To Clients: Tax deadlines are looming

Clients are often busy shopping for holiday gifts in December, so why not send them a letter reminding them that buying presents isn’t the only thing that needs to get done by the end of the year. This template letter explains to clients a few of the tax-related things they need to do before they ring in 2009.

Dear [Client’s name]:

If you’re like many people, you’re probably waiting until April to start thinking about your taxes. However, by the time taxes are due, it’s usually too late to realize tax-saving opportunities.

Now is the time to determine if there are any tax breaks 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:

Are you giving to charity? Two years ago, the Conservative government eliminated tax on “in-kind” donations of securities, mutual funds and segregated funds to registered charities. If you’re planning 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 2008 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.

Did you open a tax-free savings account? While you can’t add cash into this new TFSA until January 1, it’s a good idea to open the account before December 31 so you can start saving as soon as the banks re-open after New Years. In 2009 you can save up to $5,000 in a variety of investment options and, if you need those dollars at any point, you can pull them out tax-free.

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 2008 for various items including alimony payments, child-care expenses, interest expenses on money borrowed to earn investment income and investment counselling fees.

If you would like to book an appointment to discuss these or other potential tax-saving strategies, please don’t hesitate to contact me directly.

Sincerely,

[Your signature]

[Your name]

(11/04/08)