EY has identified the top 8 questions Canadians should ask their tax advisors in order to plan for a better tax season:
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- Are there any income-splitting techniques available to me?
Determine if you can take advantage of differences in tax brackets and marginal rates in your family with income-splitting loans or reasonable salaries to family members.
- Have I paid my 2015 tax-deductible or tax-creditable expenses yet?
There are a variety of expenses, including interest and child-care costs that can only be claimed as deductions in a tax return if the amounts are paid by the end of the calendar year. You’ll want to check on expenditures that give rise to tax credits and consider if the deduction or credit is worth more to you this year or next.
- Have I maximized my tax-sheltered investments by contributing to a TFSA or an RRSP?
Make your TFSA and RRSP contributions for 2015 and catch up on prior non-contributory years. In order to maximize tax-free earnings, consider making your 2016 contributions in January.
- Have I maximized my education savings by contributing to an RESP for my child or grandchild?
Make registered education savings plan (RESP) contributions for your child or grandchild before the end of the year. With a contribution of $2,500 per child under age 18, the federal government will contribute a grant (CESG) of $500.
- Is there a way to reduce or eliminate my non-deductible interest? Interest on funds borrowed for personal purposes is not deductible. Where possible, consider using available cash to repay personal debt before repaying loans for investment or business purposes on which interest may be deductible.
- Have I reviewed my investment portfolio?
Consider if you have any accrued losses to use against realized gains and determine if you have realized losses to carry forward.
- Can I improve the cash flow impact of my income taxes?
Determine if you’re eligible to request reduced source deductions and see if you’re required to make a 15 December instalment payment.
- Have I thought about my estate planning?
End of the year presents the perfect time to review and update your will and consider if there are changes to your life insurance needs. It may be the right time to consider an estate freeze to minimize tax on death and/or probate fees. Developing a comprehensive succession plan can help you pass the benefit of your assets to the right people at the right time.
SOURCE EY (Ernst & Young)