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Year-End Tax Checklist

Year-End Tax Checklist

  • Organize receipts for 2019 tax deductions and credits. This includes charitable donations, medical expenses, child care expenses, moving expenses (in certain situations), spousal support payments, eligible employment expenses, union and professional dues, deductible interest charges and other carrying charges. This also includes receipts and invoices for business or rental property expenditures, as well as eligible home-office expenses.
  • Consider making RRSP contributions. All contributions up to March 2, 2020 are eligible to be deducted on your 2019 tax return, subject to your personal contribution limit for 2019. Higher income spouses may also wish to contribute to a Spousal RRSP for optimal long-term tax savings.
  • Anyone 18 or older can contribute to their Tax Free Savings Account (TFSA) up to their personal contribution limit. Each year, additional contribution room is added, with the contribution limit for 2020 announced at $6,000 (same as 2019). Consider catching up on unused contribution room by making a deposit by December 31. Or, if you are considering withdrawing funds from your TFSA soon, withdraw the funds by December 31 to give yourself additional contribution room as of January 1, 2020.
  • Consider making an RESP contribution by December 31 to access the available Canada Education Savings Grant (CESG) funds which match 20% of your contribution, up to $500 per child per year.
  • If you are 65 years of age or older, consider limiting your income, if possible, so that your total net income for the year stays under the Old Age Security (OAS) clawback threshold of $77,580. Any net income over this amount on your 2019 tax return will mean you have to pay the government back for part of, or all, of the OAS benefits you received in 2019. Also, any net income over $37,790 will result in the reduction of the Age Credit given to seniors on their tax return.
  • Consider selling non-registered investments that are in a loss position (i.e. they have decreased in value since they were purchased) to trigger a capital loss, which can be applied against other capital gains to save tax. Care should be given where the same investment is repurchased soon after it is sold as CRA has anti-avoidance rules in place to limit these capital losses.
  • Costs incurred to access medical intervention required in order to conceive a child were previously disallowed as eligible medical expenses. However, starting in 2019, certain expenses are now allowed to be claimed for the medical tax credit, including those costs incurred over the past 10 years.
  • Are you a U.S. citizen, resident or Greed Card holder? Are you a dual citizen? Consider your U.S. filing obligations as CRA and the IRS have increased the amount of information exchanged between the two government entities.
  • If you own a business or rental property, consider purchasing a capital asset by the end of the year, to ensure a depreciation deduction can be taken in 2019. Most capital assets purchased in 2019 are eligible for the new accelerated depreciation rates.

  • Also consider paying a reasonable salary to family members or other individuals who have provided services, including administrative support, if you own a business or rental property. Salary payments do require source deductions (EI, CPP and income tax) where applicable, which must be remitted to CRA in a timely manner, as well as a T4 slip filed by the end of February 2020.

If you have any questions about any of these items, or want to schedule an initial consultation, contact me anytime.

 

*The blogs posted on this website provide information of a general nature and should not be considered specific advice. Please contact a professional accountant prior to acting upon or implementing any of the information included in the blogs.