As 2009 draws to a close it is time again for your clients to turn their attentions to their taxes. To help make year-end tax planning easier, CIBC has issued a report by tax and estate planning expert Jamie Golombek outlining its top 10 tips.

While the annual tax filing deadline is months away, December is often the best time of year to evaluate your clients’ tax strategies, especially as time will run out to realize a variety of tax-saving opportunities before 2010.

It’s important for Canadians to review tax-planning strategy with an advisor now to ensure they are making the most of any opportunities available to them, “especially as a result of new savings and investment vehicles, credits and policy changes that came into effect for the first time in 2009,” advises Golombek, managing director of tax and estate planning for CIBC.

The report covers the following tax topics, for discussion with a financial advisor:

1) Tax-loss selling. In order to realize losses on public securities, trades must generally be made on or before December 24th or the trade will not settle until 2010 and the loss won’t be available until next year.

2) Advice for homeowners and prospective homeowners. Canadians should be aware of changes made to the federal Home Buyers’ Plan (HBP) and consider their eligibility for the new non-refundable First-Time Home Buyer’s Tax Credit (HBTC). As well, Canadians considering any home renovations only have until the end of January 2010 to complete their renovation work to qualify for the temporary Home Renovation Tax Credit (HRTC).

3) RRSP annuitants who turn 71 in 2009. Canadians who turned 71 earlier this year only have until December 31st to make their final RRSP contribution before converting the plan into a RRIF or an annuity.

4) Contribute to an RESP.

5) Make a donation. December 31 is the last day to make a donation and receive a tax credit for 2009.

6) Contribute to an RDSP. Canadians eligible for the Disability Tax Credit, their parents and other eligible contributors have until December 31 to contribute to a Registered Disability Savings Plan and apply for the matching Canada Disability Savings Grant (CDSG) and income-tested Canada Disability Savings Bond (CDSB) for the 2009 RDSP contribution year.

7) Purchase business assets. Self-employed or small business owners should consider accelerating the purchase of new equipment or office furniture planned for 2010 to take advantage of a full year’s depreciation. A time-limited special 100% write-off is available for new computer equipment.

8) Consider a prescribed rate loan at 1%. With the Canada Revenue Agency’s prescribed interest rate set at an all-time low of 1% until at least December 31, there is no better time for couples to consider the potential benefits of income-splitting — the practice of shifting income from the higher income spouse to the lower income spouse to reduce taxes. Any investment returns above 1% can then be taxed in the hands of the lower-income spouse.

9) Pay any investment expenses by year-end. Interest paid on money borrowed for investment purposes as well as investment counseling fees for non-RRSP accounts can be deducted on your 2009 tax return but the amounts must be actually paid by December 31.

10) Apply now to pay less tax all year. Apply now to reduce tax deductions at source for 2010 by completing the CRA Form T1213 before December 31.

“Looking ahead to 2010, it’s important to view tax-planning as an ongoing process, not a year-end rush,” Golombek urges.

IE