Year-End Considerations for Investors
- Review asset mix of your non-registered portfolio. Interest income is the highest taxed of your investment income. Consider restructuring your portfolio so that interest income is earned in a registered plan (RRSP, RRIF, TFSA) where it is tax sheltered.
- Are you carrying debt that is not tax deductible? Consider reducing this debt with non-registered assets. You can then borrow to replace the investments and you will be able to deduct the interest in 2017 and beyond.
- Consider triggering capital losses to offset current year capital gains or to carryback to capital gains in 2015, 2014 or 2013.
- Consider triggering capital gains to use existing capital losses or if individual has little or no taxable income.
- Consider transferring investments with an unrealized loss to a child. You will have a capital loss while transferring any future tax liability to your child. Also, you will minimize probate fees on these investments.
- Consider donating securities to a charity. The capital gain on the donated securities will be eliminated and you will receive a donation receipt based on the fair market value of the securities at the date of transfer.
- If you are selling an asset before December 31, consider structuring the sale so that the gain is recognized over several years. The capital gain reserve calculation allows an individual to recognize a gain over a maximum of five years.
Chris Munn, Tax Partner