Maximize your RRSP contributions
Amounts that you contribute to your RRSP (or spousal RRSP, if applicable) are deductible from your income. These include amounts contributed during the year and during the first fifty-nine (59) days of the following year. Tax is deferred on all income earned inside of your RRSP until you begin receiving an RRSP income.
Make spousal RRSP contributions by December 31st
If your spouse's retirement income is expected to be lower than yours, consider contributing funds to your spouse's RRSP rather than your own plan (you can still claim the deduction on your return). Your spouse may then be able to withdraw funds in the future and pay less tax than you would pay on the same amount of income. The timing is important though - for the withdrawal to be taxed in your spouse's hands. it cannot be withdrawn until the third year after the calendar year in which you last contributed to any of your spouse's RRSPs - otherwise it will be taxed in your hands
Ensure that interest expense is tax-deductible
In general, interest is deductible for tax purposes provided it is paid of payable in the year, there is a legal obligation to pay the interest and the interest was incurred on funds borrowed to earn business or property income (except capital gains). Therefore, if you have to borrow money, you should borrow for business or investment purposes, before you borrow for personal reasons. When repaying debt, always repay loans on which the interest is non-deductible before you repay debts on which the interest is deductible.
Maximize charitable donations tax credit
Consider donating listed public securities directly to your favorite registered charitable organization. This will give you a greater tax benefit than selling the securities first and then donating the cash proceeds to the charity.
Ensure your "charitable donations" are deductible
The charitable donations tax credit is only available for donations made to registered charities, registered Canadian amateur athletic associations, Canadian municipalities, the federal government and provincial governments. To obtain the tax credit, you must include the original official receipt issued by the registered charity or association, with your tax return. Photocopies of receipts or the filing of canceled cheques, are not acceptable. These official receipts will include the registration number of the charitable institution. Ensure that your contributions are going to a true charitable association and that your receipt has a charitable registration number printed on it.
Split income with your spouse
Most couples will pay less income tax in total if each partner earns part of the family's investment income, rather than one partner earning all of it. In addition, the higher income spouse should assume most or all of the personal household expenses, leaving the lower income spouse with as much disposable income as possible to be used for investment purposes. The investment income so earned, would normally be taxable at a lower rate.
Do-It-Yourself Job Creation Plan
If you have a child over 18 and one or more children under 18, consider paying the older child for looking after the younger ones. If you're the lower-income spouse and if the baby-sitting and child care services permit you to earn income, the payments should be deductible as child-care expenses. Your adult child will have to provide you with a receipt and report the income for tax purposes.
Realize losses to offset any gains
If you've already realized or plan to realize a taxable capital gain in this year, consider selling investments with accrued capital losses before the end of the year to offset against the capital gains. If you engage in this strategy, make sure that you do not run afoul of the special tax rules designed to stop the artificial creation of tax losses.
Reduce net income to avoid the OAS clawback
If possible, defer income to a future year or maximize your deductions this year, to reduce your net income and the clawback of Old Age Security. If you are considering making the election to include all of your spouse's taxable Canadian dividends in your income, ensure that you are not subjecting yourself to the OAS clawback, by increasing your net income.
Split CPP benefits with your spouse
The Canada Pension Plan Act permits you to assign a portion of your retirement pension to your spouse. In many cases the assignment of benefits allows you and your spouse to equalize CPP retirement benefits.
Consider a RESP for your children
If you have a child or grandchild under 18, you may want to consider starting a registered education savings plan. A RESP can help you build an education fund for your child or grandchild by allowing you to earn investment income in a tax-deferred environment. Recent changes to the RESP system, including the introduction of Canada Education Savings Grants (CESGs), have made these plans more attractive than they were in the past. Under the CESG program, the government will provide a direct grant to the RESP of 20% of the first $2,000 of annual contributions made to the RESP in a year.
File for your child
Filing tax returns for your children can be very beneficial to them down the road. If your child has taxable income of less than $7,756, there is no federal tax to pay. However, by filing a return to report your child’s earned income for RRSP purposes, you will be building up the Registered Retirement Savings Plan (RRSP) contribution limit that can be used in the future. In addition, if your child is over the age of 18, they may be entitled to the goods and services tax/harmonized sales tax (GST/HST) credit. The only way to receive this benefit is to file a return.

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