YEAR-END PLANNING – TAX & LEGAL

CHECKING ITEMS OFF YOUR LIST!

It’s that time of year when we are all busy checking those important holiday lists before the rush starts. Another important list to check-off comes during the holiday season which isn’t typically as much fun to plan around, but it can impact you and your family if not handled before December 31^st 2024. Yes… it’s the tax check list!

Tax Gain Selling:

As you may recall, The 2024 Federal Budget proposed an increase to the capital gain inclusion rate for gains realized on or after June 25, 2024. The inclusion rate was increased to 66.67% up from 50%. Individuals and certain trusts are still entitled are still entitled to the 50% inclusion rate on the first $250,000 of gain annually. While the legislation has not passed as of yet, its fully expected to receive assent and be effective June 25, 2024. You can therefore take advantage of the lower rate at amounts lower than $250,000 prior to the end of year which could impact you if looking to streamline gains over the next few years. There is no wait period to buy back shares in a gain position.

Tax Loss Selling:

Consider selling non-registered holdings with losing positions prior to the end of the year. Losses can be carried back 3 years against prior gains, of carried forward indefinitely against future net gains. Reminder to wait 30 days to buy back the security to ensure you avoid the superficial loss rule.

Charitable Giving:

The end of December is always a busy time for charitable giving (‘Tis the season!) Consider donating Shares of Public Securities with pregnant capital gains from your accounts instead of donating cash (where possible). This saves cash flow, while also obtaining charitable donation receipts for the value of the donated securities, while avoiding the capital gains on selling the securities in the future. This strategy can be an excellent way to give more, but just be mindful that donating shares in this manner can take a bit of extra time to complete….so don’t delay until the end of December to take advantage of this.

RESP Withdrawals for Families:

The second semester for most post-secondary students will commence in January and with that typically comes the next tranche of Tuition and Housing/Food costs. If you have already redeemed from the RESP for the first semester for Sept 2024 or the Winter session from last year, consider your total RESP Redemptions for the year and either make additional redemptions now or wait until the new calendar year (Jan 2025) to make redemptions. Educational Assistance Payments (EAP’s) are taxable in the hands of the student hand in the year received, but many students benefit from the tax credits from paid tuition to effectively make this income tax-free. Consider all options before making redemptions.

RRSP and TFSA Contributions:

Consider making RSP Contributions now prior to the end of year. Although you still have time within the first 60 days of 2025 to make 2024 Contributions, its always prudent to take advantage of tax deferred growth as soon as possible. TFSA Contributions also benefit from the tax-free growth longer as soon as contributions are made. The un-used contribution room does carry forward until the next year, but why not take advantage now. TFSA withdrawals in 2024 will benefit from the re-instatement of that room in 2025, so if you are needing cash flow now, it can benefit you to redeem in December knowing you can add that amount back next year (in addition to the 2025 limit of $7,000).

Wills and Powers of Attorneys:

There is no deadline for end of the year planning for Wills and Powers of Attorneys, but this time of year can serve as a good reminder for those who don’t have Wills or POA’s. These documents (or lack thereof) can impact your overall estate significantly. If you need help having your legal documents completed or reviewed, please let us know. We have a great network of experts available to assist.

As always, if you have any questions, please reach out to us and we will help you with any of these above items. Be well, stay connected, and remember, there’s more than one way to wealth!

By Andrew Hawryluk
Wealth Advisor
Assante Financial Management Ltd.

The opinions expressed are those of the author and not necessarily those of Assante Financial Management Ltd. This material is provided for general information and the opinions expressed and information provided herein are subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on the information presented, please seek professional financial advice based on your personal circumstances.