It’s amazing how time flies, but we’re almost near the end of another year. And before we start to celebrate another festive season, let’s review some essential planning items and act now for some additional tax saving for 2016.
- Harvesting tax losses. Consider selling investment losers in your non registered portfolios to use as offsets to your capital gains. Any unused losses for the current tax year can also be carried back three years and forward indefinitely.
- Good to hold off buying any mutual funds until the new year. This will avoid any possible surprising and unanticipated income distribution even if you owned the funds for a month or less.
- Pay these bills before the year-end for 2016 tax benefits/credits –
medical and dental expenses;
child care expenses;
spousal support payment;
investment counsel fees.
- For self employed taxpayers, consider making your intended capital item purchases (such as an automobile) before year-end to maximize your 2016 capital cost allowance. You are entitled to claim the maximum business deductions for the year even though you actually only owned the item(s) for a month or less.
- This is the time to see if it makes sense to contribute to your RRSP for the current year. You probably know how much income you’ve earned for 2016, and whether a contribution will benefit you in tax savings for the year.
- Adjust your 4th quarter tax instalment to compensate for possible 2016 over or under payment.
- It’s always wise to contribute to your TFSA if there’s excess cash for savings and investments. Doing so in your TFSA will help you avoid taxation on any investment income generated from those contributions.
- The Home Renovations Tax Credit for seniors and persons with disabilities is still available for eligible individuals. It’s worth 10% of eligible renovation costs to a maximum of $1,000 in tax credit. All documentation must be available on request to support the claim. Details available on the BC Government website. (* please also see my blog of 2017/02/26 for the Feds’ version of this tax credit.)
And new in the CRA pipeline –
- Disposition of your Principal Residence – new reporting rules for 2016 and beyond. Individuals must now report their principal residence disposition occurring in the year. CRA has published new guidance on its website for compliance and essential reporting.
- 2016 personal tax filing – May 1, 2017
- 2016 personal tax filing with self employment reporting – June 15, 2017
- RRSP contribution deadline for 2016 – February 28, 2017