Year End Tax Planning

By Fin MacDonald
Seasons Greetings to all!! As we approach the festive season it is wise to take a few minutes to maximize our tax refunds for 2011. "Helping you keep more of your money" has been my guiding principle for the last twenty years. While there is still some of 2011 left, here are some tax tips to consider.

Families

The new Children's Art Tax Credit has been added to the returning Children's Fitness Tax Credit. Both of these tax credits are available to families with children under 16 (or under 18 if the child has the Disability Tax Credit) as of December 31, 2010. Up to $500 per child may be claimed with receipts. If your child is going to take soccer or ballet in the new year, paying the fees in 2011 allows you to claim the deduction on the 2011 tax return.

Medical Expenses

Thinking of getting new glasses/contacts, hearing aids, dentures or other eligible medical devices?  By doing it before December 31, 2011, the deduction can be made on the 2011 tax return. All the expenses from the family can be combined for one large claim as there is s 3% deductible on medical expenses. Also, please remember that 2011 is the second year that purely cosmetic medical procedures are not eligible for deduction.

Disability Tax Credit

Beware of promoters offering refunds of up to $35,000 - the Canada Revenue Agency is cracking down. If you or your spouse do not have taxable income, the Disability Tax  Credit is of no value.

Charitable Donations

Be wary of schemes that promise deductions far greater than your actual contribution. RUN, don't walk, away from theses shady promoters. Donations made in 2011 may be claimed for 2011 or any of the following five years by either spouse.

Public Transit Tax Credit

This non-refundable credit is available for monthly, yearly, or UPass bus passes. Save your passes and submit all for each family member for maximum benefit.

RRSPs

All RRSPs must be converted to RIFs or annuities by the end of the year you turn 71.  RRSP or TFSA which is best for you?  This requires careful consideration. My February column will look at this in detail.

Investments/ Capital Gains

Last day for tax loss selling is December 27, 2011. Don't forget to claim all of the investment related fees you paid in 2011. Also, interest paid on money used to buy investments (not including RRSP/TFSA) is also deductible.

In summary, much can be done in December to make your tax return a much happier time!