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Dear Nancy,

With Christmas decorations showing up in stores now, it's a reminder that the end of the year is coming. I'm looking at my portfolio to see if I need to do any tax-loss selling. I'm wondering what other things I should do before 2014 ends. What do you think?



Dear Craig,

There are some things to consider and review before the end of the year. Here is a list of my suggestions:

1. The major review is for tax-loss selling opportunities. This requires you to find out what the total is of your realized gains during the year. This is investments that were sold or redeemed that created a taxable capital gain. Investments held in a registered account are not included. You can consider selling an investment at a loss to offset some or all of the gain. If you think that the investment with the loss will recover, you can buy back that same security after waiting 30 days to pass. If you don't wait the 30 days, the capital loss is not eligible. If the amount of the loss is greater than the gain you can carry forward the loss for future gains. Alternatively, you can take the loss to help offset the gains you may have declared going back three years. It would require you filing a T1A Request for Loss Carryback form with CRA.

2. Calculate your expected total income for 2014. If you have a low income and, depending on your age, if you are retired and have low income, it may be worthwhile to deregister some funds now before you convert your account into a RIF. If you do already have a RIF you can always deregister additional funds as well. Be aware that when you deregister additional funds from an RSP or RIF there is a withholding tax taken at the time of the withdrawal.

3. Check to ensure that you have made any necessary income tax installment payments for 2014 to avoid late interest charges. The deadline is December 15, 2014.

4. If you have any securities that have a large capital gain, you may consider making a donation of that investment to a registered charity. You get the deduction for the charitable donation rather than the tax liability for the significant capital gain if it was sold by you.

5. If you turned 71 in 2014, make sure that you have moved your RRSP into a RIF.  If you have taxable earned income it may make sense to make a final contribution to your RSP. Again, it only makes sense if you have earned income to deduct the contribution from.

6. If you have no pension income expected for 2014 you should see if rolling $2,000 from your RSP into a RIF so it is classified as pension income makes sense. You are given a tax credit of 15-per-cent federal and an applicable provincial rate based on your residence.

7. If you have a new or existing spousal loan, note on your calendar that the interest on that loan must exchange hands prior to January 30, 2015 in order for the borrower to claim the interest deduction on their 2014 income tax return. By the same token, the lender must declare the equal amount of interest as income for 2014.

8. See if you can top up your contribution to your TFSA. The allowable contribution room since the plan started in 2009 is $31,000. There are specific requirements to open a TFSA such as over age 18 and a Canadian resident. So be sure you qualify.  The overcontribution penalty is 1 per cent per month for the amount of overage. It can add up quickly. If you can't, the leftover allowance is carried forward to for future years.

9. Check if you should be making a contribution to your RESP if you have one for your children. Specifically if any of the beneficiaries has turned 15. In order to receive the Canada Education Savings Grant (CESG) when they are 16, a minimum contribution of $2,000 has to have been made the year prior or  a minimum of $100 in the four years prior to turning 16.

10. This next suggestion is a subject difficult to raise but still necessary. Over the holidays when families get together it may be the one time of the year that all members are at the same location. It can be the best time to discuss estate plans so that in the case of parents that their wishes are fully disclosed to prevent any surprises and avoid possible future litigations. There generally is never an ideal time but I have seen several families destroyed over estate arguments. It is not only about money but the family cottage, heirlooms, jewelry etc. Please consider this suggestion with seriousness to avoid the irreparable damage that can be done when you are gone. Prior to your discussion, take the time to review your wills and power of attorneys for accuracy and if the instructions are still according to your wishes.

11. My final suggestion is not financial in nature but health-focused. Prepare a list of all your current medications you take and any medical issues you may have and put them in your wallet. It can be life saving in the case of a medical emergency. It would enact Murphy's law: if you have it, you won't need it.

These are some things to consider before the end of 2014. These are by no means the only things that should be looked at before December 31, 2013. It maybe worth a quick call to your investment adviser or tax accountant to check before you usher in 2015.