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6 tips to help you get the most out of year-end tax planning
Want to get ahead of next year’s tax-time crunch? Follow these do’s and don’t’s of year-end tax-planning.
DO:
1. Donate shares instead of cash. Not only do you get the charitable donation deduction, but by donating the shares you’re not subject to capital gains tax.
2. Open a TFSA when you turn 18. If you were 18 when TFSAs were created in 2009, your current contribution room has reached $46,500. Contribution room grows by $5,500 each year.
3. Review your debts. The interest paid on money used to earn business or generate investment income can be used as a tax deduction.
4. If you need to purchase a car or musical instrument for work, do so at the end of the year to enjoy the benefit of accelerated capital cost allowance claims.
DON’T:
1. Purchase mutual funds or ETFs at year end. Wait until the new year to avoid paying tax on the fund’s annual income (that you never received).
2. Claim donations. Save up all charitable gifts for two or more years to take advantage of the First-Time Donor’s Super-Credit. It’s only available for the 2013 to 2017 tax years and up to a limit of $1,000.
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