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Before making a major financial decision you
should consult a qualified professional.
Plan ahead so you are prepared to file your
tax return next year more easily. Tax planning should always be on your
mind. If you have a business
or are a high-wealth individual you should seek professional tax advice from a CPA tax specialist or
a tax lawyer. Tax planning should never be an afterthought.
One of the most important things to do during the year is
to store all tax-related documents in one place. Our preference is to
retain electronic versions of all documents, and we have a "folder"
for each tax year, with subfolders for tax slips, donation receipts, etc in
each tax year. Any electronic files should always be backed up! If you don't
retain records electronically, just on paper, then if you have a filing
cabinet, have one or more folders for these documents, including:
your tax returns and supporting documents for previous
years
notice of assessment and any other correspondence from
Canada Revenue Agency
records of investment purchases and sales in
non-registered accounts (transaction confirmations). These should be
kept until 6 years after the investments have been sold.
If you don't have a filing cabinet, pick a drawer or two in
which to store these records, or get a multi-pocket expandable file folder,
preferably legal size. Better yet, keep electronic records of these items
on a computer which is backed up frequently!
If you are an employee, make sure that the TD1
form filed with your employer is up to date.
Review the amount of
income taxes, Canada Pension Plan contributions and Employment Insurance Plan
premiums being withheld from your wages, by checking against the CRA payroll
calculator. See our article on take-home
pay calculators.
Tax Planning/Preparation for Investors
If you have investments in non-registered accounts, see the
following:
If you use spreadsheet programs, it can be very helpful to
have an investment continuity schedule for non-registered
accounts. The worksheet should have beginning of year balances,
purchases and sales during the year, and end of year balances, with capital
gains being calculated in the worksheet for any investments sold. If the
investments are in US dollars, all amounts should be converted
to Cdn$ using the exchange rate as of the date of the transaction.
Tax Planning
for Seniors - or Planning Prior to Age 65
Plan ahead, especially if you are an investor with some capital loss
carry-forwards, regarding the Old Age
Security Pension Clawback - capital gains can increase the clawback, even if they
are completely eliminated by capital losses carried forward.
Now is the time to look for a tax professional if your
financial situation is getting more complicated. Don't wait until next
tax season, when they are all extremely busy. Our
Directory has links to accounting, bookkeeping and financial planning organizations in Canada.
TaxTips.ca Tax Calculators
Use our Canadian
Tax Calculator to project what your tax situation will be for this year,
and let it help you to determine how much to contribute to RRSPs during the
year.
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