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.
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.
📥 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.
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