These daily financial tips are designed to be short ideas covering different aspects of family and business finances. They are short pieces intended to provide information to enable individuals, families and businesses to make informed financial decisions. Not all tips will apply to every situation, but over the course of a year, most financial topics will be covered. Check in regularly and share with friends and associates.
With Christmas and New Years just around the corner, there are a number of deadlines fast approaching with year-end to be aware of if you wish to take advantage of investment and tax savings. It’s always best not to wait until the last day of the year, because in many cases it takes one or two days to process the paperwork to receive value for tax purposes. Year end is often a time of year that people receive annual performance or work bonuses so having a plan or allocating some of these monies for savings, investing and tax planning is a wise strategy.
To take advantage of allowable RRSP contributions, you have until 60 days into 2018 to make your contributions which are eligible for 2017, so year end is not as critical. Having said that, if you receive a year end performance or work bonus, it is best to make contributions or allocate a portion of these monies for RRSP contributions so monies are not spent elsewhere or squandered.
If you turned 71 during 2017, you MUST convert any RRSP held assets to either a RRIF (Registered Retirement Income Fund) or withdraw them as cash. Any monies withdrawn from RRSP will be treated as taxable income.
Year-end is the final opportunity to make RESP (Registered Education Saving Plan) contributions to be eligible for matching government grants. 20% of the first $2500 of annual contributions (to a lifetime maximum of $7200) of RESP contributions are eligible for matching government grants.
Year end is the final opportunity to make tax deductible Charitable gifts/contributions. The monies must be received by the eligible registered charity by year-ed. Many/most charities now have online payment methods to facilitate contributions conveniently and in a timely manner. 15% of the first $200 of contributions are tax deductible and 29% of amounts in excess of $200 to a maximum of 75% of your taxable income are eligible.
Year-end is also the final opportunity to make contributions to political parties that are tax deductible. Again, most political parties have convenient online payment methods.
If you have stock investments held in non-registered accounts, Stock selling strategies which leverage stock losses to offset stock gains and corresponding capital gains taxes can be an effective method to minimize taxes payable. Given the effective payment dates of stock transactions, these must be completed days in advance of year end. Check with your investment and tax advisor whether this strategy suits your needs and for the final effective dates to execute such trades.
Again, it is always best to discuss and check with your investment and tax advisors in advance to find out which strategies are most effective for your family and investment objectives and the final date deadlines to complete these transactions. As it is a peak holiday period and many advisors may be on holidays and businesses operating with reduced staffing, it is best to do so in advance of year end deadlines.
Share these ideas with friends and family and come back to check out daily financial tips and ideas. If there are subjects you wish covered or questions, please email me and I’ll include them in future posts.