# Any tax claim options for me?



## OutofBounds (Dec 7, 2016)

I'll be talking to our tax prep accountant when we book our appointment about this, but I figured I'd ask here and that way have an idea for some educated questions to ask.

I make significantly more money than my common-law wife, especially as she quit her day job 2 months ago in order to pursue her own business. Her income from that as of now is pretty much nil, under a couple grand to date. 

My income will be around the 70K gross for the year, hers is going to be maybe 20K gross. Thanks to the liberals, income splitting is no longer a thing to the best of my knowledge. 

I'm plugging money into a RRSP, both a personal one and a company based employer matched one since I have loads of contribution room. 

We have no children. 

What are my other options for reducing our tax burden and keeping money out of the gooberment's filthy paws?


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## AltaRed (Jun 8, 2009)

Nothing on a 'current tax' basis other than maximizing RRSP contributions. BUT you can plan for future distribution of income towards her by contributing to a spousal RRSP, giving her the money to contribute to her TFSA and/or make a spousal loan so she can invest in her name and generate investment income which is taxable to her.


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## OptsyEagle (Nov 29, 2009)

If you claim her as your spouse you will get the spousal tax credit. It is equal to your personal exemption minus whatever income she ends up earning. Should reduce your taxes owing by around $2,000.


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## OutofBounds (Dec 7, 2016)

Good info, thanks guys. I'll look into the spousal RRSP/spousal loan line for next year. 

Unless I'm not understanding this correctly, I don't think we'll qualify for the spousal tax credit this year and only next year if her business doesn't take off and she doesn't work a part time job. 



> If, at any time in the year, you supported your spouse or common-law partner and his or her net income (line 236) was less than $11,474 for 2016 ($11,635 for 2017), you can claim all or a portion of the spousal amount of $11,474 for 2016 ($11,635 for 2017).


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## AltaRed (Jun 8, 2009)

Agreed. I assumed from your first post that your spouse would earn too much for the spousal tax credit.

Another thing. It is quite legimate for you to disproportionately fund household expenses, even 100% of them, so a lower earning spouse can disproportionately fund investments in her own name. It's just that it has future value rather than current value (like the other possibilities too). Nothing changes your current tax situation.


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## OptsyEagle (Nov 29, 2009)

OutofBounds said:


> Good info, thanks guys. I'll look into the spousal RRSP/spousal loan line for next year.
> 
> Unless I'm not understanding this correctly, I don't think we'll qualify for the spousal tax credit this year and only next year if her business doesn't take off and she doesn't work a part time job.


Sorry. I thought I read your wife earning $2,000, not $20,000. 

It appears you are just too well off. Nothing immediate for you anyways.


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## OutofBounds (Dec 7, 2016)

AltaRed said:


> Agreed. I assumed from your first post that your spouse would earn too much for the spousal tax credit.
> 
> Another thing. It is quite legimate for you to disproportionately fund household expenses, even 100% of them, so a lower earning spouse can disproportionately fund investments in her own name. It's just that it has future value rather than current value (like the other possibilities too). Nothing changes your current tax situation.


That's what we may end up having to do. I'll pay for the expenses and her income goes entirely to savings and investments 



OptsyEagle said:


> Sorry. I thought I read your wife earning $2,000, not $20,000.
> 
> It appears you are just too well off. Nothing immediate for you anyways.


Kinda what I figured. I thought the government was supposed to be helping us middle class folks. Guess they lied. Again. Shocker. LOL. 

Thanks for the info! At least now I won't look like a total idiot when I talk with the accountant.


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## AltaRed (Jun 8, 2009)

OutofBounds said:


> Kinda what I figured. I thought the government was supposed to be helping us middle class folks. Guess they lied. Again. Shocker. LOL.


They are. It is just that income needs to be taxed appropriately. Be happy when you earn enough to complain that you are being taxed.


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## Nononymous (Jun 10, 2015)

Also the income-splitting of which you speak wasn't something available to couples earning regular salary incomes, if I'm not mistaken. You had to set yourself up as a corporation and make the spouse a shareholder (I'm fuzzy on the details). The freakout about the changes came from doctors who set up their practices that way, and family farms, and so on. It was never of benefit to anyone with a normal job.


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## AltaRed (Jun 8, 2009)

Nononymous said:


> Also the income-splitting of which you speak wasn't something available to couples earning regular salary incomes, if I'm not mistaken. You had to set yourself up as a corporation and make the spouse a shareholder (I'm fuzzy on the details). The freakout about the changes came from doctors who set up their practices that way, and family farms, and so on. It was never of benefit to anyone with a normal job.


