Tax Planning with a Financial Advisor: What You Need to Know

Most people think about tax planning once a year—when they're scrambling to file their tax return by April. But effective tax planning isn't something you do in March; it's something you build throughout the year. A financial advisor who understands tax strategy can help you keep more of what you earn, reduce what you owe, and structure your investments and accounts for maximum efficiency.

Income Splitting and Household Tax Efficiency

One of the most powerful tax-planning strategies is income splitting—and it's often misunderstood. Income splitting doesn't mean evading taxes; it means legally using your household structure to reduce the total tax your family pays.

If you're a higher earner and your spouse has lower income, strategies like spousal RRSPs allow you to contribute to a registered account in your spouse's name. When the money is eventually withdrawn, it's taxed in your spouse's hands at a lower marginal rate. For business owners and incorporated professionals, pension income splitting after age 65 can also reduce tax significantly.

In London Ontario, where many households have a single primary earner, income splitting can create thousands of dollars in annual tax savings.

RRSP and TFSA Strategy: Account Optimization

Most people know they should contribute to an RRSP, but few understand which account—RRSP or TFSA—should be their priority.

An RRSP gives you an immediate tax deduction, which is valuable if you're in a high tax bracket. However, when you withdraw money later, it's fully taxable. A TFSA offers no tax deduction on contributions, but grows tax-free and withdrawals are tax-free. The optimal strategy depends on your income, your expected future tax bracket, and your goals.

For business owners and professionals, the picture becomes more complex. Should you contribute to an RRSP in your corporation, your personal account, or both? The answer affects not just your tax bill, but also your pension income, CPP contributions, and Old Age Security eligibility. A financial advisor helps you model these scenarios and choose the path that works for your situation.

Capital Gains Timing and Corporate Shares

If you own investments outside registered accounts, the timing of when you sell—and whether you trigger a capital gain—matters significantly. In Canada, only 50% of a capital gain is taxable, but you still need to plan when to realize gains and how to offset them with losses.

For business owners with corporate shares, the situation is even more nuanced. If you own shares in a Canadian-controlled private corporation, you may be eligible for the lifetime capital gains exemption—potentially allowing you to exclude up to $1,016,836 of capital gains from tax (as of 2024). But you need to plan this carefully, and coordinate with your accountant and legal advisor.

A financial advisor working with business owners in London Ontario ensures your investment and corporate strategy aligns with your tax situation and succession plans.

Tax Planning Is Year-Round Work

The biggest shift you can make is thinking about taxes throughout the year, not just at filing time. In Q4, review your year-to-date income and gains. Do you have room for additional RRSP contributions before year-end? Should you harvest losses in your non-registered portfolio? Is this the right year to take a withdrawal from your RRIF?

These decisions are interconnected. A withdrawal from an RRIF affects your net income, which affects your CPP and OAS, which might affect provincial tax credits and benefits. A financial advisor maps this out with you, ensuring every decision pulls in the right direction.

How Marc Pineault Integrates Tax Planning

At Pineault Wealth Management in London Ontario, tax planning isn't a separate service—it's woven into every conversation about your investments and goals. Marc works closely with your accountant and tax professional to ensure your financial plan and tax strategy are aligned.

Whether you're a business owner managing corporate and personal accounts, a retiree coordinating RRIFs and CPP timing, or a household looking to optimize your tax situation, the goal is the same: structure your financial life so you keep more of what you earn and reach your goals faster.

If you're in London Ontario or southwestern Ontario and want to see how tax-efficient planning could work for you, Marc Pineault at Pineault Wealth Management can walk you through your situation and identify opportunities you might be missing.

This article is for educational purposes only and does not constitute personalized financial advice. Please consult a qualified financial planner before making any financial decisions.