By April, when most people think about their taxes because they are preparing to file their return, it is usually too late to take advantage of the many opportunities that were available to you all the months before to minimize and defer your taxes.
- Proper tax planning gives you the opportunity to arrange your affairs in such a way as to minimize the amount of taxes paid and ideally, should be done at the beginning of the taxation year. You should be doing your tax planning for the 2010 taxation year now, even though that return will not be filed until April 2011.
- Tax minimization and deferral, which are perfectly legal, should not be confused with tax evasion, which is most certainly illegal! Tax evasion includes making false or deceptive statements in a return, certificate, statement or answer to the CRA in order to willfully evade or attempt to evade paying tax. If you destroy, alter, mutilate or otherwise dispose of records or books of account, this is also considered tax evasion. Conviction means expensive fines and possibly jail time. Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.