About RBC > Media Newsroom > News Releases > Thirteen spooky reasons why December 31, not October 31 can be the most haunting day of the year for tax payers
Thirteen spooky reasons why December 31, not October 31 can be the most haunting day of the year for tax payers
TORONTO, October 26, 2012 - While October 31 can
be especially scary for little ones, December 31 can prove
downright haunting for adults if they haven't considered certain
year-end tax planning strategies. RBC Wealth Management has
suggestions for Canadians to ensure they take all necessary
2012 tax planning tips into account.
"December 31 is second only to April 30 as a crucial
date in the tax planning calendar," said Tony Maiorino,
vice-president and head, RBC Wealth Management Services. "Because
this date represents the last day of the year that potential
tax savings opportunities are available, you need to start
planning now to help achieve your financial goals."
Failing to consider the following 13 potential tax planning
strategies may make your December 31 particularly spooky:
For business owners:
- Incorporated company: If
you are a business owner with an incorporated company, you
may find both year-end corporate income tax deductions and
a structured retirement savings plan for yourself through
an Individual Pension Plan (IPP).
- Salaries for family members:
As a business owner, consider paying salaries to yourself
and appropriate family members before December 31. When
used correctly, this strategy can give your family members
earned income enabling them to make an RRSP contribution
the following year and giving your business a tax deduction
in the current year.
- Purchasing assets:
If you are a business owner and intend on purchasing assets
for your business, e.g. computers, purchasing them before
December 31 may allow your business to claim depreciation
on these assets for tax purposes.
- Prescribed rate loan to spouse:
With Canada Revenue Agency (CRA) stating the
prescribed interest rate will remain at a historical low
of one per cent until December 31, it is an opportune time
to consider establishing or modifying a spousal loan as
a possible income splitting strategy.
- Unrealized capital gains: If
you have unrealized capital gains, you may want to consider
deferring them until after December 31 if your marginal
tax rate may be lower in 2013 compared to 2012. This could
allow for any tax payments to be deferred until 2014.
- Tax loss selling:
Are you facing a large capital gain in 2012? Perhaps you
sold a rental property, securities or your business. If
so, you may wish to maximize the opportunities associated
with selling securities that have an unrealized capital
loss to help reduce your tax liability or obtain refunds
for taxes paid in previous years.
- Charitable donation: Making
a charitable donation is an excellent choice for reducing
the personal tax you pay. The final day to make contributions
to a registered charity in order to claim the donation tax
receipt on your 2012 income tax return is December 31. However,
if you plan on donating securities in-kind before year-end,
then due to the administration involved in processing an
in-kind donation, ensure that you start this process well
in advance of the year-end to ensure that the in-kind donation
is recorded as a 2012 donation.
- Registered Retirement Savings
Plan (RRSP) Conversion: If you are turning 71
in 2012, you cannot have an RRSP after December 31. Consider
making your expected 2013 RRSP contribution in December
before converting your RRSP.
- Employer Bonus: Are
you receiving an employer bonus by December 31? Deferring
it may be a wise choice for you if you are expecting to
be in a lower tax bracket in 2013.
- Registered Education Savings
Plan (RESP): If you are contributing to a RESP,
you'll want to ensure you have contributed the maximum allowed
in order to qualify for the 20 per cent Canada Education
Savings Grant by December 31.
- Moving within Canada:
If you plan to move within Canada, consider that individuals
pay provincial tax rates on taxable income based on their
province of residence on December 31. Since marginal tax
rates vary from province to province (and from 39 to 50
per cent), you may want to consider moving prior to December
31 if you are moving to a province with a lower tax rate.
- Quarterly payments to CRA: If
you make quarterly tax installment payments to the CRA,
you should consider making your final payment on or before
December 15 to avoid late interest charges.
- Fees: Remember to
pay all investment management fees, tuition fees, safe deposit
box fees, accounting and legal fees if deductible, childcare
expenses, alimony, medical expenses and any business expenses
by December 31 if your intent is to deduct them on your
2012 tax return.
All tax saving strategies should be reviewed by a qualified
tax specialist and, where appropriate, by your investment
advisor, to ensure all appropriate regulations, laws and individual
personal considerations are taken into account.
About RBC Wealth Management
Wealth Management is one of the world's top 10 largest
wealth managers. RBC Wealth Management directly serves affluent,
high-net-worth and ultra high net worth clients in Canada,
the United States, Latin America, Europe, the Middle East,
Africa and Asia with a full suite of banking, investment,
trust and other wealth management solutions. The business
also provides asset management products and services directly
and through RBC and third-party distributors to institutional
and individual clients, through its RBC Global Asset Management
business (which includes BlueBay Asset Management). RBC Wealth
Management has more than C$562 billion of assets under administration,
more than C$324 billion of assets under management and approximately
4,300 financial consultants, advisors, private bankers and
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For more information, please contact:
Bev MacLean, RBC Corporate Communications, email@example.com,