I recently received a hefty promotion for $350k (plus stocks and bonuses) with the same company. Now that I can finally start to pay down my debt, I'm not so happy that suddenly 45% of my pay disappears in the form of taxes.


What can I do to minimize my tax exposure (i.e. on general principal), and how much tax money goes to the Canadian government? I know that I can max out my outstanding RRSP contributions and get a nice refund at annual tax return time, and I know that I can max out my TFSA and watch the interest itself grow without being taxed.

Besides these methods, what else can I do to minimize the tax going to the government? Donating to charity reduces my tax exposure, but results in a net loss of money for me (i.e. the only way, to my knowledge, that donating to charity benefits an individual if he/she is donating to a bogus charity and committing tax fraud).

Could I just gift money to family and friends so they can max out their respective RRSP contributions, for example? They don't have to claim gifted cash, and whatever they contribute to their own RRSPs is tax sheltered, resulting in a refund for them at tax return time. Sounds perfectly reasonable. Are there other such methods I could do to minimize how much of my money ends up in the government's coffers? I'm perfectly fine with gifting to people I know personally, and want to minimize the amount of money paid in taxes, even if it results in a greater overall personal loss.

  • 76
    Trying to minimize taxes used to pay for welfare and subsidized university? I'm with you philosophically on reducing taxes but the irony is too much.
    – brian
    Commented Sep 16, 2019 at 17:39
  • 17
    According to this, gifts are not deductible for the giver, so how would this reduce your tax burden?
    – D Stanley
    Commented Sep 16, 2019 at 17:59
  • 17
    How do you feel about marriage?
    – Roger
    Commented Sep 16, 2019 at 19:00
  • 22
    So, you want to take action to harm others even if it results in personal loss to yourself? Why?? Commented Sep 17, 2019 at 12:49
  • 20
    Just to clarify, 45% isn't applied to your whole salary.
    – jcm
    Commented Sep 18, 2019 at 3:20

4 Answers 4


Congratulations on an amazing rise on salary. Please pat yourself on the back for such an accomplishment.

The best thing you can do is to hire a competent tax specialist. Here in the US, it is typically an accountant and they would tell you that there is not much they can do. Maximizing tax favored retirement accounts is about the best one can get away with. It is unlikely that gifting relatives will result in tax deductions.

Here in the US, high income types also invest in mutual funds that spin off few capital gain distributions after they have maximized their tax favored accounts. Dividends are less of a concern as they are taxed at a lower rate. That way money that is earned from investments do not significantly add to their tax bill.

Doing a bit of research, you are among the highest 10% of wealth earners in Canada. As such, you and those that make more than you, likely pay about 85% of the tax revenue for the government. The top 1% pay around half. When a politician decries "tax cuts for the rich", he is correct because in reality only the "rich" or more accurately high wage earners actually pay income tax.

While the living off of 55% of your income is kind of crummy, you can take comfort in two things. The first is that most 4 person families live off of far less. Second, your income will likely to continue to rise.

So live off less than you bring home, invest, and keep up the good work.

  • 18
    "When a politician decries "tax cuts for the rich", he is correct because in reality only the "rich" or more accurately high wage earners actually pay income tax." I think this is worded somewhat poorly. Most people pay income tax, not just high earners. I assume you're talking about how the high earners pay the majority of the tax.
    – JMac
    Commented Sep 17, 2019 at 14:42
  • 8
    @JMac its splitting hairs, but in the US while the majority may pay into income tax system, their effective tax rates are zero or less with tax returns and credits. It may not feel that way because of social security taxes, but that is not what politicians are talking about when they talk about tax cuts.
    – Pete B.
    Commented Sep 17, 2019 at 19:15
  • 2
    But the question (and paragraph) were about Canada, so I'm not sure how that US statistic really applies here. I also still think it could be a lot clearer. Even if that's true in Canada, I definitely pay income taxes. If I get a rebate or credit that offsets that payment, doesn't mean I'm not paying income tax; it just means that I end up getting compensated for the payment.
    – JMac
    Commented Sep 17, 2019 at 19:19
  • 5
    Can I ask how you came to the 85% and 50% figures? My own research came up with very different results.
    – Waddles
    Commented Sep 18, 2019 at 8:02
  • 2
    @hatchet I just checked my mutual fund 1099-DIVs from the last few years, and indeed most of my dividends were qualified. I never realized I was getting favorable tax treatment on them.
    – Barmar
    Commented Sep 19, 2019 at 16:27

Minimizing taxes at your scale is more an exercise in determining which activities the government decides to tax less rather than an exercise in finding clever loopholes to exploit. You lack the resources (and the tax burden) to make use of the more intensive tax avoidance strategies in a feasible or efficient manner. Sorry, but no tax havens, no accountants, and no in-house legal teams for you!

