What are the best tax minimization strategy

What is Tax Minimization?

Tax Minimization is a way minimizing the annual tax on one’s business or property. People with huge income in order to avoid tax opt for the Tax Minimization. The Tax Minimization Strategy is a key part of wealth planning process. Different strategies are used by people for the Tax Minimization.

Splitting income:

Transfer of tax liability from the higher income family member to the lower income family member is one of the Tax Minimization Strategy. Creating arrangement for spousal loan, contributing to the spousal RRSPs and establishing a family trust are common ways used to split family income.

Tax-exempt insurance:

Life insurance policies are also used as Tax Minimization Strategy to reduce the investment taxes. One can go on to deposit some amount in an insurance policy to reduce the tax.

Asset allocation:

To reduce the tax on assets or property, one can transfer it to any of their family members name especially to wife. This is a common Tax Minimization Strategy used all around the world.

Retirement:

The Tax Minimization Strategy that helps people in the long run is by investing in retirement plans. People contribute maximum amount of their income to the retirement accounts.