Want to put more money in your pocket? Five most overlooked year end tax
There are ways to pay less in taxes - but you must act before December 31
TORONTO, Nov. 27, 2012 /CNW/ - Canadians who want to take full advantage of
the various tax credits, deductions and other opportunities for tax savings,
need to act quickly, before year end, says CIBC's tax and estate planning
expert, Jamie Golombek.
"With 2012 drawing to a close and the very busy holiday season approaching,
Canadians shouldn't forget tax planning opportunities that may disappear if
they don't act before year end," said Mr. Golombek. "There are a number of
easy ways for Canadians to reduce taxes that they might otherwise owe - but in
many cases you need to act before December 31."
Mr. Golombek cites the most overlooked strategies from his recent report:
Donate to your favourite charity
December 31 is the last day to make a donation and obtain a tax receipt for
2012. Many charities offer the ability to donate online, with electronic tax
receipts that are generated and emailed to you instantly. For example, if your
total 2012 donations exceed $200, each additional $100 donation in 2012 can
get you up to $100 back, depending on your province of residence.
Contribute to an RESP for your child or grandchild
The federal government provides a Canada Education Savings Grant of 20 per
cent on the first $2,500 of annual RESP contributions per child, which can add
up to $7,200 to an RESP during a child's lifetime. If you haven't maximized
RESP contributions for your children or grandchildren, you can make an
enhanced catch-up contribution in 2012.
If your child turned 15 in 2012 and has never been an RESP beneficiary,
December 31, 2012 is your last chance to contribute to an RESP to create CESG
eligibility. For example, by contributing $2,500 to an RESP, you could get
$500 of CESGs added to the RESP account, usually by the following month.
Pay expenses by year end to be eligible for tax deductions and credits
Claiming expenses, such as interest on money borrowed for investing or student
loans, daycare fees and children's fitness or arts fees, can all provide
benefits at tax time. However you must pay these expenses by the end of the
year to realize the tax savings for 2012. For example, paying $500 for your
children's winter swimming lessons before year end could mean up to $75 in
Review your investments
The end of the year is a good time to review the types of investments you
hold, and the accounts in which you hold them. Investments yielding
highly-taxed interest income may be best-suited to RRSPs or TFSAs, while
Canadian equities, which can generate favourably-taxed dividends and capital
gains, may be more suited to non-registered accounts. If you are planning a
TFSA withdrawal in early 2013, consider withdrawing the funds by December 31
instead, so you don't have to wait until 2014 to be able to re-contribute that
Prepare for retirement
There are a number of tax considerations for those just entering into their
-- If you turned 65 in 2012 and have not yet applied for Old Age
Security benefits, remember that retroactive benefits, which
can be worth over $6,500, can only be claimed within a limited
time. To receive those benefits, you should apply as soon as
-- If you turned 71 in 2012, you have until December 31 to make
any final contributions to your RRSP and convert it into a RRIF
or registered annuity.
"These tips are some of the most commonly overlooked, easy ways you can act
now to benefit from tax savings when you file your tax return next spring,"
says Mr. Golombek. "But keep in mind that tax planning is a year-round affair.
Speak to your accountant or tax advisor well in advance of tax filing season
to get more information on how to reduce your taxes."
More details are available in Mr. Golombek's report, 2012 Year End Tax Tips.
CIBC is a leading North American financial institution with nearly 11 million
personal banking and business clients. CIBC offers a full range of products
and services through its comprehensive electronic banking network, branches
and offices across Canada, in the United States and around the world. You can
find other news releases and information about CIBC in our Press Centre on our
corporate website at cibc.com.
Sean Hamilton, 416-304-8456,firstname.lastname@example.org.
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-0- Nov/27/2012 11:00 GMT
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