BMO Nesbitt Burns' Year-End Tax Study: Canadians Not Familiar with
Specific Tax Deadlines
- Offers tips on year-end tax-saving strategies
TORONTO, ONTARIO -- (Marketwire) -- 12/28/12 -- With the end of the
year only a few days away, BMO Nesbitt Burns reminds Canadians not to
wait until April to think about their taxes. The end of December
marks an important time for many who are looking to minimize the
amount of taxes they pay on their investment income.
According to a study by BMO Nesbitt Burns, 93 per cent of Canadians
believe they are familiar with the income tax deadlines. However,
when asked about various, specific tax deadlines, many did not know
the correct dates for:
-- Charitable donations and tax credit/deduction deadline (61 per cent
unaware of the correct date)
-- RRSP contribution deadline for those turning 71 (70 per cent unaware)
-- Payment of quarterly tax installments deadline (73 per cent unaware)
-- TFSA withdrawal deadline (78 per cent unaware)
-- Tax-loss selling deadline (85 per cent unaware)
"It's important for Canadians to educate themselves on the various
end-of-year deadlines to help ensure there are no missed
opportunities to reduce their tax bill," said John Waters, Vice
President, Head of Tax & Estate Planning, Wealth Group, BMO Nesbitt
Burns. "Many tax strategies require foresight to be effective, and
tax planning should be a year-round activity. Seek out the assistance
of a financial and tax professional as soon as possible - waiting
until the New Year to start thinking about taxes is often too late."
Before year-end, BMO Nesbitt Burns offers the following tax-saving
1. Charitable Donations & Other Tax Credits/Deductions - Deadline:
-- Instead of donating cash to charities, 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. Ensure all charitable donations are made before
December 31, in order to receive a tax receipt for 2012.
-- December 31 is also the final payment date for a 2012 tax deduction or
credit for expenses such
as childcare, medical, tuition and the
recently-introduced children's fitness and arts tax credits.
2. TFSA Withdrawals - Deadline: December 31
-- 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 for the following year.
3. RRSP Contributions for those turning 71 - Deadline: December 31
-- Individuals who turned 71 years of age in 2012 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 impact their tax planning.
For next year:
Payment of Quarterly Tax Installments - Deadline: Generally around
-- Individuals whose estimated income tax payable for the year, or payable
for either of the two preceding years, exceeds $3,000 ($1,800 for Quebec
residents) may be required to pay income tax installments. Personal tax
installments are due four times a year, with the final installment due
-- Canadian investors are often required to pay by installment since tax is
not deducted at source on investment income. If an investor falls short
on any required installments, he/she could incur non-deductible interest
Tax-loss Selling - Deadline: December 24
-- 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 Nesbitt Burns
advisor as well as your tax advisor in implementing this strategy.
For more information on tax-efficient investing and planning, locate
a BMO Nesbitt Burns Investment Advisor at www.bmo.com/nesbittburns.
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The results cited in this release are from an online Pollara survey
with a random sample of 1,000 Canadians 18 years of age and older,
conducted between November 29th and December 4th, 2012. A probability
sample of this size would yield results accurate to +/- 3.1 per cent,
19 times out of 20.
(i) When a due date falls on a Saturday, a Sunday, or a holiday
recognized by the CRA, payment will be considered on time if received
the next business day.
Amanda Robinson, Toronto
Valerie Doucet, Montreal
Laurie Grant, Vancouver
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