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What are the best ways to make your taxes work for you?

POSTED June 10, 2021

What are the best ways to make your taxes work for you?

UPDATED February 23, 2024

Find out why it’s important to know the difference between voluntary and involuntary philanthropy 

By Janine Purves, Bryce Liedtke and Rich Widdifield, planned giving consultants, The Donor Motivation Program Canada

Kids sit on floor in classroom with mini chalkboards

Many Canadians don’t realize they can choose how to redirect their involuntary philanthropy — or tax dollars — to support causes and values that are important to them.

The Merriam-Webster’s Dictionary defines a philanthropist as “a benevolent supporter of human beings and human welfare.” But, that may describe more of us than you think.

Consider the following: whom are we describing when we reference an individual who potentially gives up approximately a quarter of her/his capital gains and/or up to roughly one-half of his or her income to support the general welfare of our country? Of course, the answer is most of us! In other words, as taxpayers, we can all be considered involuntary philanthropists.

Take a moment to review the pie chart below, and consider if that is how you would choose to donate your money. If the answer is, no, then you may wish to investigate how you could redirect your involuntary philanthropy, or tax dollars, to voluntary philanthropy.

pie chart with loony at the centre

Please don’t misunderstand. We realize taxes are necessary and important, but our government is actually a strong supporter of voluntary philanthropy.

Historically, Ottawa has provided incentives to encourage activity in the economy. As an example, if our government wishes to increase real-estate ownership, it allows tax breaks for the purchase, ownership and sale of this asset class.

To encourage philanthropy, the federal government introduced more than 20 pieces of legislation into our Income Tax Act in the ’90s. Many international tax experts suggest this has created the most generous tax environment in the world to encourage individual charitable activity.

There are many income-tax reduction and estate-tax elimination tactics that can help you…

  • minimize or even eliminate taxes on your estate
  • avoid double taxation on your “red” retirement accounts
  • bypass paying upfront capital gains taxes when selling your investments
  • convert assets into an income you can’t outlive and leave a lasting legacy.

If this type of voluntary philanthropic planning, with its focus on your relationships and values, resonates with you, register for our income-tax reduction and estate-tax elimination webinar on January 30 at 1:00 p.m. ET (for Ontario), February 13 at 1:00 p.m. PT (for British Columbia) or February 27 at 1:00 p.m. MT (for Alberta).

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