If you can’t beat them…
For most people, taxes are simply a fact of life. You earn more, you pay more. But the world’s wealthiest individuals often operate under a different set of financial principles.
It’s not because they’re breaking the law. In most cases, they’re taking advantage of tax rules that governments intentionally created to encourage investment, entrepreneurship, charitable giving and long-term wealth creation.
The surprising truth is that many of these strategies aren’t reserved for billionaires. While you may not own a private jet or a multinational corporation, you can begin adopting some of the same principles to legally reduce your tax bill and build wealth.
Here are seven strategies the ultra-rich use—and how you can begin applying them.
-
They Earn More From Investments Than From Salaries
How the rich do it:
The wealthy understand one simple truth: earned income is often taxed more heavily than investment income.
Canada’s 2026 federal income tax brackets range from 14% to over 33%. But long-term capital gains and qualified dividends are taxed at 0%, 15%, or 20% at most.
The same holds in most parts of the world, even in less developed countries. Salaries are easy targets for taxes
Instead of relying primarily on salaries, the rich build portfolios of stocks, real estate, private businesses and other investments that may receive more favorable tax treatment, depending on the jurisdiction.
So instead of taking a $200,000 salary, a founder pays themselves $1,000 or less and lives off stock gains.
For example, Chip Wilson — the Lululemon founder — has structured much of his wealth around share ownership rather than salary.
He has also used charitable donations of shares as part of his philanthropy; Canada provides special tax treatment for qualifying donations of publicly traded securities
How you can join them:
Start investing consistently, even with modest amounts. Build assets that can generate dividends, capital gains or rental income over time rather than relying solely on your paycheck.
-
They Delay Taxes Whenever Possible
One of the greatest financial advantages isn’t avoiding taxes—it’s postponing them.
Money that remains invested continues to compound. The longer taxes can be deferred, the longer that money continues working for you.
This explains why many wealthy investors avoid selling appreciating assets unless necessary.
What you can do:
Take advantage of retirement accounts and other tax-deferred investment vehicles available in your country. Think long term instead of constantly buying and selling investments.
-
They Own Businesses and Get Business Tax Deductions
How the rich do it:
Business owners can deduct expenses before tax: travel, vehicles, home office, health insurance, meals. A regular employee can’t.
Governments frequently encourage entrepreneurship through tax incentives because businesses create jobs and economic growth.
Check with your accountant or CRA on the list.
How you can join them:
Start a side business. Freelancing, consulting, e-commerce, content creation — all qualify.
Keep receipts. A legitimate business lets you deduct tools, internet, education, and more.
Legitimate business expenses—such as office costs, travel directly related to business, equipment, professional services and employee benefits—may reduce taxable income.
-
They Give to Charity— Strategically
How the rich do it
The ultra-rich don’t just donate because it’s generous—they donate because it’s smart.
Canada and most other countries provide tax incentives for charitable giving. Wealthy families often establish donor-advised funds, private foundations or charitable trusts that allow them to support causes they care about while receiving legitimate tax benefits.
In some cases, they can donate appreciated assets instead of cash, avoiding capital gains taxes while claiming a charitable deduction where permitted.
Warren Buffett has famously kept much of his fortune invested in Berkshire Hathaway rather than taking it as personal income. He has also donated enormous amounts of Berkshire stock to charitable foundations, including nearly $6 billion in 2026.
How you can join them:
Support charities you genuinely believe in and understand the tax benefits. Keep accurate records and consult a tax professional to maximize any eligible deductions.
Generosity not only feels good — it also pays.
-
Use “Buy, Borrow, Die” —They Borrow Instead of Selling Assets
How the rich do it:
Instead of selling stock and paying capital gains tax, they borrow against appreciating assets it. Loans aren’t taxed. When they pass away, assets get a “stepped-up basis” so heirs don’t owe gains tax on decades of growth.
How you can join them:
You can’t borrow millions against Tesla stock tomorrow. But you can use the principle: avoid selling and triggering taxes. Use a HELOC on rental property, or hold investments long-term.
Talk to a financial advisor about securities-backed lending once your portfolio grows.
This approach requires substantial assets and carries financial risks, making it unsuitable for many investors, but it illustrates an important principle.
-
They Max out Tax-Advantaged Accounts
How the rich do it:
The ultra-rich rarely ignore tax incentives.
They maximize retirement plans, education savings accounts, health savings vehicles and other government-approved programs that reduce taxes or allow investments to grow more efficiently.
How you can join them
Start with what you can access:
- TFSA: 7,000 room in 2026. Grows 100% tax-free forever.
- RRSP: Deduct contributions now, pay tax later in retirement when rate is lower.
- FHSA: $8,000/year for first home. Deductible going in, tax-free coming out.
- RESP: 20% CESG grant from the government.
Review every tax-advantaged savings or investment account available where you live and contribute consistently whenever possible.
Many people lose thousands each year simply because they don’t use benefits that already exist.
-
They Use Trusts and Estate Planning to Protect Generational Wealth
How the rich do it:
The wealthy think beyond this year’s tax return.
They use trusts, estate planning, insurance strategies and charitable giving to preserve wealth across generations while supporting causes they care about.
Good planning helps reduce unnecessary taxes and prevents family wealth from being lost through poor succession planning.
How you can join them:
You don’t need a complex trust. A simple will, beneficiary designations, and a basic trust can protect assets and reduce probate. As your net worth grows, an estate attorney can help with more advanced tools.
The Biggest Difference Isn’t Income—It’s Strategy
Many people assume the rich pay less tax because they have better accountants.
The reality is more nuanced.
They structure their finances differently.
Employees are paid first and taxed almost immediately. Investors and business owners often build systems that allow their money to grow more efficiently before taxes are due, while staying within the law.
Final Thoughts
You don’t need to become a billionaire before you begin thinking like one.
Remember, the goal isn’t to avoid taxes illegally. It’s to understand the rules well enough to pay no more than the law requires while building lasting wealth.
Because the biggest tax advantage isn’t being rich.
It’s learning how wealth is built.
