TORONTO, Dec. 17, 2013 /CNW/ - The Twelve Days of Christmas has become a holiday favourite over the years. In the spirit of this
traditional festive carol, RBC Wealth Management offers The 12 Tips of Tax Planning to help with the important weeks ahead in the annual tax-planning
"Unfortunately, the tax collector isn't as nostalgic," said Tony
Maiorino, vice-president and head, Wealth Management Services at RBC
Wealth Management. "That's why we encourage individuals and business
owners to take advantage of some downtime they may have over the
holidays to consider some important tax planning strategies."
Maiorino said that while many Canadians may be aware of the importance
of year-end tax planning, there are some equally important deadlines
for implementing tax-saving strategies that may only be available in
January and February.
"Naturally, our minds may not be on taxes during the holiday season," he
added. "But January and February are right around the corner. Now is a
good time to review your situation with a qualified legal or tax
In the spirit of the season, RBC Wealth Management offers The 12 Tips of Tax Planning as a guide:
RRSP contributions: The deadline to make a contribution to a registered retirement savings
plan (RRSP) that can be claimed as a 2013 RRSP tax deduction is
generally the 60th day after the 2013 year-end, which falls on March 1,
2014. But since March 1 falls on a weekend, the deadline has been
extended to Monday, March 3, 2014.
In-Kind RRSP/TFSA contributions: If you don't have sufficient cash on hand to make an RRSP
contribution, you can consider making an "in-kind" contribution of
eligible securities from your non-registered account to your RRSP. You
can also contribute securities in-kind to your Tax-Free Savings Account
2014 RRSP contribution room: Potential new RRSP contribution room is created every January 1 based
in part on income earned in the prior year. In light of this, consider
making an over-contribution of $2,000, which is not subject to the
over-contribution penalty. Although the money is not tax-deductible, it
can be deducted in a future year if you have the available RRSP room.
To avoid the over-contribution penalty, you'll need to check that
you're not more than $2,000 over your total contribution limit.
TFSA: Canadians who are 18 and over are eligible to contribute to a TFSA.
The contribution limit was $5,000 per year from 2009 to 2012 inclusive,
and is $5,500 for 2013 and 2014. If you did not use your contribution
room in a previous year, the unused room is carried forward
Family income splitting loans: If you set up a prescribed rate loan with your spouse or a family
trust in a previous year to split income, it is critical that the
annual interest on the loan be paid on or before January 30, 2014.
Eligible retiring allowance: If you received an eligible retiring allowance in 2013, you'll have
until March 3, 2014 to make a special contribution to your RRSP (but
not to a spousal plan) without requiring RRSP contribution room.
Labour-sponsored investment funds: Consider purchasing shares of labour-sponsored funds by March 3, 2014
to take advantage of a 15 per cent federal labour-sponsored funds tax
credit on a maximum contribution of $5,000 (maximum $750 federal tax
credit). An additional provincial tax credit may also be available.
Speak with your advisor to determine whether an investment in a
labour-sponsored fund is suitable for you.
LIRA conversion to LIF/RLIF: If you have a Locked-In Retirement Account (LIRA) and are planning to
convert it to a Life Income Fund (LIF) or Restricted Life Income Fund
(RLIF) in 2014, you may want to consider converting the plan in January
2014, rather than later in the year, to give you added flexibility to
withdraw more from your LIF/RLIF in the first year.
2013 Home Buyers' Plan withdrawals: If you participated in the Home Buyers' Plan (HBP) in 2013, but
borrowed less than the maximum $25,000 tax-free from your RRSP, you may
be eligible to make another tax-free RRSP withdrawal in January 2014
(up to the $25,000 maximum permitted). After January 2014, subsequent
withdrawals will not qualify as tax-free.
For business owners:
Consider paying yourself a bonus: If you operate your own business with a year-end after June 30,
consider paying reasonable bonuses to employees, including yourself.
Canadian tax rules allow a corporation to deduct a bonus paid to an
employee on the corporation's previous year's tax return as long as the
bonus is paid within 179 days after its corporate year-end.
T4 filing deadlines for employers: If you have employees in your own business or you employ a nanny or
babysitter, then you must file the appropriate T4 Summary forms to the
CRA by the end of February. For 2014, the deadline is February 28. In
addition, a copy of the T4 slip must be delivered or mailed to the
employee(s) by this date.
Sale of private business shares: You may have disposed of "qualified small business corporation" shares
in 2013 and realized capital gains that cannot be fully exempt under
the $750,000 lifetime capital gains exemption. If this is the case, you
may be able to defer all or some portion of the taxable capital gain if
you reinvest the proceeds in a new eligible small business corporation
any time in the year of disposition, or within 120 days after the end
of that year.
As always, you should obtain professional advice from a qualified tax
advisor before acting on any of the information above.
About RBC Wealth Management:
RBC Wealth Management is one of the world's top 10 largest wealth managers*. RBC Wealth
Management directly serves affluent, high-net-worth and ultra-high net
worth clients in Canada, the United States, Latin America, Europe, the
Middle East, Africa, and Asia with a full suite of banking, investment,
trust and other wealth management solutions. The business also provides
asset management products and services directly and through RBC and
third party distributors to institutional and individual clients,
through its RBC Global Asset Management business (which includes
BlueBay Asset Management). RBC Wealth Management has more than C$639
billion of assets under administration, more than C$387 billion of
assets under management and over 4,400 financial consultants, advisors,
private bankers, and trust officers. For more information, please visit
*Scorpio Partnership Global Private Banking KPI Benchmark 2013. In the
United States, securities are offered through RBC Wealth Management, a
division of RBC Capital Markets, LLC, a wholly owned subsidiary of
Royal Bank of Canada. Member NYSE/FINRA/SIPC.
Royal Bank of Canada (RY on TSX and NYSE) is Canada's largest bank as
measured by assets and market capitalization, and are among the largest
banks in the world, based on market capitalization. We are one of North
America's leading diversified financial services companies, and provide
personal and commercial banking, wealth management services, insurance,
investor services and capital markets products on a global basis. We
employ approximately 79,000 full- and part-time employees who serve
more than 15 million personal, business, public sector and
institutional clients through offices in Canada, the U.S. and 44 other
countries. For more information, please visit rbc.com.
RBC supports a broad range of community initiatives through donations,
sponsorships and employee volunteer activities. In 2012, we contributed
more than $95 million to causes worldwide, including donations and
community investments of more than $64 million and $31 million in
For further information:
Tony Maraschiello, RBC Wealth Management Canada Communications, 416 974-9334