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Tax Planning as Part of Your Long-Term Financial Goals

tax planning on a computer

Any actions you take today can significantly benefit your future self. The sooner you establish a comprehensive personal financial plan that includes tax planning, the greater your long-term benefits will be.

The goal of tax planning is to minimize the amount of income tax you pay so that you may optimize your savings for retirement, as well as for other long-term financial goals such as wealth transfer and philanthropic giving.

Saving for Education

The cost of post-secondary education has been rising faster than inflation for decades. Thankfully, there is a government savings plan, the Registered Education Savings Plan (RESP), which enables you to grow earnings tax-free and make tax-free withdrawals as long as they are used for qualified education expenses – plus you can claim the Canada Education Savings Grant of 20% of your contributions up to a maximum grant of $1,000 per annum.

Parents typically initiate RESPs for their children. However, young adults can contribute to their own RESP. 

Investing with Tax Planning in Mind

As you enter your peak earning years, typically your 40s and 50s, there are many different interests competing for your money. These are the years when you may have the greatest discretionary income and are able to employ a wider variety of tax-efficient strategies as part of your financial plan.

You should consider the different tax treatments of your investments such as dividend income vs. capital gains. Also, consider any government efficient plans such as Tax-Free Savings Accounts (in which you withdraw tax-free, but get no tax benefit when you contribute) and Registered Retirement Savings Plans (RRSPs) (in which you get a tax benefit when you contribute but your withdrawals are taxed).

Retirement Years

Depending on your age, retirement may seem very far away. You may have more urgent expenses such as a mortgage or car payments. However, the sooner you start saving for retirement, the greater will be your benefit from compounding. Even if you start with a small amount now you can generate significant assets for a comfortable retirement.

You should take full advantage of any contribution matching that your employer offers in respect of your pension plan or RRSP. As well, make the maximum allowable contribution to your RRSP as you get the double benefit of immediate tax savings on your contributions and tax-free growth of your money as long as it remains in the RRSP.

Tax Planning Considerations for Wealth Transfer

Taxation can be your estate’s worst enemy if wealth transfer is not planned for in advance. The sooner you plan for your wealth transfer the greater the tax planning options that are available to you.

Tax planning strategies to consider include the use of life insurance policies, gifting of cash to inheritors while you are still living, gifting of appreciated assets, and utilizing family trusts for the passing of wealth.

For more information on these strategies please refer to our article, How to Pass Money to Heirs While Minimizing Taxes in Canada.

Philanthropic Giving as a Tax Planning Strategy

When planned for in advance, a philanthropic strategy can provide the “win-win” of significant tax savings and more assets to give to your favorite charities.

These strategies can include life insurance structures, such as making a charity the beneficiary of your policy, establishing a Donor Advised Fund for charitable giving, setting up a Private Foundation, and others which are discussed in greater detail in our various philanthropic blog posts.

Professional Assistance is Crucial

There are many tax planning strategies, all with rules that you must abide by. Therefore, it is crucial to work with a financial professional that knows your personal financial circumstance and can help you establish the most beneficial tax strategy as a component of your overall financial plan and long-term financial goals.

Investing with Bloom Investment Counsel, Inc.

Investing in dividend-paying equities is another tax planning strategy to help you reach your long-term financial goals. It substantially increases the after-tax rate of return for Canadian taxable investors given that Canadian eligible dividends are taxed at a lower rate than other income.

For over 25 years, Bloom Investment Counsel has specialized in one thing, and we strive to be the best at it—investing in income-generating investments, specifically dividend-paying stocks, which can help you generate income if needed, and growth from investing in the stock market

Since 1985, we have provided actively managed, customized Canadian and U.S. dividend-paying portfolios for wealthy individuals, family offices, foundations, corporations, institutions, and trusts.

Get in touch today,  To learn more about how our customized investment portfolios can help you protect, preserve and grow your wealth call us at +1-416-861-9941 or email us at

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