Don’t leave these gifts unopened!

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Canada’s new Liberal government ran their election platform with several initiatives and promises that will affect taxpayers.  Amongst other things, they promised to:

  • Reduce the TFSA annual contribution limit from $10,000 to $5,500;
  • Increase the federal tax rate by 4% for individuals with taxable income over $200,000;
  • Effect a 1.5% decrease in the federal tax rate for individuals with taxable income between $44,701 and $89,401, the middle class tax cut.

The exact timing of the above changes is not known.  While the following list is not exhaustive, here are some items that must be considered, incurred or paid prior to year-end in order to be included in your 2015 tax return.

 

Prior to December 24, 2015, put tax loss selling strategies to work by following these steps:

  • Calculate the capital gains that you have realized for 2015.
  • Identify and sell investments that are in a loss position in your non-registered accounts.  Trades entered by December 24th will settle funds in the account prior to December 31st. (Remember that you can’t buy the exact same investment back again within the next 31 days)
  • Net your capital losses against capital gains on your 2015 tax return.

Prior to December 31, 2015:

  • Contribute the maximum amount possible to your TFSA to ensure the 2015 maximum of $10,000 is not lost by future changes.
  • Make charitable donations using qualifying securities instead of cash.
  • Contribute to your child’s RESP/RDSP.
  • Withdraw funds from your RRSP if you are in a low tax bracket for the 2015 tax year.
  • If you are age 71 this year, you must convert your RRSP to a RRIF.  Consider the following:
  • Use your younger spouse’s age for minimum payment calculations.
  • Make a final contribution to your RRSP based on earned income this year.
  • If you are a trustee of a testamentary trust, consider triggering income (like capital gains) before the end of the year as income retained inside the trust will be taxed at the highest marginal tax rate starting in 2016.

We recommend that you discuss these strategies with your professional investment, tax and legal advisors prior to implementation to ensure that they fit within your overall wealth plan.

 

The information above is a sampling of our full 2015 Year-end Tax Planning Checklist.  There are many more and important considerations that are included in full article.  To view the entire article, please visit our website at www.phillipsfortress.ca.

The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson GMP Limited or its affiliates. Assumptions, opinions and estimates constitute the author's judgment as of the date of this material and are subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results. The comments contained herein are general in nature and are not intended to be, nor should be construed to be, legal or tax advice to any particular individual. Accordingly, individuals should consult their own legal or tax advisors for advice with respect to the tax consequences to them, having regard to their own particular circumstances. Insurance services are offered through Richardson GMP Insurance Services Limited in BC, AB, SK, MB, NWT, ON, QC, NB, NS, PEI and NL. Additional administrative support and policy management are provided by PPI Partners. Richardson GMP Limited is a member of Canadian Investor Protection Fund. Richardson is a trade-mark of James Richardson & Sons, Limited. GMP is a registered trade-mark of GMP Securities L.P. Both used under license by Richardson GMP Limited