This is an additional cost that is above and above your required tax payment if you are borrowing money to pay your taxes. Tax scheduling vehicles are registered retirement savings plans and related accounts such as RESPs and RRIFs. In the year in which you take money out of the tax shelter, you will get a tax deduction immediately and pay taxes later. Keep in mind that when you put money into the tax shelter, your tax situation can be different than when you take money out. At both times, the tax code itself may be different as well. This is difficult to plan, but it is usually assumed that as time goes by, taxes will increase. Have a look at Tax Shark for more info on this. When your revenue is at its highest, the ideal scenario is to contribute to an RRSP, and withdraw it when your revenue is at its lowest. This would translate into the largest deposit deduction and the lowest tax burden upon withdrawal. The amount of taxes you pay within the tax year can also affect the frequency of your withdrawal. The larger the withdrawals from the lump sum, the greater the rate of taxes charged in advance. The taxes payable will be adjusted to the same amount at the end of the tax year, irrespective of this initial deduction. However, you can either pay the tax guy in advance throughout the year or pay the tax guy more at the end of the year. If you can generate a return within the tax year, delay the payment of the tax as long as you can and generate that additional income.Generally speaking, the tax code in Canada looks at three types of income. These are income, dividends, and capital gains (operating as an employee and interest earned on guaranteed securities fits here). Three different levels of risk are represented by these three buckets, and so there are three different sets of rules for each.