Go to the Globe and Mail homepage

Jump to main navigationJump to main content


Entry archive:

Home Cents

Check this list twice so your portfolio looks nice Add to ...

With Christmas and New Year’s quickly approaching, there’s another checklist you might want to look at, and it has nothing to do with what gets placed under the Christmas tree.

Adrian Mastracci, a portfolio manager with KCM Wealth Management Inc. in Vancouver, says before the clock strikes midnight on Dec. 31, there are a few financial issues you might want to consider to make sure you start 2012 on the right financial foot. The purpose is to “just have people revisit these areas see if they apply and do something constructive,” he says. Here’s his 2011 year-end planning checklist.

1. Open up a tax-free savings account.

If you don’t have one yet, you can put $15,000 into it since the maximum per year is $5,000 and TFSAs began in 2009. You can add another $5,000 in 2012. The investment income earned in a TFSA isn’t taxed, but you can’t use any capital losses either. “The key is if you take money out, you have to wait for next year to put it back,” Mr. Mastracci says, or you’ll get penalized.

2. Contribute to your registered retirement savings plan.

You can make regular and spousal 2011 deposits until the end of February, 2012, and this year’s tax assessment will tell you how much unused RRSP room you have. For most people it’s a lot.

3. Convert your RRSP to a registered retirement income fund.

Sadly, you can’t tell the government you aren’t the age you are. You must convert your RRSP by Dec. 31 if you turned 71 this year. Then you’ll make your first minimum RRIF withdrawals in 2012.

4. Take an extra RRIF payment, if you need it.

You might have a bigger expense this year and need the cash. You must receive the payment by Dec. 31.

5. Set up for voluntary RRIF payments.

Some people under age 71 may want to voluntarily arrange 2011 RRIF income, some as a way to split pension income with a spouse. The RRIF has to be set up and the payment received by Dec. 31.

6. Set up a registered education savings plan.

If you have more than one child, consider a family plan that can be used by any of your children in case one decides not to pursue a post-secondary education. It cuts down on paperwork and fees. A $2,500 deposit provides the maximum $500 annual grant per child. Then you let the grandparents know that you’ll gladly accept cash payments to help boost the RESP. The maximum lifetime contribution is $50,000 per child.

7. Set up a registered disability savings plan.

It allows savings up to $200,000 for a disabled beneficiary under age 60, who also must qualify for the federal disability tax credit.

8. Sell your money-losing investments.

That would be part of a plan to put them against your capital gains. “See if it makes sense to sell those losers,” Mr. Mastracci says. Your account has to receive the sale proceeds by Dec. 31. Your 2011 losses can first be applied against any gains you have this year or to gains reported in the past three years. Or they can be carried forward.

9. Make cash donations.

They must be made by Dec. 31. Make sure you get receipts.

10. Donate securities by Dec. 31.

That’s more tax effective than donating cash, says Mr. Mastracci, since capitals gains on the donated securities are exempt from income tax. Charities know what to do, just contact your favourite.

11. Pay deductible expenses.

If you want to deduct an eligible expense this year, you have to pay it by Dec. 31. That includes dues, medical expenses, professional fees, tuition, child fitness credits and political donations.

12. Review your self-employed income.

If you’re self-employed, review your remuneration for this year including salary, management fees, bonus and dividends. To create the maximum 2012 RRSP room of $22,970 requires “earned income” of $127,600 this year.

13. Consider a prescribed 1-per-cent rate loan to your spouse or partner.

This can be a beneficial income-splitting strategy. That 1-per-cent rate is as low as it will go and doesn’t change over the life of the loan, Mr. Mastracci says. All the documentation must be in place by Dec. 31.

Follow us on Twitter @globemoney

Read more of Globe Investor's 29 Ways in 29 Days to be a better investor

Report Typo/Error

Follow on Twitter: @gilllivingston

Next story




Most popular videos »

More from The Globe and Mail

Most popular