Tips for last minute Canada tax savings and government grants

Tips for last minute tax savings and government grants:

-Dec 23 is the last day in 2011 to sell losing investments (stocks, bonds mutual funds etc.) in your non-registered accounts to recover capital gains tax on the sale of winning investments in the past three years.

-If you wish to invest in mutual funds wait until late December, after the dividends and distributions are paid, or the New Year to purchase funds in a non-registered account, otherwise you will be taxed on the distributions or dividends.

-To get government grants for your children’s Registered Educational Savings Plan (RESP)- you must invest in an RESP before Dec 31.

-If you are a business owner- buy and start using equipment late in your fiscal year because generally you will be eligible for half the tax deduction for capital cost allowance (CCA). Employees may also be eligible to claim CCA on automobiles, aircraft and musical equipment. Please check with your tax advisor.

-If you are making regular contributions to a retirement savings plan, you may apply each year for an adjustment to the amount of tax deducted from your paychecks. Mail your request to the Taxpayer Services Division of Revenue Canada.

-If you have made modifications to your home to make it greener or make it more habitable for a senior- you may be eligible for tax credits when you file your 2012 tax return. Please check with your tax advisor for all expenses that are eligible for tax credits.

-If you turned 63 this year, seek out advice on cashing out your RRSPs before you turn 64 as depending upon your income at retirement you may be vulnerable to government clawbacks on your Guaranteed Income Supplement (GIS) and Old Age Security benefits.

-For those turning 60 or more, check on your eligibility to a claim tax credit called Pension Income Amount which is available both from the federal and provincial governments. For Ontario residents it is $2000 federal and $1259 provincial.

-If you have turned 71, this month is the last chance to transfer your RRSPs to RRIFs so that you pay your tax liabilities over time rather than immediately. If you have maxed out your RRSPs, you may make an over contribution of $2000 without penalty and delay RRIF withdrawals until late next year if you wish.

-If you have any further questions- please do not hesitate to contact Lachman Balani of Shah Financial Planning Inc at 416-902-3580 or

Happy tax saving and happy holidays!

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