Income Tax Breaks :

Tax planning for some Canadians is an activity that starts after year-end, and filing their tax returns in April. However, many of the opportunities to reduce your tax bill require that you act by Dec. 31, or before.

Outlined below are key tax-saving strategies to implement before year-end. Cretus Capital Inc. can provide additional explanation and help identify strategies that might work for you and your family, based on an understanding of your overall situation.

Make political donations

Generous tax benefits are available for political and charitable donations made during the calendar year.

A 75% tax credit is generated on the first $400 you contribute to a political party, 50% for the next $350 and 33.3% for the next $525. However, there is no additional credit for political donations beyond $1,275.

Charitable donations

For charitable donations, you earn a federal tax credit of roughly 15% on the first $200 and 29% on amounts above $200, up to certain limits based on your net income for the year. Provincial tax credits multiply the tax benefits, and unclaimed donations can be carried forward up to five years.

Recent tax enhancements have made donations of appreciated investments especially attractive from a tax perspective. You no longer pay any tax on capitals gains realized when you gift publicly listed securities or mutual funds.

An Individual can claim charitable gifts up to 75% of their net income, Gifts can be in the form of monetary donation and/or gift in kind donations, A gift in kind refers to property other than cash, A charity that receives a gift in kind can issue a tax receipt for the FAIR MARKET VALUE of the gift on that date it was donated.

Pay or incur expenses that earn tax deductions or credits

Make optimal use of all expenses that may reduce your taxable income (tax deductions) or tax payable (tax credits), if paid by Dec. 31. For example:

• Investment carrying charges, such as interest on certain investment loans and some investment or   accounting counsel fees (e.g., fees for non-registered PPS accounts)

• Medical and dental costs not covered by insurance, for amounts over 3% of net income or $1,885,   whichever is less (covering any 12-month period ending in the tax year)

For more examples contact or call Glenn Whitter

Use capital losses to offset capital gains

Are you selling investments this year? If you realize capital losses, you can apply them against taxable capital gains to help keep investment-related tax to a minimum. Any unused capital losses can be used to offset capital gains of the previous three years or carried forward indefinitely.

To ensure transactions settle in the current year, investments should be sold well before the last trading day of the year.

Defer income to a future year

Pushing taxable income to another year is a good strategy for many people. It means more cash flow this year to invest for the future or direct to other financial planning goals.

Deferring income may especially appeal to individuals who expect to be in a lower tax bracket in the next year (e.g., because of a return to school or parental leave). It may not be advantageous for people expecting to be in a higher tax bracket. If in doubt, call Glenn Whitter and consult a tax professional.

Flow through shares

Flow-Through Shares are a tax-advantaged investment in the Canadian natural resource sector. Taxpayers in the highest marginal tax rate can reduce their taxable income and receive refundable or non-refundable tax-credits depending on their province of residency.

Essentially, exploration or mining companies who issue flow-through shares renounce the deductions that would normally be available to the company and provide the deduction to the investor. In order for the investor to benefit from the flow-through shares the company must spend the flow-through dollars on exploration in Canada (BC, AB, SK, MB, ON. ONLY) . This includes most non-development stages of mining including ground sampling, geophysics, drilling, etc.
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For more info contact or call Glenn Whitter