thousand dollars.

4. Don't overpay tax installments. The Canada Revenue Agency calculates the quarterly payments based on last year's tax due. But your income may be lower this year or you may qualify for additional credits. You are not required to pay the amount the CRA has calculated but make sure your installments are realistic or you could face penalties.

5. Spread income among family members to the extent possible, keeping the income attribution rules in mind. Each family member can earn slightly more than $10,000 before any tax is payable. Consider using a bona fide spousal loan at the current low rates to reduce tax on investment income.

6. Start a business. Self-employed people qualify for big tax breaks.

7. File an audit-proof return. Know the rules of compliance and stay within them. There are very stiff penalties if you're caught straying.

8. Build contribution room for your TFSAs, RRSPs, etc. and take advantage of them.