Kicking off December 2023
As we come to the end of another year tax planning and reducing income taxes are not usually high on people’s minds. But smart investors take a little time before year end to set themselves up for a low tax bill. Here is a list of key dates and tax saving ideas. Remember that personal tax returns are based on a December 31st deadline whereas corporate returns are based on their individual company year ends.
December 15
Pay your quarterly tax instalments. If you received a notice from the CRA last year that quarterly tax instalment payments are required, then you should make sure your quarterly payments are all paid. CRA usually will charge interest and/or penalties for any unpaid quarterly payments as at December 15th.
Before December 27
Consider tax-loss selling to reduce taxes. December 27 is the deadline to take any losses from stocks or other investments. The losses may be capital losses or income losses and both have different tax consequences. A good accountant can advise you. Capital losses can offset capital gains in the year whereas income losses can offset income for the year. They can also be used for previous years (up to three years back) or carried forward indefinitely to future years.
Keep in mind that there are rules around tax-loss selling (and when you can buy back the same or identical shares, mutual funds or ETFs after you sell) and the strategy may not be right for everyone. Feel free to discuss this with us and/or your accountant.
Before December 31
Donate to your favourite charities. Make your charitable donations before December 31 in order to claim the donation tax credits for 2023. Remember, donations have to be to registered charities only. Remember you can also make donations in kind subject to the charity approval.
Make your RESP and RDSP contributions. Government grants are available annually for RESP (Registered Education Savings Plans) and RDSP (Registered Disability Savings Plans). You must make them by December 31st and if you want to know the annual limits or set up an RESP or RDSP contact us and we can assist you.
Make tax-deductible payments. Did you know that some common life expenses may be tax deductible? If you want these deductions to apply to your 2023 taxes, you have to make these payments before the end of the calendar year. A few examples include child care, applicable medical expenses, investment management fees, alimony and any deductible accounting or legal fees. If you’re not sure what you can claim, it’s a good idea to connect with your accountant.
Make your TFSA contributions. The TFSA contribution limit for 2023 is $6,500, and if you have unused contribution room from previous years, you can use that as well. Make sure to check your available contribution room on your CRA notice of assessment or by calling CRA directly. The 2024 contribution limit will be $7,000 and can be made January 1, 2024.
Remember the new FHSA. The First Home Savings Account is new in 2023 and offers another great opportunity for Canadians to save and invest with tax advantages. The annual contribution period for the FHSA is January 1 to December 31 This means that you must contribute before December 31st to have your contribution amount deducted from your taxable income for 2023. Learn more about the FHSA to find out if it’s right for you.
Use up your health benefits. Why not throw in a massage or an end-of-year visit to your chiropractor? If your employer offers extended health benefits, your coverage is likely tied to the calendar year. Check your balances to see if you have coverage left and make appointments or even get new glasses for the New Year.
For 2024
Starting January 1, 2024
Make your TFSA & RRSP Contribution. You do have the whole year to make these contributions, but wise investors always invest at the start of the year to gain the tax free compounding of interest for the whole year.
Before March 1
Make final RRSP contributions. You will hear from us in early January, or sooner about contributing to your RRSP but you can contribute for 2023 up to February 29th 2024, and then file your tax return and get a refund. You can check your available contribution room and look at your finances to see how much money you can put away for your future.
Disclaimers: Personal circumstances vary so be sure to double check with your accountant/tax advisor