It’s that time of year again – Year End Tax Planning. Each year, Jamie Golombek of Renaisance Investments puts together a list of tips. To see his full list click here . My abbreviated version follows.
1. Are you between 60 and 64 and considering taking CPP early? You may want to apply before Dec. 31, 2014 as the “downward monthly pension adjustment” increases from 0.56% in 2014 to 0.58% in 2015.
2. Did you turn 71 in 2014? You must convert your RRSPs to a RRIF or registered annuity before the end of the year. If your spouse or partner is younger than 71, you can continue contributing to a spousal RRSP.
3. Review which investments you hold in your RRSP, TFSA and non-registered accounts.
a. Non Registered Accounts – Canadian dividends are taxed more favourably than interest income.
b. RRSP – 2014 maximums (assuming that you have used all of your previous contributions) is limited to 18% of your income to a maximum of $24,270 less any pension adjustments.
c. TFSA – You can contribute up to $31,000 in 2014 (if you have not contributed before). If you have withdrawn funds from your TFSAs, make sure to check when you did it, as re-contribution room is not available until the following calendar year.
4. Registered Education Savings Plans (RESP) and Registered Disability Savings Plans (RDSP) – the government has matching grants for both of these programs. The RESP is designed to save tax efficiently towards children’s post secondary education. The RDSP is designed for people who qualify for a Disability Tax Credit and are under 49 years of age. Contact me for information on both of these programs.
5. Charitable Donations, Investment Expenses, Childcare Expense, some Business Expenses should be done before the end of the year to use the expenses on your 2014 taxes. You have until March 2, 2015 to make your 2014 tax year RRSP deduction.
6. As of 2014 Safety Deposit Box fees are no longer deductible
There are many additional tax planning activities that you may be able to use to decrease your taxes. Speak to your accountant or give me a call.