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Tax Deductibility of Life Insurance Premiums

The question of whether premiums paid for life insurance can be deducted from income often arises in tax-planning exercises.

The rule is that life insurance premiums are considered to be capital outlays and not an expense incurred for the purpose of producing income from a business or property. Therefore  a deduction is usually disallowed.

Tax News & Tips: 2009 Money Saving Strategies

There is no better time than at the start of the year to take actions that will minimize your tax bill. Here is a  few ideas to consider: 

Maximize contributions to your Registered Retirement Savings Plan (RRSP):

The contribution cap for 2009 is $21,000. And don’t forget, you still have until March 2 to max out your 2008 contribution room of $20,000. The sooner you contribute, the sooner the money starts growing  tax-free until you start to withdraw. Consider adding contributions to the usual monthly household payments you make. In return for your contributions you get a tax credit.

Major 2008 Federal and Provincial Changes Affecting Individuals

Tax-Free Savings Account (TFSA):

The 2008 federal budget introduced a new Tax-Free Savings Account (TFSA) which, beginning in 2009, will allow Canadians who are 18 and older to save up to $5,000 per year in the TFSA investment vehicle. Unlike a registered retirement savings plan (RRSP), investors will not be able to deduct contributions to a TFSA for tax purposes; however, investment income, including capital gains earned within the TFSA will not be subject to tax, even when the funds are ultimately withdrawn.

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