I am not a Canadian tax expert, but the most obvious tax-benefited activities in Canada (and most Western nations) are investments in general and the charitable donation of assets.

Capital gains in Canada effectively get a 50% discount in taxes since they only count half as income. This can be reduced further by offsetting with any capital losses. This is probably subject to an army of minor regulations and tweaks, so just focus on it as a general principle rather than the exact number.

Donating an asset can (sometimes, not always) produce large tax advantages, since the asset is considered donated at current market value (provides full charitable tax benefit) but does not count against you as a capital gain (thus evading the capital gains tax entirely.) If you have sufficiently-appreciated assets, this capital gains dodge may suffice to make the overall transaction a net positive for you. Exact results depend on exact details, don't trust the Internet.

If you really want to give stuff away instead of paying taxes, you can give people assets that have depreciated - you get to realize the capital loss and they get the asset. This isn't a net positive, but it is a way to give to friends and gain some tax advantages at the same time. CAVEATS - Don't try and play games by claiming an overly-depressed valuation to drive up the loss, and don't try this in reverse (appreciated gifts count as a capital gain.)

Congratulations on your success, and please consider hiring a Canadian professional before you try anything complicated.


If you own any works of art or ecologically sensitive lands you can donate those to a city government/museum/conservation trust/accredited charity and receive a tax refund for the appraised value of the donation. This would only net you a tax benefit if the appraised value was greater than what you spent, but it would deprive the government of money if that's your goal.

You might be able to convince an artist to sell you a piece at a discount with the agreement that you would subsequently be donating it to a museum or city collection as this would add to the artist's reputation. For information on cultural donnations read the Canada Revenue Agency's pamphlet on writing off donations: https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/p113/p113-gifts-income-tax-2016.html

  • The discount trick sounds like fraud
    – user32205
    Commented Sep 21, 2019 at 1:50
  • @aidan.plenert.macdonald possibly, I would consult an accountant before trying it. I don't see anything in the tax code about it though-- essentially you have to pay for the museum to hire an appraiser who determines the fair market value of the work. The amount that you paid to purchase the work doesn't enter into the equation as the value is determined primarily by the artist's reputation/previous sales/listed prices of their works. If the artist or gallery dealer wants to give you a discount on a work of art for some reason that's their business.
    – Dugan
    Commented Sep 21, 2019 at 14:42

Disclaimer: I'm from the US so I might get parts of this wrong.

One way you might be able to reduce your taxes is to invest in real estate. In the vast majority of countries real estate is taxed very well. It appears you can deduct theoretical real estate losses against salary in Canada. There are legal ways to make it look like you're making a loss to the tax collectors while you're actually making a profit.

Borrowing money to buy real estate magnifies the amount of rent you get and the amount of theoretical losses you get. In a few years you might be able to pay absolutely nothing in taxes on your salary income. You can also defer paying capital gains on real estate if you use the money from the sale to purchase another investment property.

Source: https://turbotax.intuit.ca/tips/claiming-a-loss-on-rental-property-6385

  • Why your house is a terrible investment. It's relevant to ask why buying your own property would earn you more than an REIT. Also rent is taxable and regular non-qualified income at that.
    – user32205
    Commented Sep 21, 2019 at 1:49
  • When you rent out a property you get a bunch of deductions. Deductions vary by country. If these deductions are more than the rent you make a theoretical loss. It doesn't matter what the official tax rate is. So yes rent is theoretically taxed at the normal tax brackets, but practically it isn't. Commented Sep 21, 2019 at 18:32
  • Whether investing in real estate in a good idea depends on the area. Generally more millionaires/wealthy people there is in an area the lower the yield. Rental properties generally have a higher rate of return than the stock market. Commented Sep 21, 2019 at 18:35

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