As the New Year approaches, BMO Financial Group reminded Canadians today that December 31st marks the last day to contribute to certain registered plans. It is also a key deadline for Canadians who want to take advantage of tax deductions.
Tina Di Vito, Head, BMO Retirement Institute, cautioned Canadians to act now to get their contributions and tax planning in order before December 31. Waiting until the New Year to start thinking about taxes is often too late, as many of the cut-off dates for tax deductions and credits fall at the end of the calendar year.
"With all the distractions around this time of the year, it's easy to forget about key end-of-year personal finance deadlines. With a little bit of planning and help from a financial or tax professional, making arrangements now can make the New Year less stressful," said Ms. Di Vito.
Tina Di Vito Reminds Canadians of the Following Year-End Deadlines:
Tax-loss Selling - Deadline: December 23
-- If you have investments that have depreciated in value, consider selling
these investments before year-end to offset capital gains realized
earlier in the year to reduce your overall tax bill. It is important to
ensure that a sale makes sense from an investment perspective, since
stocks sold at a loss cannot be repurchased until at least 30 days after
sale to be effective. Be sure to work with your BMO advisor when
implementing this strategy.
RDSP Contributions for Grants and Bonds - Deadline: December 31(i)
-- Designed for individuals with disabilities, the Registered Disability
Savings Plan (RDSP) combines the advantages of tax deferred investment
growth with the opportunity to receive government subsidies. December 31
is the annual contribution deadline for receiving Grants and Bonds from
the government.
-- December 31 is also the last day for Grants and Bond eligibility for
those beneficiaries who are turning 49 years of age, and is the last day
contributions are permitted to the plan for those beneficiaries who are
turning 59 years of age.
-- For more information on the RDSP, please visit:
http://www.bmo.com/home/personal/banking/investments/disability-
savings/registered-dsp
Charitable Donations & Other Tax Credits/Deductions - Deadline: December 31(i)
-- Ensure all charitable donations are made before December 31 in order to
receive a tax receipt for 2011.
-- Instead of donating cash to charities, investors could consider donating
appreciated publicly-traded securities. This strategy can provide a tax
credit equal to the value of the securities donated, while also
potentially eliminating the capital gains tax otherwise payable on the
gain accrued on the security.
-- December 31 is also the final payment date for a 2011 tax deduction or
credit for expenses such as childcare, medical costs, tuition and the
recently-introduced children's fitness and arts tax credits.
TFSA Withdrawals - Deadline: December 31(i)
-- If you are planning a withdrawal from your Tax-Free Savings Account
(TFSA), consider making this withdrawal in December instead of waiting
until the New Year; a withdrawal would result in additional TFSA
contribution room in the following year.
-- For more information on the TFSA, please visit:
http://www.bmo.com/home/personal/banking/investments/tax-free/tfsa
RRSP Contributions for those turning 71 - Deadline: December 31(i)
-- Individuals who turned 71 years of age in 2011 must collapse their RRSP
by the end of the year. Such individuals should consider a final RRSP
contribution, assuming any unused contribution room exists. Seniors
and/or retirees should also take note of some of the important tax
changes in recent years (such as pension income splitting, the
amendments to the Canada Pension Plan and the introduction of the TFSA)
that may affect their tax planning.
-- For more information, please visit:
http://www.bmo.com/home/personal/banking/investments/retirement-
savings/retirement-planning/what-stage-are-you-in/my-working-years