8 ways to cut taxes in 2015

It’s time for clients and business owners to consider how to reduce taxes in April, says EY in a new report.

The firm identifies the top ten conversations you should be having with clients before the year ends. These are:

1. How to approach income splitting. Clients should consider splitting loans, given the prescribed interest rate applicable to the exemption from income attribution on intra-family loans will remain at 1% for loans created in 2014.

2. How to pay tax-deductible or tax-creditable expenses. There are a number of expenses that can only be claimed as deductions in a tax return if the amounts are paid by the end of the calendar year. So, tell clients to accelerate early 2015 payments if they can benefit rom doing so.

3. How to maximize tax-sheltered investments. The earlier people contribute to TFSAs and RRSPs, the more time their investments will have to grow. Read: Government urged to eliminate TFSA loophole

4. How to maximize education savings. Suggest clients make RESP contributions for children or grandchildren before the end of the year. With a contribution of $2,500 per child under age 18, the federal government will contribute a grant of $500.

5. How to reduce or eliminate non-deductible interest. Interest on funds borrowed for personal purposes isn’t deductible, so clients should prioritize using available cash to repay personal debt.

6. How to prepare to file your 2014 return. If, at any time in the year, clients held certain specified foreign investment properties with total costs of more than $100,000, they’re required to file information returns (Form T1135) with their personal tax returns for the year. These report details for each of those investments. Read: The trouble with foreign withholding taxes

7. How to improve the cash flow impact of income taxes. If clients regularly receive tax refunds because of deductible RRSP contributions, child-care costs or spousal support payments, they can request that CRA allow their employer to reduce the tax withheld from their salary (Form T1213).

8. How and when to review estate plans. Clients should update their wills periodically to ensure it reflects changes in their family status and financial situations, as well as changes in estate law. Read: How tax law is evolving

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