Tax Savings - a step in the right direction

If you're like many people, you may not really start thinking about your taxes until April when it's time to file your return. However, by the time taxes are due, it's usually too late to make any significant changes in order to realize tax-saving opportunities.



Now is the time to determine if there are any tax situations you can take advantage of by acting before the end of the year. With this in mind, there are a number of tax-related questions and issues that we may need to discuss soon in order for you to get the most out of this tax year. For example:

Do you have the proper Tax Free Savings Account? The new Tax-Free Savings Account (TFSA) is a flexible, registered general-purpose savings vehicle that allows Canadians to earn tax-free investment income to more easily meet lifetime savings needs.

• If you currently have a TFSA is it really making the return you envisioned? We can re-visit this account and insure it is in a vehicle making higher returns.


• Considering opening a TFSA? We should talk about your growth goals and place your TFSA in the appropriate funds.



A few benefits to what we offer with IPC as compared to your local bank:


• The ability to add a beneficiary designation
• 2009’s growth in our corporate bond TFSA was 29% compared to the local bank of 1.2%


Are you giving to charity? Whether you wish to give cash, property or securities, it is important to make sure that all donations are made by December 31 in order to realize the tax benefits on your 2010 return.



Do you have any non-registered mutual fund purchases planned? Many mutual funds distribute their earnings at the end of the year, meaning that investors who purchase them in December will be liable for taxes on those earnings as if they had been invested for the entire year. We can get an estimate of what this year's distributions will be to determine if it might be worthwhile to postpone non-registered mutual fund purchases until January.



Have you turned 71 this year? If you have turned 71 in 2010, you must convert your RRSP to a RRIF, annuity or a combination of the two. Failing to make this decision by the end of December could result in your entire RRSP portfolio being considered taxable income for the year. Also, if you'd like to make one last top-up contribution to your RRSP, it has to be done by the end of the year.


Can you benefit from tax-loss selling? Losses on certain assets ― mainly stocks ― can be offset against capital gains that have been realized during the previous three years. Now is the time for us to review your portfolio to determine if there are any equities for which you want to lock in the losses before year-end.


In addition, final payments must be made before December 31 in order to claim a tax deduction in 2010 for various items including alimony payments, child-care expenses, interest expenses on money borrowed to earn investment income and investment counseling fees.

Contact us at your local Investment Planning Counsil to dissuss your options and move forward on your tax savings. 905-295-2341.