There’s no shortage of movies that folks like to watch this time of year. Do you have any favourites? Here are a few personal finance and tax lessons we can learn from some well-known Christmas movie characters you’re sure to recognize.
1. Ebenezer Scrooge, from the movie A Christmas Carol (1951). This film version, with Mr. Scrooge played by Alastair Sim, is my favourite. Mr. Scrooge was a miserly old curmudgeon. He accuses his employee, Bob Cratchit, of stealing valuable time from the business by wanting a full day off for Christmas. When asked to donate to charity, Mr. Scrooge rejects the idea, then shouts “Bah! Humbug!” as his nephew wishes him a Merry Christmas. After visits from the Ghosts of Christmas Past, Present and Yet to Come, Mr. Scrooge sees the folly in his ways and finds joy in giving to others. The lesson? Giving to others this Christmas season can bring much joy to your household, and there’s still time to make donations to worthy causes, including donating to virtually any charity online at canadahelps.org as late as Dec. 31.
2. Clarence Odbody, from the movie It’s a Wonderful Life (1946). Mr. Odbody was an optimistic angel-in-training who was trying to earn his wings by getting the main character, George Bailey, back on the straight and narrow by helping him to recognize how important he was to his family. Mr. Odbody said “Strange, isn’t it? Each man’s life touches so many other lives. When he isn’t around, he leaves an awful hole, doesn’t he?” You’re important to your family. As we head into 2019, reconnect with your family on multiple levels, including financially. How? Do some income splitting with your family, then consider donating part of those tax savings together to causes you believe in. It’s a great way to become closer. Consider these income-splitting ideas: Lend money to your spouse, create second-generation income in the hands of family, swap assets with a family member, have the higher-income spouse pay the household expenses, transfer eligible pension income to your spouse, contribute to a spousal RRSP, invest in a minor child’s name, transfer money for business purposes or report your spouse’s dividends on your tax return.
3. Susan Walker, from the movie Miracle on 34th Street (1947). Natalie Wood played the character of Susan Walker, the precocious little girl who was raised by a skeptical and broken-hearted mother who refused to allow her daughter to believe in Santa. The little girl made outrageous gift demands, saying: “If you’re really Santa Claus, you can get it for me. And if you can’t, you’re only a nice man with a white beard like mother says.” Some would call Ms. Walker greedy. Canadians get into trouble when they become greedy in their tax planning. Smart tax planning leads to greater wealth, but overly aggressive tax planning can lead to reassessments, penalties and, perhaps worst of all, having to waste much time dealing with the Canada Revenue Agency. There are grey areas in tax, so it’s not always easy figuring out what ideas are too aggressive, but a good tax professional will be able to tell you where to draw the line.
4. Buddy the Elf, from the movie Elf (2003). Will Ferrell plays this naive but funny elf who accidentally ended up in the North Pole as a young child and was raised by Santa among his elves. He always felt different, so he travelled to New York to search for his real father. His famous words include: “He’s an angry elf ... He must be a South Pole elf.” If someone is grumpy or angry, isn’t it obvious they’re from the South Pole? The lesson that comes to mind: Nothing can devastate the finances of a family like anger and fighting. If you’re having troubles with your spouse, do your best to right your relationship. Child support payments aren’t deductible for tax purposes. Ouch.
5. Father Christmas, from The Chronicles of Narnia: The Lion, the Witch and the Wardrobe (2005). Okay, you might not recall Santa’s appearance in this great movie. But he was there, played by James Cosmo. He shows up in the movie, claiming that “Winter is almost over," bringing food, swords, bows, arrows and various other weapons. Santa ensured that the Pevensie children were ready for battle. Preparation is the key to success, and now is the time to prepare for the battle that is your tax liability for 2019. How to prepare? Implement at least one strategy that will result in less tax for you in 2019. How? By using one or more of the five pillars of tax planning: Deducting, deferring, dividing, disguising and dodging – all of which are legal.
Tim Cestnick, FCPA, FCA, CPA (IL), CFP, TEP, is an author, and co-founder and CEO of Our Family Office Inc. He can be reached at firstname.lastname@example.org.