Several routine financial planning items must be completed by December 31. For example, make any charitable donations that you wish to report on this year’s tax return. Contribute to a Registered Education Savings Plan (RESP) to trigger the annual Canada Education Savings Grant (CESG). If you turn 71 this year, you have until December 31 to make your final Registered Retirement Savings Plan (RRSP) contribution and terminate the plan.
Some situations, however, call for less-routine measures that must also be performed by year-end.
Making a TFSA withdrawal. If you plan on making a Tax-Free Savings Account (TFSA) withdrawal in the near future, doing so by December 31 enables you to regain the contribution room on January 1, 2020. But if you wait until the new year to make the withdrawal, you can’t replenish the funds until 2021.
Triggering a capital loss. If you no longer wish to hold a non-registered investment whose value has decreased since its purchase, you could sell the investment to trigger a capital loss. The loss can offset taxable capital gains you realized in 2019, and
any excess loss can be carried back three years or carried forward indefinitely.
Topping up to bracket. This strategy primarily suits retirees with funds in an RRSP or Registered Retirement Income Fund (RRIF) that would eventually be taxed at the highest marginal rate when payable by the estate. You withdraw an amount by December 31 that increases your annual income to the upper limit of your current tax bracket, resulting in reduced tax over the long term.
This material was prepared for and published on behalf of the representative named herein and is intended only for clients resident in the jurisdiction(s) where their representative is registered. This material is provided solely for informational and educational purposes and is not to be construed as an offer or solicitation for the sale or purchase of any securities or as providing individual investment, tax or legal advice. Consult your professional advisor(s) prior to acting on the basis of this material. Insurance products are available through advisors registered with applicable insurance regulators. Individual equities are available only through representatives of Assante Capital Management Ltd. In considering any particular investment, please remember that past performance is no guarantee of future performance. Although this material has been compiled from sources believed to be reliable, we cannot guarantee its accuracy or completeness. All opinions expressed and data provided herein are subject to change without notice. Neither Assante Financial Management Ltd. or Assante Capital Management Ltd. nor their affiliates or their respective officers, directors, employees or advisors are responsible in any way for any damages or losses of any kind whatsoever in respect of the use of this material. Certain names, logos or graphics herein may constitute trade names, trademarks or service marks (“Trademarks”) of CI Investments Inc. and/or its affiliates or of third parties. The display of Trademarks herein does not imply any licence has been granted to any third party. Assante Capital Management Ltd. is a Member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. Copyright © 2020 Assante Wealth Management (Canada) Ltd. All rights reserved.