Take advantage of income splitting opportunities
Have you considered all possibilities for income splitting? Attribution rules do not apply on capital gains for children under the age of 18, nor do the rules apply to second-generation income. If your spouse or common-law partner does not have any income, they may be able to receive up to $28,000 in tax-free dividends. If you are over age 65 and receiving Old Age Security pension (OAS) or if you have received Employment Insurance (EI) benefits, income-splitting opportunities may eliminate or reduce the OAS or the EI clawbacks.

Maximize tax-deferral for retirement allowances
Did you receive a retiring allowance in 2002? You may still be able to contribute the eligible amount to your RRSP without affecting your RRSP contribution room, even if you did not elect for the transfer to be processed directly from your employer. This option is only available for up to 60 days after the year-end. Payments for unused sick leave qualify as “retiring allowance”, however payments for accumulated vacation leave do not qualify.

Reduce taxes withheld at source
Are you making regular payments to your RRSP from your bank account? Rather than waiting for your income tax refund, you may be able to take advantage of immediate tax savings and increase your cash flow. To do this, simply submit Form T1213 to Canada Revenue Agency (CRA) for authorization. Once authorized, your employer will be able to reduce the amount of taxes they are required to withhold based on the amount of your regular RRSP contribution. A further advantage of regular RRSP contributions would be to dollar cost average.

Minimize probate costs with joint ownership
Are you looking for ways to minimize probate fees on your estate? There are many strategies available to reduce the probate fees and minimize estate costs. A common method used is to hold property as joint tenants with rights of survivorship (not available in Quebec). This is not always the best strategy because of some dangers associated with jointly held property such as possible tax implications when adding the joint name onto the property, in addition to the future taxation of income and growth.

Think about tax savings on estate assets
Upon your death, should your property be transferred to a surviving spouse, common-law partner or testamentary spouse trust at the adjusted cost base (ACB)? Upon the death of an individual, the transfer of capital property to the surviving spouse, common-law partner or testamentary spousal trust is generally done at the ACB in order to defer potential capital gains tax until the property is disposed of or upon the surviving spouse’s or common-law partner’s death. In some cases there may be a tax advantage to trigger all or part of the capital gains to be reported on the final return and have the capital gains taxed to the deceased.

Invest in your child's education
Do you have children under the age of 18 and are not sure whether to accumulate savings for their post-secondary education in an informal in-trust account or a Registered Education Savings Plan (RESP)? In an in-trust account capital gains may be taxed in the hands of the minor child while any income may be attributed back to the contributor, depending on the source of the funds. RESPs defer taxes on income until the funds are withdrawn when the beneficiary is pursuing his or her post-secondary education.

Make your interest tax-deductible
Is the interest tax deductible on an investment loan? The Supreme Court of Canada released its long-awaited decision in the Singleton case in favour of the taxpayer. The facts in Singleton are very similar to the advice many Canadians receive from their financial planners before buying a home. The strategy often suggests to liquidate any non-registered investments (stocks, bonds, mutual funds, etc.) and use the cash received upon disposition to either fully purchase their home or at least to reduce the amount of the mortgage. The new homeowner would then acquire an “investment loan” and repurchase the securities previously disposed of with the favourable result that what would have been non-deductible interest expense on the mortgage has now become tax deductible.