Until the end of the year, we’ll be deviating from the usual “weekly brief” format. We believe it is a good time to take a final stock – pardon the pun – of your overall financial planning situation. Below is a checklist of some of the items we try to cover with you at your meeting. If you want to confirm an item on this list has been addressed, please do not hesitate to contact us. Our office will remain open during the holidays.

Investing

  • Portfolio mix. Different investments are taxed at different tax rates. If you invest in both registered and non-registered accounts, ensure you optimize your portfolio mix to ensure maximum tax-efficiency
  • The amount added to the TFSA room on January 1st, 2018 will be $5,500. This will bring the lifetime amount to $57,500. Consider putting funds into your TFSA to the extent you can make contributions (or via a transfer from your non-registered account). Ensure you don’t exceed your contribution room due to the significant penalty on over-contributions. If you have authorized us for CRA access, we can confirm your TFSA limit.
  • If you were planning on withdrawing from your TFSA, do so by the end of the year. The amount you withdraw will be added to your TFSA room at the start of 2018. If you withdraw in January 2018, you won’t get the room back until January 2019.
  • If you have investments in a non-registered account in a capital loss position, consider triggering the capital loss to offset capital gains realized during the year.
  • For non-registered accounts, delay purchases until January 2018 to minimize your allocation of taxable income for 2017 (after year-end distributions). For similar reasons, consider selling your mutual fund in a non-registered account before year-end as well (prior to year end-distributions).

Taxes

  • Any donations you want to claim on your 2017 tax return must be made by December 31, 2017.  Donations must be made to a registered charity. Contributions above $200 result in a 29% federal tax credit. Keep the donation receipts! The CRA was more aggressive in requesting documentation to prove the donations were actually made.
  • If you are a first-time donor, you can claim an additional 25% credit on up to $1,000 of donations made after March 20, 2013.  2017 is the final year in which this credit can be claimed.
  • Public transit tax credit. This credit will be eliminated following the 2017 tax year. You can claim on your 2017 income tax return, only the cost pertaining of monthly passes for transit services for the period January 1 to June 30, 2017.
  • If you are over 65 with no private pension, consider withdrawing $2,000 from a RRIF account to trigger the $2,000 pension credit.
  • Home accessibility tax credits. If you incur eligible expenses of up to $10,000 to increase the mobility or safety of a senior, you will be able to claim the federal home accessibility home credit and BC senior’s home renovation tax credit.

RRSP

  • The deadline to make an RRSP contribution for the 2017 tax year is March 1, 2018. If you have authorized us for CRA access, we can confirm your RRSP limit, factoring in any contributions you’ve made with us. An RRSP contribution has a tax savings potential of anywhere between 20%-47.7% for BC residents.
  • If you turned 71 this year, this is the final year you can contribute to an RRSP. Consider making an RRSP contribution in December of the year you turned 71 if your income in 2017 is higher than what you expect in later years.
    • If you turned 71 this year, you must wind up your RRSP by the end of the year. For most people, this means a conversion to a RRIF account with minimum annual withdrawals starting the following year.
  • Consider withdrawing funds from your RRSP if you have low income for the year.

Self-Employment / Business / Corporations

  • Consider 2017 income splitting opportunities (spouse, children, parents, etc.) as the rule changes that are likely to come for corporations in 2018 may eliminate this strategy moving forward.
  • The new rules will grandfather any existing passive investment income currently held in a corporation.  They will also allow passive income of up to $50,000 not subject to higher taxation. This means that under the new regime, you could add $1,000,000 (in addition to any grandfathered assets) generating income of 5% a year and be exempt.
  • If you are self-employed, consider purchasing capital assets before year-end. If the asset is available for use before the end of the year, you can claim one-half of the usual tax amortization for the year.
  • Consider paying a salary or bonus from your corporation to yourself in December. Usually, the payroll tax for this is due by January 15th (may be sooner depending on your remitter type).

Children

  • If you have an RESP and your child has turned 17 in 2017, this is the final year of his/her grant eligibility.  If you have grant room remaining, you can contribute up to $5,000 in the final year, generating a $1,000 grant.
  • Pay child-care expenses for 2017 by December 31st, 2017 and get a receipt. Remember that boarding school and camp fees qualify for the child care deduction.
  • If your child qualifies for the disability tax credit, and if RDSP assets or income will not disqualify him/her from receiving provincial income support, consider setting up an RDSP to qualify for the Canada Disability Savings Bond (CDSB – lifetime maximum of $20,000 per child). Contributions to an RDSP qualify for the Canada Disability Savings Grant (CDSG – lifetime maximum of $70,000 per child)
  • Children’s fitness and art credit. Sadly, these tax credits have been completely phased out, and you won’t receive a credit for these costs on your 2017 return.

Other

  • Note that MSP premiums will be cut in half for all taxpayers in 2018. The provincial government intends to eliminate all MSP premiums within four years.