As the final weeks of 2020 draw to a close, most of us are focused on holiday activities.  To ensure a fresh start to your 2021, now is the time to implement year-end tax strategies.  A quick review can uncover opportunities for you to keep more tax dollars in your own pocket. 

Here is a quick checklist to get you started:

  1. Pay items that qualify for tax breaks such as tuition fees, medical expenses, childcare fees, or child support.  Paying them before December 31 will allow you to deduct them on your 2020 income tax return.
  2. Consider triggering a capital loss for planning purposes.  Some investments in your non-registered portfolio may be still in a negative position for the year; if you sell or dispose of the investment, you can use the capital loss to offset capital gains earned in 2020 or carry them back against gains you were taxed on in any of 2019, 2018 or 2017.  You can also carry the loss forward as a cushion against future capital gains – you can carry a loss forward indefinitely.
  3. Make political or charitable donations before the end of December and get the tax credit for this year.
  4. Top up RESP and RDSP contributions before December 31st as carry forward amounts are limited, and you may miss out on Government Grants and/or Bonds.

A little preparation now can help reduce your tax bill and improve the performance of your investment portfolio.  It’s a good idea to speak with me, or your tax specialist before the end of the year about your tax and financial strategies.  If you don’t, you may end up paying more in taxes than you have to.

Have a great weekend,

Tracey

Source; Mackenzie Financial Corporation, MT 2010

Products or services related to investments, investment recommendations, financial planning, retirement planning, and investment reviews are provided through our mutual fund dealer Security Financial Services and Investment Corp. 4665 Yonge Street, Suite 309, Toronto, ON M2N 0B4 t 416.964.0440