As the end of 2010 is fast approaching, here are some personal tax tips I think you should consider:

1. Some deductible expenses and credits can only be claimed if they are paid in the year, a different concept than incurred in the year. For example, you incur a dentist bill in November 2010, but didn’t pay it until February 2011. In this example the dentist bill may be claimed on your 2011 tax return, not your 2010 tax return. Here are some items that should be paid by year end in order to get the tax deduction or credit – interest expense, safety deposit box fees, investment management fees, medical expenses, tuition fees, donations, child fitness programmes and transit passes.

2. Donations are a good way to give back to society and get a tax break. I mention donations in point 1, but one thing I want to point out is to watch out for the donation schemes that promise a large donation receipt for a low contribution. The CRA plans on auditing all of these tax shelter gifting arrangements, so be wary of these arrangements. Learn more here.

3. If you have a capital gain in the year, you may want to review your portfolio for the stocks that are in a capital loss position in order to realize the loss to offset the gain to save taxes. In order to claim the loss, the trade must be executed prior to December 24 if the stock is on a Canadian exchange. However, you should discuss first with your investment adviser if selling the stock is a prudent move.

4. Contribute to your kids registered education savings plan in order to receive the federal government grant.  The federal government will provide a grant up to $500 if you contribute a maximum of $2,500 per child. This is a great way to get free money and save for your children’s education so why not take advantage of this.

5. Contribute to your tax-free savings account if you have not utilized your maximum room.  Even though the TFSA does not give you a tax deduction or save you on taxes today, I think it will prove more useful in the long run compared to an RRSP.

This entry was posted on Tuesday, December 7th, 2010 and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.