Shane Walsh

In the realm of taxation, a demand arises for customized and strategic methodologies that surpass traditional approaches. Often, individuals and businesses fail to capitalize on opportunities to lower taxes and avail government benefits due to insufficient attention to their tax returns. Taking a comprehensive and forward-looking approach is essential to minimize taxes, optimize savings, and guarantee retirees receive their full savings value without undue tax obligations.

By offering comprehensive guidance, Shane Walsh,a Certified Financial Planner^® with Investia Financial Services Inc. uses a five-step approach to optimize tax returns and secure financial security for retirees.

A highly experienced and trusted professional in the field, Shane brings 25 years of expertise as a financial advisor and 22 years in tax advisory services. With extensive work in tax return preparation, he has gained valuable insights into tax complexities. His reputation as one of the country’s Top 10 tax advisory professionals is attributed to his unique perspective, stemming from a financial advisory background rather than the typical accounting background of other nominees.

Shane's primary goal is to support his clients, regardless of their income, in safeguarding their government benefits. When individuals turn 65, they qualify for the old age security (OAS) pension provided by the government. The amount received from the OAS depends on their income, with a reduction in benefits for higher earners. For each dollar their income exceeds a specific threshold (e.g., $81,761 in 2022), their pension is reduced by 15 cents on every additional dollar, and it is entirely eliminated when their net income reaches $137,331 (2022 figures).

In order to prevent clients from losing this benefit, Shane carefully examines their income and explores various methods to decrease it or make necessary adjustments. For individuals with lower incomes, there is an additional tax-free supplement known as the Guaranteed Income Supplement (GIS). To be eligible for the GIS, single individuals or widows/divorced pensioners must have a net income below $20,952. If a client's income is close to this threshold, Shane implements strategies to assist them in reducing their net income, thereby ensuring they receive the GIS.

Another tax credit available to taxpayers is the Age Amount Credit. Everyone filing their tax return receives a personal exemption limit (e.g., $14,398 in 2022), but individuals aged 65 and above also receive an additional credit of $7,898 called the age amount. However, just like the OAS clawback, this credit starts reducing once their income crosses $39,826 (2022) and is completely lost at a net income of $92,480 (2022).

What sets Shane apart from other financial advisors is his approach to constructing income streams. Shane uses various strategies, thinking of them as buckets to fill. The first priority is to preserve tax credits, so he aims to keep the first round of taxable income around $39,000. This ensures clients can maintain all available tax credits. Then, he efficiently layers additional income on top of that, allowing clients to maintain a similar net income as before retirement while paying less in taxes due to the optimized structure of their income streams.

"Our foremost priority lies in granting individuals the opportunity to reclaim their funds, while strategically organizing their accounts to ensure the utmost tax efficiency tailored to their unique circumstances," says Shane.

Shane also employs two strategies to optimize the tax efficiency for individuals when they receive funds. Firstly, he utilizes income splitting, which is available to couples with pension income.

This strategy involves transferring a portion of a higherincome spouse's pension income to their lower-income spouse. By doing so, he aims to balance out the spouses' incomes, taking advantage of various tax credits such as personal exemption limits, age amount benefits, and pension credits. These measures help reduce the overall tax liabilities for both spouses.

Secondly, Shane utilizes a strategy called income layering, which involves strategically organizing income from various sources to optimize tax efficiency. This approach combines tax-deferred registered assets with non-registered assets to diversify income streams and minimize the overall tax impact. For example, Shane recommends initially deriving $39,000 of income from taxable sources such as pension plans or retirement savings accounts. To generate additional income, Shane suggests utilizing tax-free savings accounts (TFSAs), as any interest, dividends, or capital gains earned within TFSAs are not subject to taxation. In addition, he focuses on providing income from Capital Gains in non-registered accounts, as they receive favorable tax treatment and provide some tax relief compared to other types of income.

Shane's services are exemplified through two compelling instances. In one case, a retired nurse in her seventies with a pension income of around $70,000 sought financial advice from her local bank. The bank recommended investing only in GICs, which resulted in annual tax bills amounting to $12,000. Shane took a different approach by utilizing her tax-free savings account to shield her interest income from taxes and employing capital gains investments in her non-registered account to generate income. The investment advisory fees became a tax deduction for her, resulting in a significant change. Instead of owing $12,000, she began receiving $1,000 in tax refunds annually, leading to savings of $13,000 per year.

In another instance, a gentleman sold his house during the peak of the housing market in 2021, believing that prices were excessively high. He entrusted the proceeds of the sale to his bank for investment, but their strategy resulted in a substantial tax bill of $6,000. Seeking a solution, the bank advised him to purchase a $12,000 Registered Retirement Savings Plan (RRSP) to offset the taxes. However, upon reviewing his situation, Shane discovered the RRSP wasn’t necessary. By restructuring his account and deducting the investment advisory fees he was already paying, a better tax outcome could be achieved. This approach saved him from making unnecessary RRSP contributions and avoided the associated future tax implications.

Shane's range of services extends beyond assisting individual taxpayers, as he also provides dedicated corporate tax planning solutions that cater to the unique needs of business owners, helping them enhance their tax efficiency. Through his expertise and close collaboration with clients, Shane uncovers hidden tax traps, develops strategies to mitigate them, and maximizes tax benefits for individuals and businesses alike.

The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. This article was written, designed and produced by Financial Services Review Canada Magazine for the benefit of Shane Walsh who is an Investment Fund Advisor at Investia Financial Services Inc. Investia does not necessarily reflect the opinion of Investia Financial Services Inc. The information contained in this article comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any securities. Mutual Funds, approved exempt market products and/or exchange traded funds are offered through Investia Financial Services Inc.