Checklist to Better Your Year-end Tax Savings
By Sylvia Lim, CGA, CFP

• First Time Home Buyer's Tax Credit -
  A new non-refundable tax credit of $5,000 is introduced for the purchase of qualified homes that close after January 27, 2009. This is claimable for the taxation year in which the home is acquired.

• RRSP contribution still a good thing -
  Planning one’s own retirement is still a necessary task for most Canadians. It is generally a good idea to contribute to your RRSP on an ongoing basis. Take the long term perspective and reduce your taxes in the short term. Your current year’s contribution limit is on your most recent Canada Revenue’s Notice of Assessment.

• TFSA is a new good thing -
  For those of you who’ve maxed out your RRSP contributions and have no high rate loans to pay off, contribution to a Tax Free Savings Plan is a great idea. Although the contributions (maximum $5,000 a year) are not tax deductible, the income earned from it is. A great idea for maximum savings and financial planning flexibility.

• RESP contributions -
  It may be a good idea to contribute to a Registered Education Savings Plan (RESP) for your child’s post secondary education. The federal government will contribute a grant of $500 for $2,500 in RESP contributions, with the annual grant potentially increased to $1,000 with $5,000 in RESP contributions if you have prior non-contributory years.

• Transit pass credit (TPC) -
  This tax credit applies to the purchase of passes for public transportation including buses, commuter trains, local ferries, subways and streetcars. To qualify, the passes must be for at least a month in duration, 4 consecutive weekly passes of 5 to 7 days in duration, or electronic cards of 32 one-way trips not exceeding 31 days. The credit is transferable to the taxpayer’s spouse/common law partner or to a parent if the individual is a dependent child.

• Pension income splitting -
  A taxpayer may allocate up to one-half of all income that’s eligible for the pension income credit to a spouse or common law partner. The benefit of income splitting is the ability to shift income to a spouse/partner with a lower marginal tax rate, thereby reducing the overall tax bill for the family unit. The bigger the income disparity between spouses/partners, the better the overall tax savings.

• RRSP and RRIF conversions -
  Individuals are allowed to continue making RRSP contributions until age 71 (from 69). Mandatory RRIF withdrawals will be waived for individuals who are under 71 (from 69).

• 2010 RRSP annual contribution limit -
  18% of earned income to a maximum of $22,000.
  
  
• RRSP contribution deadline – 2011/03/01
  
  
• 2011 tax filing deadline – 2011/05/02
  
  
• 2010 self employed individuals and their spouse/common law spouse filing deadline – 2011/06/15
  
  

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