No one wants to pay unnecessary taxes. Follow these six tips to help minimize your tax burden and maximize the money in your wallet.
- 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:
- The trade must be settled before the end of the year.
- Unused capital losses can be carried forward indefinitely.
- Be sure to avoid the superficial loss rule.
- Purchase Capital Assets
When you renovate your office or upgrade your equipment, you will get the tax benefit in the year you purchased it.
- Maximize Your TFSA Contribution
Your TFSA investment grows tax free, and you can utilize unused contribution room. The limit for 2019 is $6,000 and the cumulative contribution limit from 2009 to 2019 is $63,500. If you’re at the max, you can give money to your spouse or adult children which they can contribute to their own TFSAs.
- 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.
- 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.
- Donate Shares to Avoid Capital Gains
You can donate shares of publicaly 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.
Contact a Certified Financial Planner® (CFP®) professional from CDSPI Advisory Services Inc. at email@example.com or 1.800.561.9401 to determine how tax strategies can fit into your overall financial plan.