Hi everyone, here are some friendly basic reminders as we approach the new year. Have a safe and happy holiday season!

1. Capital Losses: Trigger capital losses in non-registered accounts before the end of the year to offset capital gains in the year, or possibly create a net capital loss which can be carried back up to 3 years or carried forward indefinitely. Keep in mind CRA’s position that a loss is triggered on the settlement date, which is normally 2 or 3 days after you execute a trade. For this reason, and given market closures over the holidays, you may want to play it safe and make these trades before Christmas. Be mindful of the superficial loss rules which can deny and defer a loss if you re-purchase the same or similar security within 30 days after a sale or, in the case of re-purchasing in a registered account, can result in a permanent denial of the loss.
2. Donations: If you’re considering making charitable donations, ensure they are made by December 31 in order to get a credit on your 2022 tax return. If you have securities with accrued gains you would like to donate, you may be better to do so whenever possible given that the capital gain inclusion rate would be 0% and you still get the full donation credit. Many charities have brokerage accounts with various institutions to facilitate these donations, so ask them about it. Check whether the charity is a registered charity before you donate.
3. Business Purchases: If you have a sole proprietorship and are thinking of buying equipment, consider doing so before year end to get a CCA claim earlier. This is normally most beneficial for assets that can be depreciated quickly, like computers and software, but the new immediate expensing rules mean that many other equipment purchases may be deducted in full in the year acquired. Keep in mind you can only claim CCA (including under the immediate expensing rules) if the asset is available for use, which usually requires that you have possession of it before year end (simply ordering it by year end isn’t good enough).
4. Income Smoothing: If your income is low in 2022 and you expect to have much more income for 2023 such that some income will be taxed in a much higher bracket next year, consider ways to shift income to 2022 if possible. For example, triggering capital gains before December 31, requesting advances on bonuses, or for business owners you can defer expenses. There may be other ways to do this depending on your situation.
5. RESPs: For those with young children, make contributions to an RESP by Dec 31 to obtain the CESG (20% grant) for 2022. Although you can potentially catch up on contribution room and the CESG in a later year, it depends on the age of your child as no grants are available after the year the child turns 17 and you can only catch up one year at a time. (Annual grant is a max of $500, or $1,000 if you have unused grants from prior years.) More info can be found here. And remember, on January 1 you are able to access a fresh grant by contributing up to another $2,500 per eligible child (or $5,000 if there are “catch up years”).
6. Medical: Pay for medical expenses before year end (for a potential tax credit) and/or make sure to use any health care spending account or other benefits available to you from your employer that might otherwise expire or not roll over to 2023.
7. Adjustment and Refund Deadline: There is a 10 year deadline for individuals to request an adjustment to a tax return. Examples include: missed claiming a deduction, missed a credit (e.g. disability), etc. An adjustment to a 2012 return must be made by Dec 31, 2022. Don't miss this deadline if you may be entitled to refunds or credits and haven't filed in a long time!
8. TFSA Room: The TFSA dollar limit for 2023 is $6,500. You can contribute this amount to your TFSA as of January 1, along with any lifetime limit you have carried forward. See this link for how your overall TFSA contribution room is calculated. If you’re lucky enough to have the funds to invest in your TFSA, have them ready to be deployed in January.
9. RRSP Room: Contributions to your RRSP in the first 60 days of 2023 must be reported on your 2022 tax return, and can either be deducted on your 2022 return (to the extent you have a 2022 deduction limit, i.e. "contribution room", as per your 2021 Notice of Assessment) or carried forward and deducted on your 2023 or other future tax return (but only to the extent you have a deduction limit for 2023) – you can choose, but in most cases it's better to take the deduction on your 2022 return, unless you know with certainty you'll be in a much higher tax bracket in the very near future. Technically, if you have the funds available, you can contribute both your 2022 deduction limit as well as your 2023 deduction limit any time in the first 60 days of the 2023 (note: only the former would be deductible on your 2022 return and the latter would give you a deduction on your 2023 return). If you aren't sure what you're doing, though, seek advice, since contributing in excess of your available deduction limit can result in a 1% monthly tax on the excess.
10. Tax Withholdings: Will you be eligible for certain new credits in the new year? If so, consider completing a new form TD1 for 2023 (once available) and submitting it to your employer’s payroll department so that they can reduce your withholding at source. If you know you’ll be eligible for any deductions from net income in 2023 (example: contributions you’ll make to an RRSP outside of an employer plan), consider completing form T1213. You submit this to CRA, who then provides you with a letter for your payroll department approving reduced withholdings for you. These procedures give you more after-tax funds with each pay. Be careful though; if you over-estimate what you’re entitled to, you’ll likely owe when you file your return.
11. Income Splitting: If your registered accounts are maxed out and you invest in a non-registered account, consider ways to split income with family early in the year to get the most benefit. Although planning in this area is somewhat limited due to the attribution rules, some strategies include a prescribed rate loan to a spouse to split investment income, or investing the Canada Child Benefit in an account in your child’s name. Keep in mind the prescribed rate increases from 3% to 4% on January 1, 2023, so a prescribed rate loan is best done before the new year if this planning is for you. If you’re older and have more considerable wealth, consider an advance on inheritances to your adult children (but seek tax, financial planning, and family law advice before doing so). There is no tax on a gift in Canada, but beware that gifting assets results in a deemed disposition which means you realize any accrued capital gain. If you are gifting US situs property or are a US citizen, green card holder, or resident, get US tax advice first.
12. Interest Deductions: If you have debt on personal use property (like your home) and also own assets that generate income, like a rental property, dividend-paying stocks, or business assets, consider whether you may benefit by restructuring your debt to make your interest tax-deductible. CRA has a simple example of how this could work using your home mortgage and public company stocks. You can also search the sub for tons of examples and posts about the Smith maneuver, which is really just an organized way of going about this. For unincorporated business owners / contractors, consider the cash damming technique to pay off personal debts while generating tax-deductible interest.
13. Estimate Your Tax Owing: If you had a new job in 2022, more than one job, or self-employment, rental, or investment income, estimate your income tax early by using an online tax calculator to avoid any surprises and prepare for any amount you may owe on filing in April.
14. Record Keeping: Get ready for tax season and start the new year off right by keeping a good set of records. This is particularly important for items that aren’t tracked for you by CRA or an employer, such as medical expenses, home office expenses, or child care. Keep everything in a folder and consider an electronic/cloud back up. Note that CRA has requirements for electronic records so that they are acceptable to support your tax filings.
15. Wills: With the end of a year approaching and a new year beginning, now is a good time to consider how your personal situation has changed. Did your wealth change substantially? New source of income? Marriage/Divorce? New children? Death in the family? Consider revising your wills if necessary. There may be tax saving opportunities upon death. Speak to a lawyer and accountant.
16. FHSA: Keep an eye out for the Tax-Free First Home Savings Account which will become available in 2023. CPA Canada has a great article on how the account will work.