2016 is just around the corner. Find out the 2015 tax savings strategies that you need to take advantage of before the end of the year.
Tax Loss Selling
If you own property, such as stocks, bonds, mutual funds and real estate, which have gone down in value from their initial purchase price, consider selling some property to trigger a capital loss. Capital losses can be offset with capital gains from the property you already sold during the year, which will reduce your taxable income for 2015.
Contribute to RRSPs
Contribute to your RRSPs to reduce your taxable income for 2015. RRSP contributions are tax deductible to the extent that you have RRSP room available. Your available RRSP room is shown on your 2014 Notice of Assessment. The deadline for making a RRSP contributionso that it counts toward your 2015 taxes is February 29, 2016.
Make a Charitable Donation
Charitable donations made to a registered charity qualify for a donation tax credit. The credit is equal to 15% of the total amount donated up to $200 and is 29% over $200. Rather than spreading out the donations you would normally make between 2015 and 2016, consider making all of them in 2015. This way, you can take advantage of the higher donation tax credit of 29% instead of 15%.
Make a Contribution to Your Spouse’s RRSP
Feeling generous or do you just want to save taxes? Well whatever your reason is, consider contributing to your spouse’s RRSP by no later than December 31, 2015. This is because you can claim a tax deduction for the contribution made, and your spouse can withdraw the money you contributed from her RRSP on are after January 1, 2018. The amount withdrawn will be included in your spouse’s income and not yours.
Provided that your spouse is in a lower tax bracket than you, the tax you saved when making the spousal RRSP contribution will be more than the tax that your spouse has to pay upon withdrawal of the RRSP money.
Here’s the catch: If your spouse withdraws money from his/her RRSP before January 1, 2018, then the amount withdraws will be included in your income, making this tax strategy useless.
So Here’s the Tip:
Don’t wait until 2016 because by then it’s too late. Take advantage of the 4 2015 year-end tax strategies we talked about in this video to save on taxes this year.
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.