It’s that time to break from the year-end tax-planning playbook

It’s that time to break from the year-end tax-planning playbook

- in Personal Finance

Jamie Golombek: There a few unique preparing opportunities that are worth considering of saving you some tax when you file your return following spring

The whiff of nutmeg, sprinkled atop a good freshly-brewed eggnog latte, can only mean one important thing — year-end tax planning season is for us, once again.

While it’s true that the listing of year-end tax planning suggestions doesn’t vary much out of year to year, for 2017, there one or two unique planning opportunities which have been worth considering to save you many tax when you file an individual’s return next spring.

Tax loss selling

It may seem odd to talk about taxes loss selling in a year by which many investors’ non-registered portfolios are generally in place, but you may still be holding that “sure thing” penny-stock your wonderful uncle tipped you away about a few years back that’azines just about to rebound. If your patience is running out, these days may be a good time to consider disposal that stock, doing some tax-loss selling to offset some of the gains you will have realized when you sold off certain winners in 2017.

Tax-loss selling will involve selling investments with gathered losses, typically at twelve months end, to offset investment gains realized elsewhere inside your portfolio. Any net capital losses that cannot be used at the moment may either be carried again three years or carried ahead indefinitely to offset world wide web capital gains in many other years.

In order for your reduction to be immediately available for(a treadmill of the prior three years), the particular settlement must take place in 2017. Different for 2017, Canada has acquired a shorter settlement time for equity and long-term personal debt market trades, to match with a change to a “T+2” (commerce date + two days) standard for U.S. markets. This means that, rather than the previous three-business-day settlement interval, effective Sept. 5,positions are now settled in two working days. To complete settlement by Dec. 31, the trade date must be no later than January. 27, 2017, which, for the first time during Canada, puts your taxes loss deadline after the The holiday season and Boxing Day governmental holidays.

Note that if you purchased securities in a foreign currency, the increase or loss may be larger or smaller than you think whenever you take the foreign exchange component into consideration. For example, Jake bought 1,000 shares of a Anyone.S. company in December 2012 when the price has been US$10/share and the U.S. dollars was at par with the Canadian dollar. Today, the price of a shares has fallen so that you can US$9 and Jake decides he / she wants to do some tax great loss harvesting, to use the US$1,One thousand (US$10 — US$9 = US$1 x 1,500) accrued capital loss in opposition to gains he realized before in 2017.

Well, before knowing if this strategy will work, he’ll should convert the potential U.Verts. dollar proceeds back into Canadian dollars. At an exchange amount of $1 U.S. Implies $1.25 CDN, selling the Ough.S. shares for US$9,1000 yields $11,250 CDN. So, what initially appeared to be an accrued capital loss of US$1,000 (US$10,1,000 – US$9,000) turns out to be a cash gain of $1,250 ($11,Two hundred fifty — $10,000) for Canadian taxation purposes. If Jake had gone ahead and sold the actual U.S. stock, he previously actually be doing the opposite associated with tax loss selling and accelerating his tax bill by simply crystallizing the accrued capital grow in 2017.

First-Time Donor’s Super Credit

This is the last year which you can claim the federal First-Time Donor’s Awesome Credit (FDSC) if neither anyone nor your spouse or common-law partner has claimed the donation tax credit from 2008 so that you can 2016. The FDSC provides an additional 25 % tax credit on entire monetary donations up to $1,500. This is on top of the federal and provincial donations tax credits.

For income donations up to $200 in a year, the government donation credit (15 per-cent) combined with the 25 per cent FDSC is worth Forty five per cent of the donation sum. For total cash donations between $200 and $1,000 this holiday season, the federal donation credit (Twenty nine per cent) plus the 25 per cent FDSC get the federal credit to 54 per cent of the donation volume. Add to this your provincial donation ‘tokens’, and the total tax loans could be around 70 %, depending on your province regarding residence. That means your out-of-pocket cost to donate $1,000 could be as far as $300.


While you may not be a first-time donor, potentially your kids qualify as first-time donors should they recently graduated and started money making income for the first time. In past years’ returns, they may never have stated a donation since they weren’testosterone taxable after claiming the usual personal amount and the college tuition, education and textbook income tax credits.

Dividend Sprinkling

Finally, small business owners may want to make a change prior to Jan. 1,if your corporation could be caught because of the proposed anti-dividend-sprinkling rules. The new rules would look at whether cash flow received, typically in the form of profits, by a related adult investor is “reasonable,” taking into account any person’s labour and funds contributions to the business alongside any previous returns together with remuneration, in comparison to a situation exactly where an arm’s length investment decision was made.

If your private company has other shareholders, as if your spouse, partner, or other individual relatives as shareholders, think about whether it makes sense to pay added dividends to family members whorrrre in lower tax brackets into get one last conquer at the can and capitalize on any income sprinkling prospects before any proposed protocols could increase the tax amount on such income springing up form 2018.

You may also wish to review the discuss structure of your private business to determine if more than one investor own shares of the same course. Corporate law might require in paying the same amount of dividends to any or all shareholders of the same class of explains to you. If you cannot pay dividends one shareholder without causing yet another shareholder to be taxed within the highest tax rate with dividends received by these folks, you may wish to consider a corporate reorganization so your shareholders own shares of several classes.

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