Press release from CNW Group
Don't wait until April to review your taxes: Five tax strategies for year end
Friday, November 29, 2013
Don't wait until April to review your taxes: Five tax strategies for year end07:00 EST Friday, November 29, 2013
Take advantage of tax strategies before December 31 to pay less in taxes
TORONTO, Nov. 29, 2013 /CNW/ - CIBC (TSX: CM) (NYSE: CM) - Canadians who want to take full advantage of various 2013 tax planning opportunities need to act before year end instead of next April, says CIBC's tax and estate planning expert, Jamie Golombek.
"With the holidays approaching, the last month of the year is very busy," said Mr. Golombek. "But it's also an important time of year to put tax planning strategies in place that can help reduce taxes for 2013. Instead of waiting until April to think about tax planning, now is the time when Canadian investors can take advantage of various year end tax strategies, specifically designed to reduce their 2013 taxes. These strategies are easy for Canadians to implement, but they need to act before year end."
Mr. Golombek cites five important tax strategies from his newest report, 2013 Year End Tax Tips.
Consider tax-loss selling
Tax-loss selling involves selling investments with accrued losses at year end to offset capital gains realized elsewhere in your portfolio. Any capital losses that can't be used currently can either be carried back three years or carried forward indefinitely to offset capital gains in other years. In order for your loss to be immediately available for 2013 (or one of the prior three years), the settlement must take place in 2013, which means the trade date must be no later than December 24, 2013.
Prepare for retirement
There are a number of tax considerations for those just entering into their retirement years:
- If you turned 71 in 2013, you have until December 31 to make any final contributions to your RRSP before converting it into a RRIF or registered annuity.
- As of July 2013, you can defer your Old Age Security pension by up to 60 months. Future pension payments will be increased by 0.6% for every month that you delay receiving the pension beyond age 65, so your pension could be 36% higher at age 70.
Plan for withdrawals from registered plans
If you're planning to withdraw funds in the near future from an RRSP, TFSA or RESP, here are some tips to help you decide whether to withdraw in 2013 or early 2014:
- If you're thinking of withdrawing funds from a TFSA in the near future, consider accelerating that withdrawal so the funds are withdrawn by the end of 2013. That will then allow you to recontribute them again if the funds become available in 2014, rather than having to wait until 2015.
- For withdrawals from an RRSP under the Home Buyer's Plan or Lifelong Learning Plan, waiting until 2014 to make the withdrawal will give you an extra year before you're required to begin making repayments to the plan.
- For RESPs, if the beneficiary is attending school and has little income, consider paying Educational Assistance Payments (EAPs) in December 2013. Although payments will be included in the student's income, if the student has sufficient personal tax credits the EAPs can be received tax-free.
Donate to your favourite charity
December 31 is the last day to make a donation and obtain a tax receipt for 2013. Many charities offer the ability to donate online, with electronic tax receipts that are emailed to you instantly. You may also be able to claim the new federal First-Time Donor's Super Credit (FDSC) if you and your spouse or partner haven't claimed a donation tax credit in the past five years. The FDSC provides an additional 25% federal credit for cash donations made after March 20, 2013, yielding a federal credit of 40% for total donations up to $200 and 56% for total donations between $200 and $1,000. Provincial donation tax credits further increase your tax savings.
Pay expenses by year end to be eligible for tax deductions and credits
Claiming expenses, such as daycare fees, interest on student loans, and spousal support payments can all provide benefits at tax time; however, you must pay these expenses by the end of the year to realize the tax savings for 2013.
"These tips highlight several ways you can act now to benefit from tax savings when you file your return next spring," says Mr. Golombek. "But keep in mind that tax planning is a year-round affair. Speak to your advisor well in advance of tax filing season to get more information on how to reduce your taxes."
For more details on these five strategies, along with a few more, see Mr. Golombek's report, 2013 Year End Tax Tips
CIBC is a leading North American financial institution with nearly 11 million personal banking and business clients. CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada, and has offices in the United States and around the world. You can find other news releases and information about CIBC in our Press Centre on our corporate website at www.cibc.com.
For further information:
Kevin Dove, Head of External Communications, 416-980-8835, email@example.com