Your Family Can Save 12K A Year Through This Tax Strategy
How Canada's 3% prescribed-rate trust strategy can legally shift investment income to children – but new AMT rules may now reduce or even reverse the tax savings.
📥 Free resources from this episode
Prescribed Rate Loan Family Trust – Tax Savings Model
The Advisors TablePrescribed Rate Loan Family Trust – Tax Savings Model
A detailed calculator showing how Canada's 3% prescribed-rate trust strategy can save – or lose – families thousands under the new AMT rules.
Show Notes
There's a strategy high-income families in Canada have used for years to legally shift investment income to their kids – kids who pay almost zero tax.
And it all starts with a 3% loan.
But after recent tax rule changes, the same strategy that once created major tax savings can now actually backfire depending on what the trust invests in.
In This Solo, We Cover:
• How prescribed-rate family trust strategies work
• Why the 3% CRA prescribed rate matters
• The January 30 deadline that can destroy the structure
• How income gets shifted to kids in lower tax brackets
• Why interest income still creates major tax savings
• How new AMT rules changed the math on capital gains
• The investment scenario where the strategy can actually cost you money
We also built a full model comparing interest income, dividends, capital gains, and mixed portfolios – and the results may surprise you.
This isn't a loophole.
It's built directly into Canadian tax law.
But if the structure, paperwork, or investments are handled incorrectly, CRA can unwind the entire strategy.
📝 Related Articles
Do You Need A Holding Company In Canada? The 5 Signs
A holding company can save hundreds of thousands in tax – or add needless complexity. Learn the five signs it makes sense, from surplus cash and investments to asset protection and business sales.
Will vs. Trust: Which One Actually Controls Your Assets In Canada?
Most Canadians think their will controls everything they own – but beneficiary designations, joint ownership, probate, and tax rules often determine where assets actually go.
How To Get Paid By US Clients Through A Canadian Corporation (2026 Guide)
W-8BEN-E, HST, salary vs dividends, and personal services business risk: how Canadian corporations can bill US clients without expensive mistakes.
🎬 More Episodes
SoloHow To Get Paid By US Clients (Canadian Corp)
How Canadian corporations billing US clients can face 30% withholding, HST issues, and PSB reclassification – and the key factors CRA uses to assess the relationship.
- US Tax
- Cross-Border
- Corporate Tax
SoloFamily Trusts Explained: Why The Wealthy Never Gift Their Kids Anything
Why wealthy Canadian families never put assets in their kids' names, how a family trust actually works, and the timing decision worth $1.3 million.
- Family Trust
- Trust Planning
- Income Splitting
SoloDo You Actually Need A Holding Company?
How a holding company can reduce taxes, protect assets, and improve long-term planning for some Canadians – while creating unnecessary cost and complexity for others.
- Holdco Structure
- Corporate Tax
- Professional Corporations
SoloCRA Takes 54% Of Your RRSP When You Die (Unless You Do This)
How a $1 million RRSP can create a $500,000+ tax bill at death – and the little-known planning strategy that may help families keep far more of their wealth.
- RRSP
- Retirement Planning
- Beneficiary Designations
SoloEstate Planning Explained: Will vs. Trust In Canada
How wills, beneficiary designations, joint ownership, and trusts actually control your assets in Canada – and why many families discover critical estate planning gaps only after a crisis occurs.
- Estate Planning
- Wills & Estates
- Trust Planning
SoloThe Airbnb Tax Nobody Knows About
How Airbnb income can quietly transform your home into a taxable commercial property – triggering unexpected HST, loss of principal residence treatment, and massive tax exposure on sale.
- Real Estate
- Capital Gains
- Tax Compliance
Senior Tax Manager · Tax Manager
Two ways in: the groundwork under our advisory files, or a senior seat with a defined path to Manager.