Thank you.

I think it should be if your marginal tax rate is positive, people should choose tax credit over tax deduction. Tax deduction is only dollar for dollar reduction in the taxble income, while tax credit is a dollar for dollar reduction in the tax payables.

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Take care

I have a few rental properties that bring in roughly $10,000 per month with mortgage payments and other deductions of roughly $7000.00 per month which makes my net income $3000.00 per month.

Am I able to pay my expenses including property management, utilities and mortgage payments with a line of credit and further write off the interest for carrying these charges until an undisclosed date, potentially building them into the mortgage of the property by re-financing and gradually pay it off with the future rental income.

My reasoning for this question is that I would like to take the full $10,000 monthly and apply it to my personal residence where the interest is not tax deductable and pay it off as soon as possible. Once it is paid off I will then focus on paying off the monthly expenses related to my rental properties that acrued during this time by using the future rental income from these properties.

I know that I will be paying compounded interest on the deferred expenses and it will lower my future revenue, plus as I pay off the principle of this loan it will also be considered income, but this will benefit me both in lower capital gains tax because I am making less income based on more interest being paid and it will convert my bad debt into good debt.

I hope I explained this properly so that everyone reading this understands what I am saying and can potentially answer my question.

Based on the info I am giving I would also like to know that if this is possible for me to do, I am also assuming that my net monthly income during this time of defering my expenses will still be $3000.00 per month as I am able to deduct the expenses immediately this year even though I am deferring paying them until potentially next year.

Please get back to me and let me know if I am dreaming here.

thank you

[...] Original post by Private Canadian Corporations and Taxes – Scenarios | Million Dollar Journey [...]

[...] the $10k business income is distributed to Jim via salary, the corporation would get a tax deduction, but the income would be added to Jim’s existing $65k job income. This would result in net [...]

The valuable deductions (like RRSPs) come “off the top” and the less valuable ones (like Transit pass savings) come “off the bottom”. Might now work for everybody, but it’s enough to help my wife understand.

Since I don’t have a formal “payment contract”, whats the chance that I will be granted my letter of authority? From the CRA’s point of view, they have to “trust” that I will make all the RRSP contributions I am claiming.

Does anyone else have any experience with this?

The only real documentation I could provide is my written promise :)

Hope that helps.

I had an RRSP contribution tax receipt the time I used the T1213 form. My employer’s HR group said that was good enough. I would think that your best bet is to ask your HR group or ask whoever at the government this form will be sent to. My HR group handled the sending to the government for me.

I’m filling out the form myself, but am stuck on this step.

Can I claim the amount that my employer contributed for RRSP Deduction? Or can I only claim the amount that I contributed?

Thanks