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|Preparing your income tax return can be stressful and time consuming, but there are tactics that can help reduce the amount of tax you pay:
• Exercising employee stock options? - Speak to your employer about deferring the employment benefit.
• Will you have an employer provided car? - Keep track of personal and business use to reduce the income inclusion.
• Receiving a bonus? - Defer it for a year if you will be in a lower tax bracket.
• Do you have unused RRSP contribution room? - Make this year’s contribution now and start enjoying tax-deferred earnings.
• Keep investments that generate interest income in a registered account to defer taxing the income and hold dividend paying investments that are taxed at a lower rate outside your RRSP or RRIF.
• Will you realize a capital gain? - Carry forward losses realized in previous years to reduce taxable gains.
• Are you and your spouse splitting investment income? - Consider a loan for investment purposes.
• Do you and your spouse make charitable donations? - Claim all donations on one tax return regardless of the donor. You receive a tax credit equal to 16% on the first $200 donated and 29% on any additional donations.
• Are you planning to sell investments during the year? Will you also be making a charitable donation? - Donate the investments directly to charity and halve your tax.
• Are you and your spouse collecting CPP/QPP? - Sharing benefits may reduce the total tax on this income and may also prevent the higher income earner from losing any OAS entitlement.
• Are you collecting an employer pension? - A $1,000 tax credit is available to individuals in receipt of employer pensions and also to those aged 65 or older who receive RRIF payments.
The comments contained herein are not intended to be a definitive analysis of tax or estate law, and are general in nature. Professional advice regarding an individual's particular tax position should be obtained