DEAR READER: Looking for a private school?



  • Virtual School Expo: Meet top-ranked schools and get exclusive access to admissions officers 
  • Parent Q&A Roundtables: Get current parents and alumni's honest perspective on each school
  • Consultations & Tours: Gauge the suitability of each school and get a closer look at school life

On now. Space is limited, don't miss out.

Are you considering Private School?

On now! Get free access:

  • Virtual School Expo: Meet top-ranked schools
  • Parent Q&A Roundtables: Hear from current parents and alumni
  • Consultations & Tours: Gauge the suitability of each school

Space is limited, don't miss out.

Yes, I want free access

Want an insider's perspective on schools?

Take 90 seconds now, and we'll give you free access to the Private School Admissions Pathway, a sequence of virtual events and your own personalized portal to manage your school research and improve your admissions prospects. You'll receive:

Only available Oct 3-24th. Don't miss out.

Yes, I want free access >
Register for Admissions Pathway

Using a family trust to finance your child's education

Find a list of schools

Family trusts have been used for generations to hold wealth and property for children and grandchildren. A lesser-known benefit of family trusts: they can also be used to finance your children's education in a tax-efficient manner.


Paying for Your Child's Education with Family Trusts
Photo Courtesy of St. Clement's School - Tobi Asmoucha

Bill Steele, a 44-year-old business-owner and Chartered Accountant, took the advice of Alan Stewart, his Investment Advisor, to create a family trust as a means to pay for his two children to attend an independent school.

Virtual Private School Expo: Oct 3, 2020   Recommended

Answers to all your private school questions. Hear from current parents and recent graduates, get advice from education experts and speak with admissions teams from top schools.
One day only. Don't miss out.


Register for free access

"The RBC Dominion Securities Family Trust is a fully documented trust that allows Canadians to save taxes by earning investment income and capital gains in the hands of children or grandchildren who pay little or no taxes," explains Stewart, an Investment Advisor and Financial Planner with RBC Dominion Securities. "Every child or grandchild in Canada who has no other income can earn up to a certain amount of investment income tax-free every year. The Family Trust can be established to take advantage of this annual opportunity while still providing the parent, in certain circumstances, with control over the monies loaned to the trust."

The strategy of diverting income to your children or grandchildren through a trust is possible because every person in Canada, regardless of age, can earn about $10,000 in interest income, $20,000 in capital gains or $50,000 in eligible dividends a year before they are required to pay any income tax (Ontario). Children are unlikely to have any additional income, so any investment income and capital gains earned in a Family Trust can be distributed to the children and will likely be tax-free in their hands.

Paying for Your Child's Education
Photo Courtesy of Trillium School - Stan Behal

"Basically, we set up a trust and lend the money to it at the current CRA prescribed rate of 1%. The rate is fixed for the life of the loan, regardless if interest rates rise. The income earned on the investments can then be used to pay for private school tuition or for other endeavours that benefit our kids, such as tutoring, music lessons and sports fees," says Steele.

Families can use a lawyer to set up a trust, but RBC Dominion Securities offers an "off-the-shelf product" that clients can use instead –a template for setting it up where all the legal work has already been done.

"For our family, this financial strategy will not only reduce our tax burden, but it will benefit our children," says Steele.

There are other options available to families when deciding how to afford a quality education, including:

To learn more about family trusts or what options may be best for your family, please consult with your legal or tax advisor, or contact Alan Stewart* at [email protected] For more information about independent schools visit www.educationoakville.com.

There are three major benefits of setting up this Family Trust:

1. Tax savings.

Assuming your child or grandchild has no other income, in certain provinces they can earn up to approximately $10,000 of interest income, $20,000 of capital gains, or $50,000 of dividends from Canadian public companies eligible dividends tax-free every year due to their basic personal tax exemption.

2. Access to capital.

The parent or grandparent can loan monies to the Family Trust so they will never lose access to the loan capital.

3. Fund children's expenses.

The investment income earned in the trust can be used to pay for expenses that directly benefit the child or grandchild (e.g. private school tuition, post-secondary education costs, lessons, camps, etc).

—Heather Hwang
*Alan Stewart is an Investment Advisor with RBC Dominion Securities Inc. Member-Canadian Investor Protection Fund.
Advertisement
Find Private Schools:

In the spotlight:

Latest Articles


September 15, 2020
What's the right type of school for an anxious student?
Exploring your anxious child’s potential fit in 10 different school types

September 15, 2020
What's the right type of school for a child with ADHD?
Exploring an ADHD child’s potential fit in 10 different school types

September 15, 2020
What's the right type of school for a child with autism?
Exploring your autistic child’s potential fit in 10 different school types

September 15, 2020
What's the right type of school for a student with dyslexia?
Exploring a dyslexic child’s potential fit in 10 different school types

September 14, 2020
Bilingual Polish-English schools in Canada
Private schools that teach Polish and English
Our Kids The Trusted Source
Our Kids The Trusted Source

By logging in or creating an account, you agree to Our Kids' Terms and Conditions. Information presented on this page may be paid advertising provided by the advertisers [schools/camps/programs] and is not warranted or guaranteed by OurKids.net or its associated websites. By using this website, creating or logging into an Our Kids account, you agree to Our Kids' Terms and Conditions. Please also see our Privacy Policy. Our Kids ™ © 2020 All right reserved.

Sign up to receive our exclusive eNews twice a month.

You can withdraw consent by unsubscribing anytime.

Name
Email
verification image, type it in the box
Our Kids From Our Kids, Canada’s trusted source for private schools, camps, and extracurriculars.