What are the various ways of savings to avoid income tax?

Tax imposed on investment income when you lend your money to your spouse for investment?

• I am currently working and my wife is not. We have a joint savings account which my wage is deposited into. I am thinking about buying some investment products such as stocks, mutual funds etc. using the money from my joint account, under my wife’s name to reduce the income tax that would be imposed on the investment income as my wife would not have any other incomes (and therefore, she would be in a low tax bracket). I am trying to find the way that the tax would not end up being imposed on me instead of my wife. I heard that if I lend my money to my wife in some official way then I would not be taxed for the income that my wife’s investments would produce. Can you let me know of the details of this method (detailed procedure I must to follow)? Are there any other easier or simple ways for me to avoid paying the tax? Thank you.

• Answer:

  It's called an inter-spousal loan. As long as you loan the money at CRA's prescribed rate, there is no attribution of the income. They work well because interest rates are so low these days. CRA's prescribed rate is 1%. You must document the loan, and your wife must pay the interest no later than January 31 of the following year.