How we help
- Asset-location strategy across registered and non-registered accounts
- Corporate investment income — passive-investment-income rules and SBD grind
- Refundable Part I tax (Part IV / RDTOH) tracking for active investors
- Capital-loss harvesting and superficial-loss-rule compliance
- Donation-of-securities planning for appreciated public holdings
- Foreign-content exposure under T1135 reporting
- Coordination with retirement-income drawdown sequence
Asset location matters
The standard investing maxim is "asset allocation matters more than asset selection." For Canadian investors with multiple account types, there's a second-order principle: "asset location matters more than the second decimal of asset allocation." The tax-shelter characteristics of TFSAs, RRSPs, non-registered accounts, and corporate accounts differ in ways that suggest different optimal holdings for each.
Where each asset type belongs
A simplified decision tree for Canadian investors:
- TFSAs: Highest-growth-potential assets. The TFSA shelters all future growth and income from tax permanently. A 30-year-old TFSA holding a high-growth equity ETF produces 30 years of tax-free compounding; the same asset in a non-registered account produces 30 years of tax-drag on dividends and eventual capital-gains tax.
- RRSPs: Tax-deferred but eventually taxable. RRSPs work best for assets that throw off the most income (high-yield bonds, high-dividend equities) — the income that would have been taxable annually in a non-registered account compounds tax-deferred instead. RRSPs are less efficient for tax-deferred-status-already growth assets (since the tax-deferred gain becomes ordinary income at withdrawal, not capital gain).
- Non-registered accounts: Assets that produce favourably-taxed income — Canadian-source eligible dividends, foreign equities producing capital gains, and broad-market equity ETFs. Canadian dividend tax credits are wasted inside RRSPs.
- Corporate investment portfolios: Complicated. Corporate passive income is taxed at refundable Part I rates (~50%), much of which is recoverable when the corporation pays dividends, but the SBD-grind rule reduces the small-business deduction available to the active operating company when passive investment income exceeds $50,000 / year. The optimal corporate investment mix depends heavily on the operating company's profile.
The corporate-passive-income trap
For owner-managers with substantial retained earnings, the corporation's passive investment income produces a compounding tax problem. The first $50,000 of annual passive investment income at the corporation is "free" — it doesn't grind the SBD. Each additional dollar of passive income reduces the SBD by $5, eliminating the SBD entirely when passive income reaches $150,000. Operating-company income previously taxed at ~12% (Ontario CCPC SBD rate) shifts to ~26.5% (general rate) at the margin — a substantial increase.
Planning around the SBD grind includes:
- Distributing excess passive investment income out of the corporation as dividends to keep the corporate passive-income balance under control.
- Restructuring so the passive-investment portfolio sits in a separate holdco that doesn't share an SBD pool with the operating company.
- Investing in growth assets rather than income assets, since unrealized capital gain doesn't count toward the $50,000 threshold.
Donation of appreciated securities
For investors holding appreciated public-company shares that they intend to donate to charity, gifting the shares directly (rather than selling and donating cash) eliminates the capital-gains tax on the accrued gain — the inclusion rate is zero on donations of qualified securities. Combined with the donation credit, the after-tax cost of a gift of appreciated securities is materially lower than a cash gift of the same FMV. The Charitable Giving page covers this in detail.
Foreign content and T1135
Canadian investors holding more than $100,000 (cost amount) of "specified foreign property" must file Form T1135 annually with the CRA. The form's reporting requirements scale with the size of the foreign portfolio. Most investors with US-listed ETFs or US brokerage accounts above the threshold face the obligation, even when the holdings are simple and the income is fully reported.
Retirement drawdown coordination
The order in which different account types are drawn down in retirement materially affects lifetime tax. Common approaches:
- RRSPs first — depletes the tax-deferred bucket while it's smaller, reducing eventual mandatory RRIF minimums.
- Non-registered first — uses capital-gains-taxed dollars when capital-gains rates are low (avoiding paying tax on RRSP withdrawals in higher brackets later).
- TFSA last — TFSAs are the most tax-efficient bucket; they're typically drawn down last to maximize tax-free compounding.
The optimal drawdown sequence depends on the retiree's other income, expected longevity, estate plans, and current tax brackets.
How we work the file
Investment-tax-planning engagements at Barrett Tax Law focus on the structural decisions — corporate vs. personal, RRSP vs. TFSA, asset placement, holdco structure — not on specific investment selection (we're not investment advisors). We coordinate with the investor's portfolio manager and review the structure annually as the portfolio and tax position change.
What to expect when you call us
Your first call is a free, no-obligation consultation with a tax lawyer. We will review the details of your situation, explain your options under the Income Tax Act and CRA administrative practice, and give you a clear, fixed-fee quote if you choose to retain us. Your consultation is confidential, and once we are retained, communications are protected by solicitor–client privilege.
