Reminder: Year-end investing and tax deadlines

The new year is approaching and with it, several key deadlines for tax deductions, says BMO Financial Group. The bank has issued a notice reminding Canadians that Dec. 31—which falls on a Saturday this year, so plan accordingly—marks the last day to contribute to certain registered plans and take advantage of certain tax credits.

RDSP contributions for grants and bonds December 31 marks the registered disability savings plan (RDSP) contribution deadline for receiving grants and bonds from the government. It is also the last day for grants and bond eligibility for those beneficiaries who are turning 49 years of age, and is the last day contributions are permitted to the plan for those beneficiaries who are turning 59 years of age.

Charitable donations and other tax credits/deductions All charitable donations must be made before Dec. 31 in order to receive a tax receipt for 2011. As well, Dec. 31 is the final payment date for a 2011 tax deduction or credit for expenses such as childcare, medical costs, tuition and the recently introduced children’s fitness and arts tax credits.

TFSA withdrawals If you are planning a withdrawal from your tax-free savings account (TFSA), consider making this withdrawal in December instead of waiting until the new year; a withdrawal would result in additional TFSA contribution room in the following year.

RRSP contributions for those turning 71 Individuals who turned 71 years of age in 2011 must collapse their RRSP by the end of the year. Such individuals should consider a final RRSP contribution, assuming any unused contribution room exists. Seniors and retirees should also take note of some of the important tax changes in recent years (such as pension income splitting, the amendments to the Canada Pension Plan and the introduction of the TFSA) that may affect their tax planning.

“With all the distractions around this time of the year, it’s easy to forget about key end-of-year personal finance deadlines,” says Tina Di Vito, head of BMO Retirement Institute. “With a little bit of planning and help from a financial or tax professional, making arrangements now can make the new year less stressful.”

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.