Apprehension growing as the taxman cometh

WINNIPEG - Despite hit and miss stock market returns and an economic downturn, some things don't change. According to new research by Investors Group, high income and property taxes continue to be seen as top threats to Canadians' retirement security. High taxes are viewed with the greatest apprehension (46 per cent), outstripping concerns about inflation, currency fluctuations, poor stock market returns (39 per cent), and fear of job loss (33 per cent).

The concern about high taxes is a consistent finding in a series of three polls conducted by Investors Group beginning September 2008. High income and property taxes are seen as the number one threats to retirement security, with 45 per cent of respondents citing taxes in September, dipping to 40 per cent in October, before jumping to 46 per cent in the recent survey conducted in early March.

"Taxes can have a significant impact on investors whether saving for retirement or in later years when living on fixed income," said Jack Courtney, Assistant Vice-President, Advanced Financial Planning at Investors Group. "It pays to employ tax saving strategies that can help cut tax bills in future years or help mitigate the impact of taxes when withdrawing from investments."

According to Courtney, investment vehicles such as RRSPs, Tax Free Saving Accounts and corporate class funds can help minimize taxes while allowing investments to grow at a faster rate. Retired individuals should consult a planner to help decide the most tax-efficient approach to withdrawing funds, how to avoid clawbacks and consider income pension splitting, for example.

"Every dollar saved is a dollar earned, and this is especially true during times like this," he said. "A professional planner can recommend tax-efficient strategies that will ultimately put more money in your pocket and leave less for the taxman."