10 Year End Tax Planning Strategies

At Insightful Wealth Group we believe in “All Year Tax Planning”. In fact, during our regular reviews we investigate all opportunities to reduce a client’s present and future tax liabilities. However there may be something new or changing in your life and now is a great time to identify and review any such items.

Below are some of the strategies that can be utilized to help reduce taxes:

  1. Year End Tax Loss Selling – Involves selling stocks, bonds or mutual funds which are in a loss position prior to year end to offset similar investments which you have sold for a profit thereby reducing the taxes owing. Losses can be utilized to offset gains as far back as three years, and can carry forward indefinitely.
  2. Registered Plans – Making contributions to your RRSP, RESP and/or TFSA taking the time to see which is most prudent.
  3. Flow Thru Shares – Buying shares in certain Canadian resource companies entitles you to a deduction against your income and therefore you pay less income tax. While Flow Thru can be advantageous for some, they are high risk investments and therefore we must carefully decide whether they are best suited for your portfolio based on your risk tolerance and tax situation.**
  4. Allocating Pension Income to your Spouse – Income splitting rules allows you to allocate up to one half of eligible pension income (CPP, Company pension, RRIFs) to your spouse or common law partner. This results in a higher combined after tax income.
  5. Converting non-deductible interest – Selling some of your non-registered investments to pay off debt (loans, credit cards) then borrow* to repurchase investments at a later date. Interest paid on money borrowed to invest may be tax deductible.
  6. Estate Planning – When you die, there are tax liabilities on your assets. It is important to plan now to reduce the tax burden on your loved ones.
  7. Business Owners Compensation – Deciding how to be compensated - via salary or dividends. Besides taxes, there are many other aspects to consider such as company’s revenue, your age and/or years of CPP contributions.
  8. Personal Payments – Must be made before the end of the year and includes medical expenses, childcare fees, charitable donations, spousal support payments, political donations, and safety deposit box charges
  9. Making Capital Acquisitions for Business – Purchasing before year end allows a deduction for all of 2016 on your tax return in April 2017, as opposed to waiting until early 2017 and having to wait until your April 2018 tax return.
  10. Avoid selling assets such as income property or stocks until the New Year – Allows for the deferral of taxes until April 2018.

We have a team of experts who can help implement each of these strategies if together we decide they will be advantageous to your situation. Contact us to discuss if any of these ideas could help keep more of your hard earned dollars in your pocket.