Tax Tips for the End of the Year

You’ve just visited the LCBO and picked up a couple of bottles of champagne for the big midnight toast. You’re going to stop by the Metro for a couple of bags of chips and that onion dip the neighbours like oh so much. Ah yes, the dollar store has some party hats and noisemakers so that pretty much finishes off everything you need to do before the end of the year. Or does it?
 
Have I done everything I need to do to ensure 2010 is as successful as possible? Have I completely made use of the limits provided to me by the government to shelter my hard earned cash from the ravenous jaws of Revenue Canada? I can contribute up to $22,000 or 18% of the income reported in the previous tax year. What’s so important about that? If I reduce my taxable income this year, I just may see myself with a cheque in my hand come May or June next from the government in the form of a tax refund. Sweet!
 
Of course, going back to fundamentals, do I even have a RRSP? That’s a Registered Retirement Savings Plan, 4 letters which should be burned into the minds of all of us hoping to spend our "golden years" in a good place with a good lifestyle all while not having to slog it out at the age of 65 or 70. All of us should be consulting with somebody – and I don’t mean Uncle Harry – with professional credentials about what all we should be doing to prepare ourselves and our finances for the future. Yes the government will help out but let’s not procrastinate with some vague idea that Mr. Harper out of a fit of generosity is going to make our retirement years all comfy and nice. At the end of the day, each of us is responsible for our own fate and unless we have extremely generous or guilt-ridden children who will dot over us in our senior years, we better get cracking and do what’s necessary to ensure we have a degree of financial independence later on in life.
 
TFSA
If you have room in a Tax Free Savings Account, have you contributed as much as you can? What? You don’t know what a TFSA even is? [rolls eyes] Oh boy, we have to get you over to a financial planner immediately!
 
Charitable Donations
Listen you tightwad, how about ponying up for a few of the lessers out there in the world? How about supporting your community? How about giving to those services which provide much needed help for those who won’t be popping the cork on a bottle of champagne this coming New Year’s Eve? Get on the phone or get online and whip out that piece of plastic and show us what a true giving person you really are. After all, this gift of largesse on your part will come back to you and I don’t mean as goodwill to you, I mean as a tax refund cheque next May or June. Hey, I like getting something back for my charitable ways as much as the next guy but I really like getting something back I can actually take to the bank. Okay maybe I’m not Mother Teresa but at least I am making some donation to support various charities in order to help out my fellow man.
 
Future Investment
Do your children have a Registered Education Savings Plan? Top it off and make sure you are eligible for the maximum Canada Education Savings Grant.
 
Review
Take a look at your books. – I mean your accounting books; not your Tom Clancy spy novels! – Many things must be dated on or before December 31 to fit into the current tax year. Various expenses like alimony, childcare and medical bills dated in 2010 will get you a tax break come April of next year.
 
Make yourself a New Years’ Resolution
You are going to start paying attention. Getting rich ain’t going to happen all by itself!
 
Final Word
How many times am I going to have to say this? Read The Wealthy Barber! (see my blog for a review of the book)
 
Have yourself a Happy New Year. Don’t drink and drive. And be careful popping the cork on the champagne bottle. Believe or not, I’ve actually left a dent in the ceiling from the force of the cork flying off the bottle. You can’t always see it but sometimes when the light is right, I can still make out the indentation in the plaster. That’s the last time I let my neighbour shake up the bottle before I try to fill up the glasses for the final toast of the year!
 
See you next year!
Click HERE to read more from William Belle 
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