• Both spouses/common-law partners must file an income tax return in order to receive the CCTB. Income earned from benefit payments invested in the child’s name will not be attributed back to the parents by Tax Accountant at Woodbrige.

• Obtain the benefit of tax shelter deductions in advance. Apply to your CRA district taxation office for permission to reduce income taxes at source to reflect tax shelter deductions.

• If you have a shortage of cash, consider borrowing to invest in an LSVCC  RRSP. If you were in the highest tax bracket 46.41, your tax savings from a maximum $5,000 investment would be $2,321 from the RRSP plus $1,500 from the LSVCC tax credits, for a total tax saving of $3,821. You can then use your tax savings to repay most of the loan according to your neighborhood Accountant in Vaughan.

• If you own units of a LSVCC purchased in 1995 or earlier, check the terms of your fund. In some cases it may be possible to redeem the units of a fund and reinvest them in the same fund (or another one) to obtain another tax credit. Under federal rules, fund units must be held for a minimum of five years,or eight years. The equivalent provincial rules vary by jurisdiction. Also, before redeeming your units, be sure and check the terms under the prospectus of the fund you purchased as redemption fees imposed by the fund company may also apply.

• Contribute to your RRSP early in the year. If, for example, you contribute $13,500 at the beginning of the year instead of at  the end, over a 28-year period, assuming an eight per cent rate of return, you would have an extra $100,000 in your RRSP by Tax Accountant in Woodbridge.

• If you don’t have enough cash to top up your RRSP, consider making a contribution in lieu of cash, or ‘in kind’ as it is  commonly phrased. The asset transferred must be a qualified investment. These may include publicly listed stocks (and some privately listed stocks if they are held at arms-length), corporate and government bonds, debentures and similar obligations. Be careful when transferring investments that have declined in value, because that loss will be ignored for tax purposes. Consult your  senior accountant at Woodbridge for great advice.

• Individuals with low earned income that precludes their owing any tax should still consider filing a tax return in order to create RRSP contribution room for future use via Accountant at Woodbridge.

• If you are an employee who is making regular RRSP contributions, request that the amount of income tax withheld on your paycheque be reduced in order to reflect the savings those contributions will bring. This is a more efficient way to manage your money than overpaying tax up front, then waiting for a refund the following year.

• You don’t have to deduct an RRSP contribution the year in which it is made; instead, you can carry it forward for deduction in a future period when you have income placing you in a higher tax bracket. Be sure you have utilized all personal tax credits before deducting your RRSP contribution according to your local tax accountant at woodbridge.

• If you have both a regular and a spousal RRSP and are the annuitant for each, you can transfer the proceeds of one plan into the other prior to maturity if you believe that will provide certain advantages, such as administrative ease. The combined new plan would then be classified as a spousal plan.

• Beware of the tax consequences when transferring investments to your RRSP. The CRA treats such transfers as being similar to a sale of the investment. Moreover, while deemed capital gains triggered by a transfer to an RRSP are taxable, deemed capital losses are not deductible. So instead of transferring a money-losing investment to  your RRSP consider selling it, then contributing the cash to your RRSP and repurchasing the investment within the RRSP. This will crystallize your capital loss.
• For more information please see your Tax Accountant at Woodbridge or call us at 905-794-8283.