Year-round tax planning tips

By being forward-thinking, doing some research and identifying credits and deductions, Canadians can reduce their 2013 tax bills, says BMO Nesbitt Burns.

Read: How new dividend tax rules affect biz owners

Here are some tips.

Payment of quarterly tax instalments

• 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 instalments.
• Personal tax instalments are due four times a year, with the next instalment due September 15.
• Canadian investors are often required to make instalments since tax is not deducted at source on investment income. If an investor falls short on any required instalments, he could incur non-deductible interest or penalties.

Read: Tax credits for students

RRSP contributions for those turning 71

• Individuals who turn 71 years of age must collapse their RRSPs by the end of the calendar year.
• These clients should consider taking advantage of a final contribution into their RRSP before the end of the year, assuming unused contribution room exists.
• Seniors and/or retirees should also take note of some of the important tax changes in recent years (such as pension income-splitting, OAS and CPP, and the introduction of the TFSA).

Read: 5 ways to decide between TFSAs and RRSPs

Consider tax credits

• Equivalent-to-Spouse Credit: If single, divorced or separated, your client may be able to claim his child under 18, or another family member who lives with him and is a dependant, as an “equivalent-to-spouse” for tax purposes.
• Disability Credit: Those with a severe or prolonged mental or physical disability that significantly impedes their abilities to perform routine tasks of daily life can apply for this credit.
• Caregiver Tax Credit: Canadian families providing in-home care for a dependant adult relative may be eligible for a caregiver tax credit, provided the dependant’s net income is below certain thresholds.

Read: Save tax on company cars

Consider tax deductions

Some out-of pocket expenses can be used to reduce overall tax bills. These include:

• Childcare expenses: Fees for daycare, summer camp or boarding school for children under 16 can be deducted if parents are either working or attending school full time.
• Medical expenses: Clients can reduce their taxes by claiming a tax credit for all or part of an expense related to a medical impediment. This includes guide dogs for the blind, bathroom aids, attendant care, a portion of the cost of an air conditioner to ease a severe respiratory ailment, and accessible housing and tutoring services for those with a certified learning disability.
• Moving expenses: If your move brings you a minimum of 40 km closer to your new job, expenses like movers, renting a truck, cost of breaking a lease, storing furniture, legal fees, real estate commissions and food or hotels can be claimed.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.