Review our year end tax tips to discover a number of perfectly valid actions you may still be able to take before the end of the year to cut your taxes and to optimize your wealth management planning.
As tax planning specialists, we can help you decide exactly what to do, when to do it, and what not to do. Why overpay your taxes?
As you turned the calendar from November to December, you may have considered the year as good as done. Many business owners will spend the next few weeks reflecting on the last year and making plans for the upcoming year. But December should be a month of action – not merely a month of reflection and planning. December is the time to act on crucial year-end tax and wealth planning strategies and to optimize your plans using these year end tax tips.
Here are our top 9 year end tax tips to help you optimize your tax and wealth management plans for the year:
- Tax-loss selling. Even out accrued losses with capital gains by selling off investments that accrued losses throughout the year.
- Registered Savings Plans contributions. It is crucial to be aware of contribution deadlines and application deadlines for the various retirement and savings plans.
- Reviewing asset allocation. Specifically, reviewing allocation between non-registered investments and registered investments and ensuring that you do not have any prohibited investments.
- Contributing to Registered Education Savings Plans (RESPs) or Registered Disability Savings Plan (RDSPs). It is important to identify whether the maximum contribution has to be made in the current year or what part of that contribution can be carried over into future years.
- Ensuring certain payments are made by December 31. Charitable contributions and other expenses need to be paid by the end of the year to claim a tax deduction for that year. But also, prepayments and accelerated purchases of business assets can be made to claim all or at least part of the tax deduction in the current year.
- Get organized. Trying to find all your slips the day before the tax deadline is never a good thing. If you haven’t already started an envelope or folder to hold all your tax slips and receipts, then do so now. You can still procrastinate a little, but at least all your slips will be in one spot and you won’t miss claiming any.
- If you work in a business that usually pays year-end bonuses, be aware that an employer can generally give an employee gifts and awards worth $500 per year without triggering any tax consequences for the employee, providing it is a non-cash gift. Okay, it might seem a little strange to give an iPad or snowboard as a business gift, but keep in mind that the same $500 given in cash would be fully taxable.
- If you own your own business, it’s important to sit down with us and figure out the best combination of salary and dividends to pay yourself, because these two forms of income are taxed differently. Under certain circumstances, your spouse and children could also be part of the equation, and this could be an advantage if they are in a lower tax bracket (which is usually the case for children, at least).
- If you work for yourself or own a small business and you’re thinking of buying equipment, it’s advantageous to note that you can still claim half of the usual amortization in the current year, even if the equipment is acquired and put into service in the last few days of the year.