2014 Year-end Tax Planning Checklist

December 2014

    

Financial planning is time sensitive. While the following list is not exhaustive, here are some items that must be considered, incurred or paid prior to year end in order to be included in your 2014 tax return.

Prior to December 24, 2014:

  • Put tax loss selling strategies to work by following these steps: 
    1. Calculate the capital gains that you have realized for 2014.
    2. Identify and sell investments that are in a loss position. Trades entered by December 24th will settle funds in the account prior to December 31st.
    3. Net your capital losses against capital gains on your 2014 tax return.
Note: If your spouse has unrealized capital losses, extra steps can be taken to incorporate them in your tax planning. In all cases, you should be aware of the superficial loss rules when employing these strategies.


Prior to December 31, 2013:

  • Make charitable donations. Donating qualifying securities instead of cash can increase your tax savings. 
  • Contribute to your child’s RESP/RDSP.
  • Withdraw funds from a TFSA, if needed. Any withdrawals will increase your contribution room in 2015.
  • Withdraw funds from your RRSP if you are in a low tax rate for the 2014 tax year.
  • If you are age 71 this year, you must convert your RRSP to a RRIF. Consider the following: 
    • Use your younger spouse’s age for minimum payment calculations. 
    • Consider an advance contribution to your RRSP for earned income from this year.
  • Pay all tax deductible expenses.
  • If you are a trustee of a testamentary trust, consider triggering income (like capital gains) before the end of the year as income retained inside the trust will be taxed at the highest marginal tax rate starting in 2016.
  • Stock Option Rules - Special Relief: If your taxes are higher than the proceeds upon the sale of your shares following the exercise of your stock options, there is some relief if you sell the shares prior to 2015 and make proper election prior to December 31st, 2014.
For Corporations: 
  • If you are selling the assets of your corporation, be sure to complete the transaction by December 31st, 2014.  The tax treatment on the sale of eligible capital property will be changing in 2015.
  • Consider paying an employee a non-cash gift or award of up to $500. This amount may be deductible to you and non-taxable to the employee

For January 2015:

  • Remember to pay interest on prescribed rate loans (e.g. spousal loans) prior to January 30th

For March 2015:

  • You have until March 2nd, 2015 to make your RRSP or a spousal RRSP contribution, and deduct the amount on your 2014 (subject to your RRSP contribution limits) tax return

Ongoing reporting obligations:

  • If you hold foreign property with a cost base greater than $100,000, file the Foreign Income Verification Statement (CRA Form T1135). As of June 2014, new rules apply to disclosure of this information.
  • If you are a U.S. Person for tax purposes, understand your IRS reporting requirements. U.S. Persons (even those who are resident in Canada) have tax reporting requirements in the U.S. For example, U.S. persons are required to report any holdings in Passive Foreign Investment Companies (PFICs)

Note: Beginning in 2014, Canadian financial institutions are required to report certain information on U.S. persons as a result of the U.S. Foreign Account Tax Compliance Act (FATCA).

New tax measures:

  • Family Tax Cut – Income Splitting. In the October 2014 Federal Tax Update a new non-refundable tax credit of up to $2,000 was introduced for eligible couples with minor children. The new credit will be effective for the 2014 and subsequent tax years.
  • Child Care Expenses and The Universal Child Care Benefit. Effective 2015 there will be an increase in the Child Care deduction by $1,000. The Universal Child Care Benefit (UCCB) will also increase to $160 per month for children under the age of six, and $100 per month for those ages six to sixteen.   As a result of the UCCB changes, the Child Amount Tax Credit is being repealed in 2015

We recommend you discuss these strategies with your professional investment, tax and legal advisors prior to implementation to ensure they fit within your overall wealth plan. 

         To receive more information, including complimentary copies of our education articles on the any of the above topics, please contact your Investment Advisor.
    Previous Tax & Estate Planning Strategies
    View items by year:

    2015

    2014

    2013

    2012

    2011

    • 2014 Year-End Tax Planning Checklist

      Dec 10, 2014

      Financial planning is time sensitive. While the following list is not exhaustive, here are some items that must be considered, incurred or paid prior to year-end in order to be included in your 2014 tax return.
      read more
    • Tax loss selling – Smart strategy to reduce your capital gains this year

      Nov 17, 2014

      Each year, whether in bull or bear markets, volatility presents investors with tax loss selling opportunities. If you’ve realized capital gains in the year, consider selling assets with an accrued loss to offset the gains. You may also realize the loss if you’ve had capital gains in the last three years that weren’t offset by your capital gains exemption.
      read more
    • Planning your business wealth transfer

      Sep 11, 2014

      If you own a company and you have one or some of your children involved in its operations, you may be facing a few estate planning challenges. Given that a business owner’s wealth is often tied up in their company, transferring its value (upon death) to their children, including those who are not involved in it, can sometimes be tricky and worrisome.
      read more
    • Creating a will to protect loved ones

      Aug 01, 2014

      The people and causes you care most about can be taken care of by your estate—if you plan properly.
      read more
    • Health: The most important asset of our clients

      Jun 13, 2014

      Our clients’ most important asset remains their health without which they can not work, get rich or simply enjoy the wealth they have accumulated; even at the risk of encroaching on them. Yet, too few of them are offered a protection plan vis-à-vis the risk of financial loss due to illness or injury.
      read more
    • Win-Win: Creating your customized charitable giving strategy while reducing taxes

      May 08, 2014

      You’ve worked closely with your Richardson GMP Investment Advisor to reach your personal investment goals. Now, we can help you achieve your dream...
      read more
    • Reaching retirement goals with fixed income is more and more challenging. Why not consider an insured annuity?

      Apr 01, 2014

      The combination of a life annuity and a life insurance contract may bring much higher yield of return than other fixed income products.
      read more
    • Beware of the changes recently announced to tax benefits of testamentary trusts and estates in the Federal Budget 2014

      Mar 05, 2014

      Have you considered using trusts as part of your estate planning? If so, beware of the changes recently announced in Federal Budget 2014 which, if passed, will eliminate some of the tax benefits of testamentary trusts and estates beginning in 2016.
      read more
    • Being an executor – An honour or a burden?

      Feb 06, 2014

      Acting as an executor can be a daunting task that takes time, knowledge and patience. When acting as an executor, you owe a duty of care to all persons interested in the estate, so the role should not be taken lightly.
      read more
    • Start the new year with a spousal loan strategy to reduce taxes

      Jan 02, 2014

      Now may be the opportune time to consider putting a spousal loan to work for you. After increasing the prescribed interest rate from 1% to 2% last September, CRA has now announced that it will decrease the rate back down to 1% for Q1 2014.
      read more