TORONTO, Dec. 10 /CNW/ - While the annual tax filing deadline is still a
few months away, Canadians should take action now to ensure they meet
applicable year-end tax deadlines and take advantage of available tax breaks.
According to John Waters, tax expert with BMO Nesbitt Burns, most people
wait until April to start thinking about their taxes, having forgotten or
perhaps not realizing that many of the cut-off dates that could impact their
tax savings fall prior to the calendar year-end. "If you don't plan and act
ahead of these dates, by the time the filing deadline approaches, it may be
too late to take steps to save on 2007 taxes," says Mr. Waters.
As a starting point, Mr. Waters suggests Canadians consider the following
tax saving strategies that have looming deadlines:
Tax instalments - Deadline: December 15th
Some Canadians may be required to pay 2007 income tax instalments if
their estimated income tax payable for the year or their actual income tax
payable for either of the two preceding years exceeds $2,000 (or $1,200 for
Instalments are due four times a year, with the final instalment due
December 15. Canadians could incur non-deductible interest if they fall short
on any of their instalments, so now is a good time to revisit the instalments
made to date to determine if a top-up is required instead of waiting until
filing their tax return in April.
Tax-loss selling - Deadline: December 21st
Investors often consider selling investments which have depreciated in
value so that the capital losses can be used to offset any realized gains.
Typically, they'll review their capital gains and losses near the end of the
year and then consider selling certain securities for losses to reduce their
overall tax bill.
To be effective for tax purposes in the current year, tax-loss selling
transactions must settle before the last business day of the year. Since
settlement can take up to three days, BMO Nesbitt Burns is advising clients to
do this by December 21st.
Donations - Deadline: December 31st
Another way to offset capital gains is to donate appreciated qualifying
publicly-traded securities to charity. This will produce a tax receipt equal
to the fair market value of the investment donated, while at the same time
potentially eliminating any capital gains tax otherwise payable on the donated
security. Donations must be made before December 31st in order to receive a
tax receipt for 2007.
December 31st is also the final payment date for a 2007 tax deduction or
credit for expenses such as childcare, medical, tuition and alimony payments.
"There are many strategies, some very simple, that you may be able to use
to reduce the amount of income tax you pay. The best strategy is to plan ahead
and act on time," stated Mr. Waters.
In addition to the tax saving strategies outlined above, Mr. Waters can
- Tax planning and savings tips: simple things almost everyone can do
to improve their tax situation.
- Understanding the potential impact of recent significant changes to
Canadian tax law and how to take advantage of the new tax credits and
deductions available in 2007, such as: pension income splitting,
children's fitness tax credit, charitable donations to private
foundations, RRSP and RESP changes.
- Options for BCE shareholders - what tax strategies should they
consider before the company goes private next year?
- Importance of planning, not just filing your taxes. Why entrepreneurs
in particular need to look at the big picture, including taking into
consideration their personal, business and family situations.
For further information:
For further information: or to arrange an interview, contact: JoAnne
Hayes, Toronto, firstname.lastname@example.org, (416) 867-3996; Laurie Grant, Vancouver,
email@example.com, (604) 665-7596; Lucie Gosselin, Montreal,
firstname.lastname@example.org, (514) 877-1101