T-SWP: How To Draw Tax-Efficient Income From Your Investments
What is a T-SWP?
T-SWP is an acronym for Tax (Smart) Systematic Withdrawal Program. This program allows you to draw consistent, monthly income from your non-registered investments
while minimizing the taxes paid on this income for the coming tax year.
The T-SWP allows you to withdraw your own invested capital from your investments at monthly intervals without accessing your investment profits (which would be taxable). All RoC (Return of Capital) income is not taxable on your yearly tax return. Capital gains, interest, and dividend returns are held internally in your investment and are taxed upon their eventual redemption.
When using T-SWP under the Corporate Class mutual fund structure, these accrued investment gains can be converted to the most tax efficient form of taxable income
upon redemption: capital gains, further increasing the tax efficiency of this cash flow strategy by taking advantage of Canada Revenue’s 50% capital gains inclusion rate.
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