Ways to save tax in Canada

When you want to know about saving tax in Canada, you need to know about the tax policy of the country. You should know about the tax treaties and tax policies in Canada. This way you can save a lot. When you want to plan your taxes in Canada, then you need to plan even at the start of the year. If you are a resident of Canada, then you should know about the various policies of the government, which are great ways to save your money on the taxes. You need to start with paying of the tax on the deadline. If you are crossing the deadline, you would be getting penalized for the same. When you cross the deadline, you would be charged even up to 5 percent of the actual tax you need to pay. You also can start saving for your future. When you choose the various retirement plans, you can save money and can also invest for the future. You can gift the assets to your children. When the assets grow in value, you will not be taxed more, as your children are gifted the same from you. The children are in the lower tax bracket and they need not pay any tax. Even if they need to pay the tax it is very less.

You need to offer some money to any of the charitable organizations that are registered. You cannot gain the profits if you are donating to any of the non-registered organization. Look for the organizations approved by the government. The strategy of the government is that to save on the income tax, you need to donate more. When you plan for investments, you can save on the taxes. Investing in the properties of other countries is an easy way to secure your tax amount. Most of the times the income tax for foreign investments are very less or you need not pay any taxes at all. This way you can save on the income tax. Also, you need to make sure that you do not bring back any of the money you had profited from the investment back to Canada, else you would be taxed on the same.

You can also invest in small businesses. This is a way to save tax. You should also remember that saving tax is possible only if you have done a proper tax planning. You should make sure your investments are done in separate accounts. If you have a spouse who is in the lowest tax bracket, then the investments should be made in different accounts. This is to ensure that the investment taxes are calculated for separate accounts separately. This way you can save at least 30% of what you need to pay as the tax. Share your assets and salary with the people of lower tax bracket in your home. This is the most easiest way to save on income tax. Read the government tax relaxation policies to get to know more about the same.

An Overview On Canadian Tax Treaties

Tax treaties are agreements that are signed between the two counties to ensure that the residents of the country are not double taxed. There are many residents of a country who work in other countries and will be liable to pay taxes in the country that they work and will also be required to file tax returns and pay taxes in the country that they are a citizen of. In such situations there are possibilities that the individual will be taxed twice for the same income by both the countries and to avoid that such tax treaties are signed between the countries. Another advantage of these treaties is that there can be sharing of information between the countries about the financial dealings of the residents so that tax avoiders can be identified. Most countries have nonresident tax that has to be paid by non residents who earn income from the country and when the person files the nonresident tax returns, it will be shared with the country that he is a resident of, provided there is a treaty that has been signed between the countries.

What Do Tax Treaties Cover

Most of the tax treaties that are signed will be in respect with the income and the investments by citizens of other countries and will generally cover the following

• Establish the taxes that are covered and who is eligible for tax benefits

• Will help to establish who can be considered as a resident of the country

• Will help to reduce the tax that is withheld from royalties, interest and dividends that are paid by a resident of one county to residents of other countries

• Will help to limit the tax that is levied on business income generated by a resident of another country

• Will help set the guidelines and the rules that will govern the nonresident tax of a country who would be residents of another country

• Help to provide exemptions to certain individuals and corporations

• Will help to provide the necessary procedural framework in cases where there is a dispute and for enforcement

Canada Tax Treaties

Canada has signed tax treaties with a lot of countries across the globe and the list of countries that have a tax treaty with Canada can be found on the official website of the Department of Finance Canada. There will be detailed reports about the tax treaties that have been signed, amendments to the treaty and all the information that one will need about any tax treaty. You can also contact the International Tax Services Office and they will be able to help you out with any information regarding the tax treaty signed with your country by Canada or on the doubts you might have regarding nonresident tax filing.

Precautions While Filing Nonresident Tax Return

It is very important to not take things for granted while filing the nonresident tax and if there is any ambiguity in the various clauses of the tax treaty that has been signed with your resident country, contact the International Tax Services Office for clarification. It will also be a good option to avail the services of tax experts to help you with your nonresident taxation procedures as they will have the knowledge of the exemptions that can be availed by you. It will also make the process a lot simpler with you not having to run around to get your income tax return filed properly.