Top Ten Year End Tax Planning Tips
Although directed to ‘year end’, these tips are valuable considerations for this upcoming income tax time. In these recommendations, author Evelyn Jacks; offers strategies for now and all year long.
1. Tax Loss/Tax Gain Selling May Make Sense. Generate losers to offset capital gains in the year; carry back losses generate capital gains to use up exempt gains balances.
2. Contribute to your RRSP. 90% of Canadians fail to top up their RRSP contribution room. It pays to remind yourself all year long that double-digit returns result from the tax savings.
3. Maximize Your Tax Deductions. Taxpayers chronically under-report eligible deductions, including moving expenses, childcare expenses, employment deductions, and carrying charges.
4. Adjust Prior Errors and Omissions. If you find that you missed a tax deduction or credit, you can adjust most federal provisions under CRA’s Fairness Package all the way back to 1985.
5. File Returns with a Family View. There are many ways to do a tax return mathematically correctly. Your goal should be to file the family’s tax returns to the best benefit of the household.
6. Transfer Non-Refundable Tax Credits Amongst Family Members. There are two formal transfer provisions relating to certain non-refundable tax credits and their use within the family.
7. File Returns for Minors. If you have a child age 18 who has little or no income, be sure to file a tax return…to generate a GST rebate in the quarter after the child turns 19, and RRSP room later.
8. Minimize Taxes on Self-Employed Earnings. Proprietors should be sure to fill up the gas tank, buy office supplies, reward special clients with gifts or pay year end bonuses to staff – all before December 31 to reap tax benefits.
9. Reduce Tax Withholding On Next Year’s Employment Earnings. Contrary to their popularity, refunds are not a good thing! An average tax refund of $1000 a year should have been working for you all year long.
10. File Family Tax Returns on Time to Avoid Late Filing Charges. For individuals, the deadline is April 30, for proprietorships it is June 15. But proprietors should stick to filing by midnight April 30.
This information is used with the permission of Knowledge Bureau Inc. For more information go to www.knowledgebureau.com.