Six Tips for Tax Savvy Dentists

No one wants to pay unnecessary taxes. Follow these six tips to help minimize your tax burden and maximize the money in your wallet.

 

  1. Turn a Loss to Your Advantage

Sell an investment that will trigger a capital loss to offset capital gains realized in the same calendar year or in the past three years. Keep in mind:

 

  1. The trade must be settled before the end of the year.
  2. Unused capital losses can be carried forward indefinitely.
  3. Be sure to avoid the superficial loss rule.

 

  1. Purchase Capital Assets

When you renovate your office or upgrade your equipment, you will get the tax benefit in the year you purchased it.

 

  1. Maximize Your TFSA Contribution

Your TFSA investment grows tax free, and you can utilize unused contribution room. The limit for 2021 is $6,000 and the cumulative contribution limit from 2009 to 2021 is $75,500. If you’re at the max, you can give money to your spouse or adult children which they can contribute to their own TFSAs.

 

  1. Enhance your RESP Grant

If you have a family RESP, your children will only receive the Canada Education Savings Grant (CESG) until the end of the calendar year that they turn 17. After that, shift your contribution to your younger children to get the most grant benefit. Funds in a family plan are interchangeable so you still have flexibility to disburse withdrawals to your older children. The maximum lifetime contribution amount per child is $50,000. Not all of this will attract a grant, but contributions above the grant eligible amount will still grow tax sheltered in the RESP. This is a good way to save more for their education without adding to your tax bill as it grows.

 

  1. RRIF at 71

When you turn 71, you will need to convert your RRSP to a RRIF no later than December 31st of the same calendar year. Don’t wait until the last week—there’s paperwork to do. Be sure to make your final RRSP contribution before you convert. If you haven’t done so already, you can make a one-time $2,000 over-contribution to your RRSP without incurring a penalty tax. Even though you can’t contribute to an RRSP after age 71, you can contribute to a Spousal RRSP for a younger spouse and receive a deduction against your tax filing.

 

  1. Donate Shares to Avoid Capital Gains

You can donate shares of publicly traded securities to a registered charity. You’ll get the charitable donation tax credit, and no capital gains tax (if they have appreciated in value) is owed on the donated shares.

 

Book a Virtual Meeting with an Investment Planning Advisor from CDSPI Advisory Services Inc. to determine how tax strategies can fit into your overall financial plan.

 

Advisory services are provided by licensed advisors at CDSPI Advisory Services Inc. Restrictions may apply to advisory services in certain jurisdictions.

You already voted!