Although you don’t need to file your taxes until spring, there are some tax tips to help get you ready for the end of the year, and some potential strategies to help reduce or minimize your tax burden for 2015!
1. Tax credits – Organizing your eligible tax credits such as:-charitable donations, kids’ sports and arts payments, transit passes, education and healthcare expenses
2. Tax Loss Selling – if you have equity losses (usually stocks and bonds) outside of your RRSP or TFSA, you should consider tax-loss selling. These losses can be offset against any capital gains that you have accrued throughout the year to help reduce tax payable. These can be offset against capital gains going back three years or forward indefinitely. **REMEMBER** If you want to buy back the same stock, you should not buy it back within 30 days otherwise it will be considered a ‘superficial loss’ and not a ‘capital loss’. Remember to do this by the end of the year, which is typically Dec 24th for Canadian equities and Dec 28th for US equities.
3. Some employees get year end or Christmas bonuses. – While these bonuses are great to help with the increased costs of the holiday season, they are fully taxable (if tax has not been deducted at source, which it is often not). Consider putting that bonus directly into your RRSP. It will offset the tax and give you a retirement ‘boost’ at the same time!
4. Pay attention to those TFSA’s!! – Although the limits have decreased, there is still a considerable amount of contribution room available, especially if you have not utilized the TFSA yet. January 1st brings a total contribution limit of $46,500. Any gains produced within the TFSA are tax exempt, which makes this account a very powerful tool for saving for retirement.
5. RRSP Loans – If you have room in your RRSP, you may want to consider an RRSP Loan. You can borrow from a banking institution at historically low interest rates with some favorable conditions. Most companies will defer the first payment up to 180 days which will allow you to make a ‘lump sum’ payment to the loan using your tax refund. Many institutions will give you an RRSP loan for as low as bank prime plus .75-1%. This is a GREAT way to catch up on your retirement savings. *REMEMBER*, leveraging (borrowing to invest) carries an additional risk, so make sure to speak to your TRUSTED SASKATOON qualified financial advisor or financial planner before you proceed!
I hope these tips are useful, if you have any questions or want to learn more about our financial services, investment & insurance products – please do not hesitate to contact me at any time, we’re here to help! 306-230-4897