As 2014 winds down the inevitable task of filing ones annual tax return looms in the not too distant future. Taxpayers and those in business know that income tax has to be paid, but, having said that one would prefer to pay as little as possible. In that regard I have prepared a list of considerations to consider for helping out your bottom line this coming spring.

  1. Pay your professional fees, union dues, alimony or maintenance payments, safety deposit box cost and investment counsel fees prior to the year end
  2. If you plan to enroll your child in activity programs in 2015 you can obtain a tax credit this year if Paid prior to December 31st. If you have reached your 2014 maximum defer the payment to 2015 as the credit can’t be carried forward.
  3. If you have a segregated fund RRSP that is of the guaranteed minimum withdrawal type make your contribution before year end. Not only will you get your deduction you will receive contractual notional increase in the income base amount.
  4. If you have a favourite charity you are thinking of helping make your monetary contribution before December 31st. If neither you or your spouse has not claimed the donation tax credit in the 5 preceding tax years you will be eligible for the Federal First Time Donors super credit on donations up to $1000. If you have stocks that have increased in value one can donate them to a charity before year end and there will be no capital gains tax on the gain. As well you will receive a donation receipt for the full market value of the gifted shares. Unlike tax loss selling the settlement date for the transaction is not a factor.
  5. For those investors who, unfortunately, may have accrued capital losses one might want to sell the shares before year end. The realized losses can be used to offset capital gains earned in 2014, be carried forward indefinitely or carried back to the three previous tax years. It is noteworthy to mention that the settlement date for the trade must occur in 2014 which means the trade date cannot be later than December 24th.
  6. A sole proprietor, business partnership or rental property owner should make purchases of equipment or supplies before year end. This will result in either additional write offs for direct costs or additional Capital Cost Allowance (at the half year rate) on capital expenditures such as vehicles or equipment.

Other considerations are available depending on one’s circumstances but suffice to say take advantage of what is available to reduce that tax burden. Best wishes to all this holiday season and may the upcoming year be one of good health and prosperity for you and your family.