Tax planning for year-end may save you money.

Recognize capital losses by selling stock in companies whose stock price has decreased.  A bad stock pick can be sold, and the capital loss reported. It can offset any capital gains. The loss may be carried back three years (i.e. used to reduce taxes on capital gains in those years) or carried forward for twenty. While capital gains are taxed on only 50% of the gain, this capital loss ‘tax-loss selling’ helps even more. Remember the settlement date is the official sale for tax purposes, so initiate your sale by close Dec27.

People can plan their RRSP contributions. If one is in a higher tax bracket, RRSPs will help, but for those in lower tax brackets, TFSAs may be better. It may be interesting to calculate how much tax will be saved given a certain amount of contributions to an RRSP.

One can also plan how much to withdraw from an RRIF. Taking the minimum to keep money in an RRIF may not be the best approach. Instead, consider taking out just enough to stay below the next marginal tax rate. That way one pays the lowest tax on withdrawals over the years.  Pension Income Splitting for seniors and pension income credits may also apply. The money withdrawn can be used to help family members or even reinvest in a TFSA.

This is only the tip of the iceberg. Talk to your tax specialist and/or financial planner today.