11 strategies to save tax

8 strategies for individuals

1. Prescribed rate loan to a spouse

   If you’re married, consider establishing or modifying a spousal loan as a possible income-splitting strategy.

2. Unrealized capital gains

   If you have unrealized capital gains and your marginal tax rate will be lower in the coming year, defer the gains until then. This way, any tax payments can be deferred until the next tax year.

3. Tax-loss harvesting

   Has an asset sale, such as a rental property or securities that soared, set you up for a large capital gain in the current tax year? Consider selling some securities that are in the doldrums, and on which you have an unrealized capital loss, to help reduce tax liability.

4. Charitable donation

   Making a charitable donation reduces personal taxes each year. If you plan on donating securities in-kind before the year ends, start the process now. It’ll take some time to administer the donation.

5. Employer Bonus

   Are you receiving an employee bonus by December 31 of this year? If you expect to be in a lower tax bracket next year, defer it to reduce next year’s taxes.

6. Moving within Canada

   If you’re moving within Canada, take into account the differing provincial tax rates across the country. If you’re relocating to a province with a lower tax rate, move before year’s-end.

7. Quarterly payments to CRA

   If you make quarterly tax installment payments to the CRA, you need to make final payments by December 15 of the current year to avoid late interest charges.

8. Fees

   Pay all outstanding fees by the end of the year to ensure they count toward the current year’s tax return. This can include: investment management fees; tuition fees; safety deposit box fees; accounting and legal fees; childcare expenses; alimony; medical expenses; and any business expenses.

3 tips for business owners

1. Incorporated company

   If you’re a business owner with an incorporated company, you can receive both year-end corporate income tax deductions and a structured retirement savings plan through an Individual Pension Plan.

2. Salaries for family members

   Business owners should pay out salaries to family members before December 31. This strategy potentially provides earned income that enables them to make an RRSP contribution the following year, as well as a tax deduction in the current year.

3. Purchasing assets

   If you plan to buy assets (e.g., a computer) for your business, go shopping before the end of the year. This way, you can claim depreciation on the assets for tax purposes.