Can You Shield Profits From Being Taxed When the Investments Are Not Made Through a TFSA?

Investments and purchases that are tax-deductible are great examples of tax shields. I will break down a few examples of such shields shortly, so a new investor can quickly get the bigger picture.

Restrictions and Limitations

Individuals and organizations can deduct charitable contributions, but there are still some fixed restrictions and limitations. Once profits are acquired, an individual must itemize deductions to obtain a reasonable tax deduction. Corporations can still receive this, but as mentioned before, there are tightly placed regulations that are relatively hard to overcome.

Tax Shelters

Mortage

If you're looking for a safe option, keep in mind that a mortgage is widely considered a traditional tax shelter. However, it's important to note that the interest costs are deductible, not the mortgage payment amount.

Purchases of commercial property, such as buying equipment, furniture, fixtures, and automobiles, can also be tax-deductible.

Depreciation

Investors who are regularly getting profits from investments should take a look into depreciation. Accelerated depreciation allows you to deduct a more significant portion of an item in the first year or two, and it's a great tax shelter.

Conclusion

While it still depends on your preference, there are undoubtedly many ways to shield your profits from being taxed.