6 year-end strategies for saving on tax

No one wants to miss out on savings. Ensure your clients know about important tax-saving deadlines coming up this weekend. And check out these other useful tax tips from BMO Nesbitt Burns.

Read: 8 great year-end tax tips

1. Payment of quarterly tax installments

Deadline: Dec. 15*

Individuals whose estimated income tax payable for the year, or payable for either of the two preceding years, exceeds $3,000 ($1,800 for Quebec residents) may be required to pay income tax installments. Personal tax installments are due four times a year, with the final installment due December 15.

Read: Don’t delay planning

2. Tax-loss selling

Deadline: Dec. 24

If your client has investments that have depreciated in value, she should consider selling these investments before year-end to offset capital gains realized earlier in the year. This move reduces her overall tax bill. It is important to ensure that a sale makes sense from an investment perspective, since stocks sold at a loss cannot be repurchased until at least 31 days after sale to be effective.

Read: How to tax-loss harvest

3. Charitable donations & other tax credits or deductions

Deadline: Dec. 31

• Ensure all charitable donations are made before the end of the year in order to receive a tax receipt for 2013.
• Instead of donating cash to charities, clients should consider donating appreciated publicly-traded securities. This provides a tax credit and could potentially eliminate any capital gains tax on the accrued gain on the security.
• Dec. 31 is also the final payment date for a 2013 tax deduction or credit for expenses such as childcare, medical, tuition and the recently-introduced children’s fitness and arts tax credits.

Read: Tax tips for giving to charity

4. TFSA Withdrawals

Deadline: Dec. 31

If your client is planning a withdrawal from her TFSA, consider making this withdrawal in December instead of waiting until the New Year; a withdrawal would result in additional TFSA contribution room for the following year.

Read: Faceoff: TFSA vs RRSP

5. RRSP Contributions for those turning 71

Deadline: Dec. 31

Individuals who turned 71 years of age in 2013 must collapse their RRSP by the end of the year. Such individuals should consider a final RRSP contribution, assuming any unused contribution room exists.

Read: Reliable retirement income streams

* When a due date falls on a Saturday, a Sunday, or a holiday recognized by the CRA, payment will be considered on time if received the next business day.