If you're earning over $150,000 a year as a salaried employee in Ontario, you've probably had this thought more than once:
"I work hard, but it feels like too much of my income disappears to taxes."
As an executive or high-income employee, you may assume there's very little you can do because you don't own a business.
That's one of the biggest myths I hear.
After working with high-income professionals preparing for retirement, I've found that the problem usually isn't that they're missing one magical tax deduction. The problem is that they're looking at taxes one year at a time instead of planning over the next 30 or 40 years.
The goal shouldn't be to pay the least tax this year.
The goal is to pay the least amount of tax over your lifetime while maximizing the amount of after-tax wealth you and your family keep.
That requires integrating tax planning, investment management, retirement planning, and estate planning—not treating each one separately.
Who Is This Article For?
This article is written for Ontario residents who:
Are between 40 and 55 years old.
Earn $150,000 or more as a salaried employee.
Work as executives or senior professionals.
Do not have a defined benefit pension.
Have accumulated at least $250,000 in RRSPs, TFSAs, or non-registered investments.
Want to reduce taxes today without creating larger tax problems in retirement.
If that sounds like you, keep reading.
The Biggest Tax Mistakes I See High-Income Employees Make
Over the years, I've noticed the same mistakes appear again and again.
1. Waiting Too Long to Start Tax Planning
Many people believe tax planning starts a few years before retirement.
In reality, many of the best opportunities exist while you're still earning a high income.
The earlier you begin, the more options you have.
2. Assuming RRSPs Solve Everything
RRSPs are excellent.
But they're only one tool.
Every dollar withdrawn from an RRSP is generally taxable as ordinary income. If most of your retirement assets are inside registered accounts, you may have less flexibility controlling taxable income later.
A retirement plan built entirely around RRSP contributions isn't necessarily a tax-efficient retirement plan.
3. Ignoring Tax Efficiency in Non-Registered Investments
Many investors focus exclusively on returns.
Very few ask:
How will this investment be taxed?
When will taxes be paid?
Can I control when taxable income is recognized?
Those questions often matter just as much as investment performance.
4. Not Planning for Bonuses, RSUs, or Stock Compensation
Large bonuses and stock-based compensation can push income into higher tax brackets.
Without planning, you may end up paying considerably more tax than necessary.
Planning before compensation is received often creates more opportunities than trying to fix things afterward.
5. Thinking Retirement Will Automatically Mean Lower Taxes
This surprises many people.
Retirement doesn't automatically equal a low tax bill.
If your retirement income comes from RRSP withdrawals, government benefits, investment income, and required minimum withdrawals later in life, your tax bill may remain much higher than expected.
That's why retirement tax planning should begin long before retirement.
A Different Way to Think About Tax Planning
One belief guides every recommendation I make:
Investment returns matter.
But after-tax income matters more.
Two people can earn exactly the same investment return.
The person who pays less tax over their lifetime often ends up with significantly more wealth.
That's why tax planning shouldn't focus on April.
It should focus on the next 30 years.
A Real Client Example
One client came to me in his early 40s.
He earned more than $250,000 annually as an executive.
Like many successful professionals, he had done an excellent job investing.
What he hadn't done was build a tax strategy.
His primary concerns were:
Paying too much tax today.
Paying too much tax during retirement.
Leaving assets efficiently to the next generation.
His investments were performing well, but almost every conversation revolved around investment returns.
Very little attention had been given to lifetime tax planning.
After reviewing his goals, we developed an integrated strategy that aligned his tax planning, investment strategy, retirement income planning, and estate objectives.
The result wasn't simply lower taxes today.
It also improved retirement flexibility, created additional tax planning opportunities, diversified future income sources, and increased the tax-efficient transfer of wealth to his beneficiaries.
For him, success wasn't measured by this year's refund.
It was measured by improving after-tax wealth over decades.
Three Strategies Worth Exploring
Not every strategy fits every investor.
Your income, risk tolerance, borrowing capacity, investment experience, and long-term goals all matter.
