Year End Step to save on 2017 Tax Bills
We know that for most Canadians, their tax bill isn’t top of mind until April tax season. While tax planning should be a year-round exercise for investors to students to small business owners, the next steps are not always clear. To save on your 2017 tax bill through various tax credits and benefits, some steps have to be taken before year-end.
In his new CIBC report, 2017 Year-End Tax Tips, Mr. Golombek provides a comprehensive overview of some notable tax-planning opportunities that should be considered before the December 31 deadline:
- Charitable donations for first-time donors
- Medical Expenses (12 month period)
- Home renovation tax credits
- New deadline for tax-loss selling
- Private corporation business owners
Mr. Golombek discusses in a video here the key takeaways from his report.
2017 is the last year you can claim the federal First-Time Donor’s Super Credit (FDSC) if neither you nor your spouse or common-law partner has claimed the donation tax credit from 2008 to 2016. The FDSC provides an additional 25% tax credit on total monetary donations of up to $1,000.
Many Canadians may not be aware of the tax credits available for home renovations related to accessibility for seniors and people with disabilities, he says. The non-refundable Home Accessibility Tax Credit is equal to 15% of up to $10,000 of expenses per year towards renovations that permit individuals to gain access to, or to be more mobile or functional within, their homes or reduce their risk of harm within their homes or from entering their homes.
For investors, tax-loss selling to offset capital gains realized on other investments is an important tax savings strategy. New for 2017, Canada has adopted a shorter settlement period for equity and long-term debt market trades. To ensure that your trade settles in 2017, your trade date must be no later than December 27, 2017.
For private corporations, some of the recently proposed tax changes could impact income sprinkling and passive investment income earned within corporations. These changes could result in tax rates of more than 40% (depending on the province) when small business income is distributed as dividends to family members after 2017 and may be of particular concern for families that have implemented estate freezes.
Regardless of your tax situation, being mindful of the tax deadline and understanding tax credits and benefits with the support of an advisor can result in significant savings for many Canadians who may be paying out more than they should. Please see the link below for the full report.
If you have any questions on how year-end tax planning, please send us an email or give us a call at 403-571-0910