I think the OP was referring to family income splitting that WAS available under the conservatives, but that 'sunny ways' Trudeau took away, not CCPC machinations currently underway.


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## Nerd Investor (Nov 3, 2015)

AltaRed said:


> I think the OP was referring to family income splitting that WAS available under the conservatives, but that 'sunny ways' Trudeau took away, not CCPC machinations currently underway.


This was only available to families with minor children, so OP would not have benefited anyway.


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## OutofBounds (Dec 7, 2016)

AltaRed said:


> It is just that income needs to be taxed appropriately. Be happy when you earn enough to complain that you are being taxed.


While I am grateful to have a job that puts a roof over my head, food on the table and provides enough for a comfortable life there is always room for improvement. 

As for the liberals helping the middle class, I would respectfully disagree as would a Sept study by the Fraser Institute. But I really shouldn't start a political debate in this thread. We'll agree to disagree. 



Nerd Investor said:


> This was only available to families with minor children, so OP would not have benefited anyway.


I was under the impression children weren't required. I haven't looked too deeply into it, so I'm probably mistaken. 

Thanks again all for the information.


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## AltaRed (Jun 8, 2009)

OutofBounds said:


> As for the liberals helping the middle class, I would respectfully disagree as would a Sept study by the Fraser Institute. But I really shouldn't start a political debate in this thread. We'll agree to disagree.


I don't believe that Liberal BS one bit either. I only commented that we all need to pay income taxes to fund education, health et al.


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## Eclectic12 (Oct 20, 2010)

OutofBounds said:


> ... I'm plugging money into a RRSP, both a personal one and a company based employer matched one since I have loads of contribution room ...
> What are my other options for reducing our tax burden and keeping money out of the gooberment's filthy paws?


The RRSP contributions when deducted are a temporary measure. It shifts when the $$ are reported as income subject to tax into the future but does not change that it will be income that is taxed.

Only the TFSA is Canadian tax free.


Maybe you are already aware of this as well as planning for it in regards to your personal plus maybe a spousal RRSP. The closing question suggests you are focused on the current year tax only without checking what the future tax bill might be. A key part of assessing the future tax is what level of income as well as what flexibility there is to withdraw from the RRSP at lower income levels.


Cheers


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## Eclectic12 (Oct 20, 2010)

OutofBounds said:


> Good info, thanks guys. I'll look into the spousal RRSP/spousal loan line for next year.


*For reading* ...
Spousal RRSP, including attribution rules as well as warning about online contributions -> http://www.taxtips.ca/rrsp/spousal-rrsp-rrif.htm
Income Splitting -> http://www.taxtips.ca/personaltax/incomesplitting.htm
Spousal Loan -> http://www.taxtips.ca/personaltax/lend-to-spouse-child.htm
Spousal Loan Attribution Rules -> http://www.taxtips.ca/personaltax/attributionrules.htm


Cheers


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## gardner (Feb 13, 2014)

OutofBounds said:


> As for the liberals helping the middle class, I would respectfully disagree


Well the marginal tax rates for for $45-$90K did drop, and the rates for $150K up did go up. I know I felt the change. You can argue a lot about what "middle class" actually means, but the tax change definitely shifted the burden up the scale.


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## Nononymous (Jun 10, 2015)

Nerd Investor said:


> This was only available to families with minor children, so OP would not have benefited anyway.


Ah, I stand corrected. We never qualified so I kind of forgot about it. Vaguely recall it being thought of less as a tax break for the middle class than a subsidy for families with only one working parent, which gets into a whole different social policy debate.


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## OutofBounds (Dec 7, 2016)

Eclectic12 said:


> The RRSP contributions when deducted are a temporary measure. It shifts when the $$ are reported as income subject to tax into the future but does not change that it will be income that is taxed.
> 
> Only the TFSA is Canadian tax free.
> 
> ...


I understand that part of the RRSPs. I fully expect to be in a much lower tax bracket when it comes time to start withdrawing from them. My plan is to use them to reduce my current tax burden and re-invest the tax return I get into my TFSA.



Eclectic12 said:


> *For reading* ...
> Spousal RRSP, including attribution rules as well as warning about online contributions -> http://www.taxtips.ca/rrsp/spousal-rrsp-rrif.htm
> Income Splitting -> http://www.taxtips.ca/personaltax/incomesplitting.htm
> Spousal Loan -> http://www.taxtips.ca/personaltax/lend-to-spouse-child.htm
> ...


Excellent material. Thank you!


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