"Year End Tax Planning Can Save You Money" :CRA SOTW
Alan Baggett
The Canadian Press - ONLINE EDITION
Year-end tax planning can save you money
By: Talbot Boggs
(Special) - The end of the calendar year often is the time when many
Canadians start to think about making resolutions they hope to keep in
the New Year. But it's also a great time to do a little a little tax
planning that can help you reduce your tax bills and get your
investment portfolios in shape for the coming year.
"(Now) is the ideal time to look over your tax strategy in order to
make the necessary adjustments before Dec. 31," says Carol Bezaire,
vice-president of tax and estate planning at Mackenzie Financial.
Bezaire suggests Canadians review the following year-end tax
checklist to maximize their tax planning.
The first thing to do is to pay all items that qualify for tax
breaks, such as tuition fees, medical expenses, child care bills,
child support payments, and tax-deductible feels for legal, accounting
and other service. Most financial and investment transactions that
qualify for credits or deductions on your 2009 tax return also must be
made before Dec. 31.
Make all your political and charitable donations, because there are a
number of ways to benefit from them on your tax bill. There is a 15-
per-cent tax credit for the first $200 donated within a tax year, and
that jumps to 29% for everything over that. Also accrued capital gains
on securities are not taxed if those securities are donated to a
charity. If you are planning to make a donation, do it before Dec. 31
to qualify it toward your 2009 tax bill.
If you've had some losing investments and you think there's little
hope they will come back, consider selling them before the end of the
year. "You can use the capital loss to offset capital gains earned
during the current tax year or in previous years," says Bezaire.
"Selling investments also gives you a chance to rebalance your
portfolio to make the most of your investments in 2010. But remember,
you must sell Canadian stocks and many other securities at least three
business days before year-end so the transaction's settlement date
occurs by Dec. 31.
Pay any outstanding income taxes. For people who are required to
remit quarterly income tax installments to the Canada Revenue Agency,
Dec. 15 is the deadline for the last payment of 2009. If you don't pay
on time you could face penalties and interest.
If you contribute to a Registered Education Savings Plan (RESP) on
behalf of a child or grandchild, making the contribution before
year's end will ensure the plan qualifies for the annual Canada
Education Savings Grant. You're entitled to 20 per cent on your yearly
contribution to a maximum of $500. That grant adjusts even higher for
families with incomes below $38,832.
If you turn 71 before Dec. 31, 2009, you're required by law to wind
up your Registered Retirement Savings Plans (RRSP). For most Canadians
this means rolling over their RRSP into a Registered Retirement Income
Fund (RRIF). But you should get started early many financial
institutions require your transfer instructions at least a month
before year's end. If you miss the deadline, the entire amount of your
RRSP could be considered income and taxed accordingly.
If you can, do those last minute home renovations to take advantage of
the federal Home Renovation Tax Credit, which offers Canadians a 15
per cent non-refundable tax credit for eligible renovation expenses.
The credit applies to any amounts spent over $1,000, up to a maximum
of $10,000, producing a maximum credit of $1,350. But time is running
out, the credit only applies to costs up to Feb. 1, 2010.
"There may be more you can do to cut your tax bill and fine tune your
finances," says Bezaire. "It's a good idea to speak to your
investment representative before the end of the year about your tax
and financial strategy. And be sure to ask about any changes in tax
rules that might affect you."
Talbot Boggs is a Toronto-based business communications professional
who has worked with national news organizations, magazines and
corporations in the finance, retail, manufacturing and other
industrial sectors. (boggsyourmo...@rogers.com)
Copyright 2010 Talbot Boggs
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