This time of year is hectic. At work and at home, we’re all busier than ever. But why not take advantage of this energy to take another look at your taxes and make sure you have effective strategies in place?
Andrei Tasevski, a financial planner in Mississauga with AWealth, has some ideas to help you do that by the end of the year.
Here are 3 tips for reducing your taxes before the Holiday Season:
1. Make a donation
Donating to a registered charitable organization entitles you to a tax credit. If you’re a first-time donor, you can get an extra 25% credit, but only if you make your donation by December 31, 2017.
You can also donate publicly traded securities that have appreciated in value to a charitable organization. You get a charitable tax credit and the capital gain is eliminated.
Why now? You’ll be helping someone in need and you’ll enjoy tax advantages!
2. Contribute to spousal RRSP
You can contribute to a spousal RRSP as long as your spouse is younger than the age of 71. You’ll keep enjoying the resulting tax deductions, if you still have contribution room and you can take advantage of income splitting in your retirement.
Why now? Contributing just before December 31 of each year makes it easier to respect the 3 year rule, so that the income will be taxed in your spouse’s hands and not yours.
3. Contribute to RESP
A Registered Education Savings Plan (RESP) is a gift to your child. Contributing to an RESP doesn’t give tax savings, but the federal government tops up your contribution 20% in Ontario. That’s the amount of the grant that can be paid to children up to and including the year the beneficiary turns 17. Also, if you open an account with Industrial Alliance, you are entitled to additional 15% bonus.
Why now? In order for a child to receive grants up to age 17, the RESP must be opened by December 31 of the year in which the child turned 15. The contributions must total at least $2,000 or contributions of at least $100 a year must be made in any 4 previous years.
Enjoy the Holidays!