As the end of 2011 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. For example, if you receive an invoice for a dentist bill incurred in November 2011, but didn’t pay it until February 2012, then this dentist bill may be claimed on your 2012 tax return, not your 2011 tax return. Here are some items that should be paid before the 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. If you hold publicly traded stocks with an inherent capital gain, consider donating them to your favourite charity. The capital gain will be non-taxable to you and you will receive a full donation receipt for the fair value of the shares. I mention donations in point 1, but one point out I want to emphasize is to watch out for the donation schemes that promise a large donation receipt for a low contribution. This is the time of the year when these schemes get heavily promoted, so be wary if a promoter approaches you with these arrangements. Learn more here. You can also consider donating your publicly traded stocks

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 23 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 taxes today, I think it will prove more useful in the long run compared to an RRSP.

This entry was posted on Friday, December 9th, 2011 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.