Tax time is still months away, but year-end is just around the corner. That means you should start thinking now about what you can do before December 31—the deadline for many tax breaks—to create some savings for yourself when tax time does arrive. Here are some things to consider before the year is out. Your RRSP A registered retirement savings plan (RRSP) is the biggest tax break available to most Canadians. Avoid the stress of scrambling to meet the RRSP deadline by contributing earlier in the year. Contributing as early as possible, or in smaller amounts throughout the year through a pre-authorized contribution plan, allows the growth on your savings to compound and generate more income. RESPs If you have a registered education savings plan (RESP) for a child, make sure you maximize the Canada Education Savings Grant (CESG) by yearend. A $5,000 contribution before December 31 may generate up to $1,100 in basic and additional CESG for your child.* Children’s tax credits The children’s fitness tax credit allows you to claim up to $500 per child for fees paid in 2013 relating to the cost of registration or membership for your child in a prescribed program of physical activity. You can also claim up to $500 per child under the children’s arts tax credit for prescribed programs of artistic, cultural, recreational, or development activity. Charitable donations Make charitable donations by December 31 if you want those donations to be eligible for a tax credit this year. Total donations for the year of more than $200 will save you tax at approximately the top marginal tax rate. You can combine your donations with your spouse’s to maximize the credit. The 2013 federal budget proposed a First-Time Donor’s Super Credit (FDSC), which if approved, will allow first-time donors to claim a 25% credit in addition to the regular tax credit for up to $1,000 of donations made after March 21, 2013. Move to save If you are moving to a province with a lower tax rate, do so before December 31 and you’ll pay the lower rate for the full year. If you’re moving to a jurisdiction with a higher tax rate, try to delay until 2014. There are a number of things you can do to save tax. Talk to us before year-end to be certain you are making the most of the tax-saving strategies available to you. Young people should file a tax return, too If your teenagers worked a summer job or are employed throughout the year, make sure they save their pay stubs. Its smart for them to file a tax return even if they earned less than the minimum taxable amount of $11,038. Filing a return allows their RRSP contribution room to be calculated. In future, when your son or daughter does earn enough to be taxed, they will be able to contribute to an RRSP, creating a deduction that will reduce the income tax they are required to pay.
Posted on: Tue, 19 Nov 2013 18:03:17 +0000
Trending Topics
Recently Viewed Topics
© 2015