Twelve days of tax tips: Ernst & Young's festive end-of-year guide

TORONTO , Dec. 1 /CNW/ - As a tumultuous year comes to a close, and Canadians turn their thoughts to holiday shopping and social gatherings, Ernst & Young is offering 12 days of tax gifts worth peeking at now.

The firm says tackling these tips by December 31 could help your bottom line and get your new year off to a good start:

    
    1.  On the first day, check your list of expenses - twice. Some can only
        be claimed as tax deductions if the amounts are paid by the end of
        the calendar year, including interest expense, investment counsel
        fees and safety deposit box fees.

    2.  On the second day, shop early and buy business assets. Self-employed
        individuals and unincorporated business owners who do can claim
        depreciation for 2009.

    3.  On the third day, sell securities with accrued losses to shelter
        otherwise-taxable gains. Don't wait - trades must take place by
        December 24 for Canadian exchanges (December 28 for US exchanges) to
        settle in 2009.

    4.  On the fourth day, get into the holiday spirit and make your final
        charitable donations for 2009. Gifting stock can provide added
        benefit.

    5.  On the fifth day, decide if your rooftop is ready for Santa's sleigh.
        The home renovation tax credit is only available on expenditures made
        before February 1, 2010. The credit is worth up to $1,350 on your
        2009 return if eligible improvement costs are at least $10,000.

    6.  On the sixth day, consider giving yourself the gift of a tax shelter
        to reduce your tax burden. But be cautious - these investments carry
        risk so consult your investment advisor before you buy.

    7.  On the seventh day, think about family. All tax-deductible alimony
        and child-care expenses must be paid by December 31 to get a 2009 tax
        deduction. Also, medical expenses, kids' fitness program costs and
        transit pass payments must be made by year end to be creditable.

    8.  On the eighth day, invest in the future by making RESP contributions
        for your children, and benefitting from the Canada Education Savings
        Grant in the process.

    9.  On the ninth day, share your income with family using income-
        splitting loans. With the current Canada Revenue Agency prescribed
        interest rate of 1%, this is an excellent tax-saving opportunity for
        those with liquid or certain other assets, who are interested in
        income splitting with spouses, partners and/or children and
        grandchildren. This could also benefit anyone who has an outstanding
        income splitting loan with a rate higher than 1% - but remember,
        annual interest must be paid by January 30 of the following year to
        avoid income attribution.

    10. On the tenth day, update travel logs. Employees who use employer-
        provided cars primarily for business may be eligible for a reduced
        standby charge and a lower alternate operating benefit. But they have
        to advise employers in writing before year end to benefit.

    11. On the eleventh day, take a breather and push your purchases of long-
        term fixed investments until January 2009 to defer the related tax by
        one year.

    12. On the final day, contribute to your RRSP and think about making your
        2010 contribution in early January. You can choose to contribute to a
        spousal plan, or your own plan.
    

About Ernst & Young

Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

For more information, please visit ey.com/ca.

Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

The Ernst & Young organization is divided into five geographic areas and firms may be members of the following entities: Ernst & Young Americas LLC, Ernst & Young EMEIA Limited, Ernst & Young Far East Area Limited and Ernst & Young Oceania Limited. These entities do not provide services to clients.

For further information: Amanda Olliver, [email protected], [phone]; Brooke McLachlan, [email protected], [phone]; Marie-Ève Graniero, [email protected], [phone]