However, these are three areas I frequently evaluate with high-income salaried employees.
1. Borrow to Invest
For some high-income individuals, borrowing to invest can create meaningful long-term tax benefits.
Because interest on money borrowed for eligible investment purposes may be tax deductible, this strategy can improve after-tax outcomes when implemented appropriately.
Depending on the type of investments you have in the non-registered account, it may also provide flexibility by allowing investors to:
Sell investments if needed : taxable (potential capital gains or loss)
Withdraw return of capital where applicable : non-taxable
Borrow against investments instead of liquidating assets in certain circumstances : non-taxable
Borrowing increases both potential gains and potential losses, so this strategy is not appropriate for everyone. It requires careful cash-flow analysis and risk management.
2. A Personal Insured Finance Arrangement (IFA)
For clients who are also concerned about estate planning, a Personal Insured Finance Arrangement may provide additional planning opportunities.
Depending on the client's circumstances and applicable tax rules, this approach can combine permanent participating life insurance with borrowing strategies to potentially:
Improve tax efficiency.
Create additional deductions where available.
Increase estate value through the insurance death benefit.
Expand retirement income flexibility by using the policy as collateral in certain circumstances.
This is an advanced planning strategy suitable only for select high-net-worth individuals and should always be designed with experienced tax, legal, and financial professionals.
3. Build Tax Diversification
Many investors diversify their investments.
Far fewer diversify their future tax bill.
A retirement portfolio with assets spread across different account types—such as registered and non-registered accounts, along with other appropriately structured assets—can provide greater flexibility when deciding where retirement income comes from each year.
That flexibility can make a significant difference over a 25- or 30-year retirement.
Questions I Ask Before Recommending Any Strategy
Whenever someone says,
"I'm paying too much tax,"
I don't immediately recommend a solution.
Instead, I ask questions such as:
What do you expect your income to look like over the next 10 years?
When would you like to retire?
How are your investments divided between registered and non-registered accounts?
Do you receive bonuses, RSUs, or stock options?
Do you intend to leave an inheritance?
What retirement income do you expect?
What tax bracket do you expect to be in after retirement?
The answers determine which strategies may be appropriate.
Tax planning should always begin with goals—not products.
Three Things You Should Do This Month
If you're serious about reducing taxes, start here.
1. Estimate Your Retirement Tax Bracket
Don't assume retirement automatically means lower taxes.
Estimate what your income could look like after you stop working.
You may be surprised.
2. Review How Your Money Can Be Withdrawn
Ask yourself:
Do my investments give me multiple ways to generate retirement income?
Or will every dollar come from highly taxable sources?
Flexibility creates planning opportunities.
3. Stress-Test Your Plan
Would your strategy still work if:
Markets were flat for several years?
Interest rates remained elevated?
You retired earlier than expected?
A strong plan should remain effective under a variety of economic conditions.
The Lesson I Wish Every High-Income Employee Learned at Age 40
By the time many people retire, their best tax planning opportunities are already behind them.
The decisions you make during your highest earning years often determine how much tax you'll pay for the rest of your life.
That's why tax planning shouldn't begin five years before retirement.
It should begin while your income is still high and your options are still wide open.
Final Thoughts
The smartest tax planning decision you can make isn't finding another deduction.
It's working with a financial planner who can coordinate your tax planning, investment management, retirement income strategy, and estate planning into one integrated plan.
When those four areas work together, you're not just trying to reduce this year's tax bill.
You're building a strategy designed to help you keep more of your wealth throughout retirement—and pass on more to the people who matter most.
If you're a high-income salaried employee in Ontario and you're wondering whether your current strategy is truly optimized, the best time to review it isn't after you retire.
It's now, while you still have the greatest number of planning opportunities available.
If live in Ontario and your T4 income is more then $150,000 you should consider exploring advanced tax, retirement, and estate planning strategies. Click on "See if we are a fit" to book an introductoy session.