Time is now to get a head start on year-end tax planning

Year-end investment decisions can result in substantial tax savings.

Year-end investment decisions can result in substantial tax savings.

Now is the time prior to Dec 31, 2011, to get your financial record keeping in order.

Dec. 31 is the deadline for clients who turn age 71 this year to convert your RRSP to a RRIF.

If you have a younger spouse, and your goal is to keep your RRIF income paid at the lowest mandatory RRIF payment amount, choose to have your RRIF payments based on the age of your younger spouse.

You also have only until Dec. 31 to make your last RRSP contribution.

If you have a spouse or partner who is under age 72, you can contribute to a spousal RRSP, providing contribution room is available.

If your income is lower in pre-retirement, you may choose to decide to take additional income from your RRSP or your RRIF in a year when your income is lower.  These are effective tax planning strategies.

For individuals over age 65, ensure $2,000 retirement income qualifies as pension income so you can claim the maximum pension credit.

It is a nice financial bonus to receive $2,000 income per year and offset it with this pension credit. Pension income can be split for tax efficiency. CPP (Canada Pension Plan) should be split to equal income with your spouse.  This is done at the CPP office.

You can minimize overall taxes by shifting income to family members in lower tax brackets.

Sell securities with accrued losses before year end to offset capital gains realized in the current year or previous three years. With capital gains, sell in years when your income is lower as a tax planning strategy.

Use corporate class funds every year to avoid the annual taxation on funds and stocks. Don’t give away your gains each year to Canada Revenue Agency.

Keep your receipts to verify your expenses.  CRA can ask for proof to back up your annual electronic filing submissions.

The TFSA (Tax Free Savings Account) is a valuable tax free savings account.

Unfortunately many Canadians hold low paying interest paying accounts that pay one per cent  annually.

This is a good time to review what is held in your TFSA, to ensure you maximize the tax efficiency offered within your TFSA. In order to deduct any investment related expenses, they must be paid before Dec. 31.

Tax deductible expenses include: interest paid on money borrowed for investing, investment counseling fees for non-registered accounts, professional accounting services for business or rental income, and safety deposit box rental fees.

Giving to charity can reduce your tax bill.  You can choose to donate to a registered charity of your choice.

Gifting publicly traded securities, including mutual funds, with accrued capital gains to a registered charity or a private foundation will provide you with a tax receipt and also will eliminate any capital gain tax.

Before we get too caught up in the spirit of the holidays, spend some time reviewing your year end tax planning strategies. Canadians pay too much tax throughout their lifetime. Make sure you do your year-end tax planning before Dec. 31.

Doreen Smith is a CFP with Capri Wealth Management Inc.






Just Posted

Your Saturday story catch-up

Every Saturday, read our popular stories from the week

Friends of Gable Beach concerned with District of Lake Country’s proposal

Carr’s Landing residents oppose the district’s latest solution to Gable Beach

Greyhound stop in Oyama gets cut

Expanded regional transit replacement option for Lake Country

Heavy snowfall for Coquihalla

Kelowna - Snowfall is expected to continue on the highway until Sunday

Lake Country budget approved

Lake Country’s 2018 Operating and Capital Budget was approved Tuesday night

President praises nearly 1,800 volunteers at B.C. Games

Ashley Wadhwani sits down with the Kamloops 2018 B.C. Winter Games President Niki Remesz

How to keep local news visible in your Facebook feed

Facebook has changed the news feed to emphasize personal connections. You might see less news.

The way government learn someone has died is getting a digital overhaul

Governments in Canada turned to private consultants 2 years ago to offer blueprint

Bobsleigh team misses Olympic medal finish

Canadian team finishes four-man event 0.84 seconds behind first place, 0.31 seconds from podium

A most delicious competition at the Mall at Piccadilly

Salmon Arm hosts the Best of the Shuswap Pie Baking Contest

B.C. Games: Athletes talk Team Canada at PyeongChang 2018

From Andi Naudie to Evan McEachran there’s an Olympian for every athlete to look up to

Snowboarders sliding into fresh territory at B.C. Games

Athletes hit the slopes for first appearance as an event at the B.C. Winter Games in Kamloops

Looking back at the 1979 B.C. Games: Good memories, even better jackets

39 years later, Kamloops is hosting the Winter Games again, with some volunteers returning

OLYMPICS 101: Oldest and youngest Canadians to reach the podium

This year, Canada sent its most athletes in Winter Games history, here’s a look at record breakers

Most Read