If you retain us, we begin work within 24 hours of being retained.
Frequently asked questions
Is the consultation really free?
Yes. Most cases qualify for a free, no-obligation consultation with one of our tax lawyers. During the call we'll review your situation, explain your options, and give you a clear quote if you decide to retain us.
What does a tax lawyer do that an accountant does not?
A tax lawyer focuses on the legal side of tax — disputes, litigation, and the structuring of transactions in light of the law and anti-avoidance rules. That includes representing taxpayers in CRA audits and objections, appearing at the Tax Court of Canada, defending penalties and director or derivative liability, and designing reorganizations such as section 85 rollovers and estate freezes.
The most practical distinction is privilege. Communications with a lawyer are generally protected by solicitor-client privilege, while communications with an accountant generally are not and can be demanded by the CRA. Where the facts are sensitive or the matter could become contentious, that protection matters.
Lawyers and accountants often work together — the accountant on the numbers and filings, the lawyer on strategy, privilege, and the legal record. Barrett Tax Law regularly coordinates with a client's existing accountant.
Do you serve all of Canada?
Yes. Barrett Tax Law represents clients across Canada. We have offices and local phone lines in Toronto, Calgary, Edmonton, Fort McMurray, Ottawa, Vancouver, and Winnipeg, plus a national toll-free line at 1-877-882-9829.
Who is Barrett Tax Law and what areas does the firm handle?
Barrett Tax Law is a Canadian boutique tax law firm that represents individuals and businesses in their dealings with the Canada Revenue Agency. The firm's work spans CRA audits and disputes, voluntary disclosures, Tax Court of Canada litigation, collections matters, and corporate and estate tax planning.
The firm was founded in 2009 and has represented many thousands of clients across Canada. Its head office is in Concord, Ontario (Vaughan), and it serves clients nationwide. You can reach the firm toll-free at 1-877-882-9829 (1-877-8-TAXTAX).
Most matters qualify for a free, no-obligation consultation, and most are quoted on a fixed-fee basis once scope is understood, so the cost is known before work begins.
What does a tax lawyer do that an accountant cannot?
Accountants prepare returns and financial statements. Tax lawyers represent you when those returns are challenged, audited, or prosecuted — and our communications are protected by solicitor–client privilege, which accountant communications generally are not.
What should I do if I receive a letter from the CRA?
First, identify what the letter is and what it requires. A CRA letter may open an audit, ask for documents, propose adjustments (a proposal letter), confirm a reassessment, or start collection action — and each carries its own deadline and its own implications. Note any date by which a response is required.
Do not ignore it, and be careful about responding off the cuff. What you say and produce can shape your later objection and appeal position, and casual admissions can be difficult to undo. If the letter proposes adjustments or penalties, or if significant amounts are involved, get advice before responding.
A free consultation can help you understand the letter, the deadline, and the right next step. Acting early — while options are still open — is usually far better than waiting until a deadline is near.
Will the CRA criminally prosecute me?
Most CRA disputes are civil. Criminal prosecution is reserved for serious tax evasion or fraud, usually involving deliberate misrepresentation. If you have unreported income, a voluntary disclosure is one of the standard ways to reduce criminal-prosecution risk.
Is the first consultation really free?
Yes. Most matters qualify for a free, no-obligation consultation with an experienced tax lawyer. The consultation is a chance to describe your situation, get a clear sense of the options and likely path, and receive a fee structure in writing before you commit to anything.
You can reach the firm toll-free at 1-877-882-9829 (1-877-8-TAXTAX) to arrange a confidential consultation. The head office is in Concord, Ontario (Vaughan), and the firm serves clients across Canada.
Are my communications with a tax lawyer confidential?
Yes. Communications between you and your lawyer for the purpose of obtaining legal advice are generally protected by solicitor-client privilege, one of the most strongly protected confidences in Canadian law. In practical terms, the CRA generally cannot compel disclosure of privileged communications.
This is an important difference from working with an accountant or other non-lawyer representative, whose communications and working papers can generally be demanded by the CRA. Where the facts are sensitive — unreported income, offshore assets, or potential penalties — that protection can be significant.
Privilege has limits and can be waived inadvertently, so it should be handled with care. A consultation can explain how privilege applies to your particular situation.
How fast can you start on my case?
We typically begin work within 24 hours of being retained. For audit deadlines, Notices of Objection, and other time-sensitive matters, we move immediately.
What if I have unfiled tax returns from many years ago?
We routinely handle 5+ years of unfiled returns. Through the Voluntary Disclosures Program — applied for before the CRA contacts you — we can usually eliminate gross-negligence penalties and limit interest exposure.