Report outlines potential tax-savings opportunities for discussion with an advisor
TORONTO, Nov. 26 /CNW/ - As 2009 draws to a close it is time again for Canadians to turn their attentions to their taxes. To help make year-end tax planning easier, CIBC has issued a report by tax and estate planning expert Jamie Golombek outlining its top ten tips. While the annual tax filing deadline is months away, December is often the best time of year for Canadians to evaluate their overall tax strategies, especially as time will run out to realize a variety of tax-saving opportunities before 2010.
"It's important to review your overall tax-planning strategy with a professional now and ensure you're making the most of any opportunities available to you, especially as a result of new savings and investment vehicles, credits and policy changes that came into effect for the first time in 2009," advises Jamie Golombek, Managing Director of Tax and Estate Planning for CIBC.
The report covers the following tax topics, for discussion with a financial advisor:
1) Tax-loss selling - Tax-loss selling is the practice of selling investments which are in an accrued loss position at year-end in order to offset capital gains realized either this year or in the previous three years. In order to realize losses on public securities, trades must generally be made on or before December 24th or the trade will not settle until 2010 and the loss won't be available until next year.
2) Advice for homeowners and prospective homeowners - 2009 brought significant tax changes for homeowners, prospective homeowners and even homeowners who renovated their home, cottage or condo. Canadians should be aware of changes made to the federal Home Buyers' Plan (HBP) and consider their eligibility for the new non-refundable First-Time Home Buyer's Tax Credit (HBTC). Canadians considering any home renovations only have until the end of January 2010 to complete their renovation work to qualify for the temporary Home Renovation Tax Credit (HRTC).
3) RRSP annuitants who turn 71 in 2009 - Canadians who turned 71 earlier this year only have until December 31st to make their final Registered Retirement Savings Plan (RRSP) contribution before converting the plan into a Registered Retirement Income Fund (RRIF) or an annuity. Individuals in this situation need to discuss their RRSP conversion options with a financial advisor before it's too late.
4) Contribute to an RESP - Registered Education Savings Plans (RESPs) remain the single best way to save for a child's post-secondary education, as recent enhancements resulted in both more time and additional room to contribute. RESPs also offer investors the opportunity to supplement their savings with a number of government grants.
5) Make a donation - December 31st is the last day to make a donation and receive a tax credit for 2009. By gifting publicly traded securities with accrued capital gains to a registered charity or foundation, donors receive a tax receipt for the fair market value of the security being donated and capital gains taxes are eliminated.
6) Contribute to an RDSP - Canadians eligible for the Disability Tax Credit, their parents and other eligible contributors have until December 31st to contribute to a Registered Disability Savings Plan (RDSP) and apply for the matching Canada Disability Savings Grant (CDSG) and income-tested Canada Disability Savings Bond (CDSB) for the 2009 RDSP contribution year.
7) Purchase business assets - Self-employed or small business owners should consider accelerating the purchase of new equipment or office furniture planned for 2010 to take advantage of a full year's depreciation. A time-limited special 100% write-off is available for new computer equipment.
8) Consider a prescribed rate loan at 1% - With the Canada Revenue Agency's prescribed interest rate set at an all-time low of 1% until at least December 31st, there is no better time for couples to consider the potential benefits of income-splitting - the practice of shifting income from the higher income spouse to the lower income spouse to reduce taxes. Any investment returns above 1% can then be taxed in the hands of the lower-income spouse.
9) Pay any investment expenses by year-end - Interest paid on money borrowed for investment purposes as well as investment counseling fees for non-RRSP accounts can be deducted on your 2009 tax return but the amounts must be actually paid by December 31st.
10) Apply now to pay less tax all year - Apply now to reduce tax deductions at source for 2010 by completing the CRA Form T1213 before December 31st. Once approved, this will allow your employer to reduce the amount of tax withheld at source by taking into account deductions such as RRSP contributions or child care expenses.
"Looking ahead to 2010, it's important to view tax-planning as an ongoing process, not a year-end rush," Golombek urges. "Consult with a tax professional to create an individualized strategy and identify opportunities to save all year round."
To view the full report and other CIBC tax reports, please visit www.cibc.com.
CIBC is a leading North American financial institution with nearly 11 million personal banking and business clients. CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada, in the United States and around the world. You can find other news releases and information about CIBC in our Press Centre on our corporate website at www.cibc.com.
For further information: For further information: Doug Maybee, Director, External Communications and Media Relations, CIBC, Tel: (416) 980-7458, firstname.lastname@example.org