|Knowing how the tax rules affect your investments is essential. Keeping up to date on changes to the tax rules can help you keep more of what you earn. Some of the most effective ways include:
- Maximizing your RRSP contributions (18% of your prior year’s earned income to a maximum of $25,370 in 2016), and contribute early in the year.
- Boosting your retirement savings with annual contributions of up to $5500 (effective 2016) in a Tax-Free Savings Account. Unused contribution room will be available for carry-forward in future years.
- Donating appreciated securities instead of cash to registered charities.
- Saving for your children’s education using a Registered Education Savings Plan & taking advantage of the Canada Education Savings Grant (CESG).
- Spreading income among family members who are taxed at lower marginal rates using a prescribed rate loan.
- Taking advantage of the rules on pension income-splitting with your spouse or common-law partner if your retirement income is disproportionate.
- Making your portfolio tax-efficient by considering the impact of income taxes, since not all investment income is taxed in the same manner.
- Boosting retirement income and reducing income tax by purchasing an insured annuity.
- Be aware of the important dates in year-end tax planning, including the due date for final income tax instalment for individuals, the last possible buy/sell date for securities to settle this year & the RRSP contribution deadline.
Call us to discuss or if you would like a copy of Tax Tips for Investors, our brochure that offers an overview of tax strategies that can be utilized to minimize your burden.
1The comments included in the publication are not intended to be a definitive analysis of tax law: The comments contained herein are general in nature and professional advice regarding an individual’s particular tax position should be obtained in respect of any person’s specific circumstances.