While effective tax planning is ideally a year-round exercise, tax-return time can offer advisors a great opportunity to remind their clients about useful tax tips and strategies.

Any extra help you can provide to your clients during the tax season — when tax issues are top of mind — represents another way to solidify your relationship with them.

Some tax tips, ideas and reminders you can raise with your clients:

> Claim All Available Tax Credits. Every year, many Canadians neglect to claim one or more of the many tax credits available to them. Examples of commonly overlooked credits are the children’s fitness tax credit and the tax credit for public transit passes. And don’t forget the first-time homebuyers’ tax credit, which was introduced in the 2009 federal budget.

The most notable credit this tax season is the home-renovation tax credit, a one-time credit offered by the federal government on eligible renovation expenses made between Jan. 27, 2009, and Feb. 1, 2010. The HRTC offers Canadians a non-refundable tax credit of 15% on eligible expenses of more than $1,000 but not more than $10,000 incurred during that period.

It’s important to note that the Canada Revenue Agency’s list of products and services that are eligible for the HRTC, available on the CRA’s website, is more wide-ranging than some clients might guess. Items such as new shutters and ceiling fans may be eligible.

“Clients probably made expenditures during the course of the year without even considering the credit that could be eligible for the HRTC,” says Lorna Sinclair, a tax partner with Deloitte & Touche LLP in Toronto.

Another sometimes overlooked credit is the universal child-care benefit, which offers eligible parents $100 a month for each child under the age of six. “You have to apply for the credit,” says Jason Safar, partner in the tax services practice of PricewaterhouseCoopers LLP in Mississauga, Ont. “It doesn’t just get sent to you.”

And while the following may seem obvious, you should also remind clients to gather all their relevant tax-related documentation, including slips, notices and receipts, either to send in with the return or to hold on to as backup for deductions they are claiming.

> Pension Splitting. Up to 50% of pension income can be transferred from a higher-income spouse to a lower-income spouse, which can result in lower total taxes for the couple. While no actual transfer of money is made, Canadians applying to split pension income need to file a T1032 form, known as Joint Election to Split Pension Income, each year. The two-page form needs to be signed by both spouses and filed with the return.

“This is one of those rare examples of tax planning that can be done at the time of filing the tax return rather than throughout the year,” says Jamie Golombek, managing director of tax and estate planning with Canadian Imperial Bank of Commerce’s private wealth-management division in Toronto.

> TFSA And Other Programs. Tax time might serve as another opportunity to revisit conversations with clients regarding the availability and usefulness of tax-advantaged government programs such as the registered education savings plan, the registered disability savings plan, the tax-free savings account and, of course, the RRSP.

This year, Canadians will receive a notice of assessment featuring their TFSA contribution limit for 2010. Reports suggest most Canadians have yet to open a TFSA. Those who have opened a TFSA may not be fully aware of the rules governing TFSA withdrawals and contribution room. Reviewing this notice of assessment with your clients may be a good way to remind them of the benefits of opening a TFSA.

> Carrying Back Tax Losses.Some clients who had sold shares in 2009 during the worst of the market crash may have triggered capital losses. Such losses may be carried back up to three years to match any gains they had made in the three previous taxation years.

“People think it’s a complicated procedure, but it’s not,” says Dennis Tew, chief financial officer at Toronto-based Franklin Templeton Investments Corp.

Taxpayers wishing to carry back losses need to file a T1A, known as a Request for Loss Carryback.

“It’s a way they can put money in their pockets today,” Tew says.

> Prescribed Rate Loans. The federal government allows Canadians to make loans to family members at a prescribed rate without triggering the attribution rules, which usually prevent a higher-income spouse from gaining a tax advantage by splitting income with a lower-income spouse. A common strategy involves having a higher-income family member make a loan to a lower-income family member. The lower-income person invests the funds and presumably will be taxed at a lower rate on any income or gains they make on the investments, lowering the overall tax liability for the family as a unit.

@page_break@The prescribed rate continues to sit at an all-time low of 1%, but it is reset quarterly. With most people believing rates to be heading upward, taxpayers considering making use of such a loan might do well to do so before rates rise.

> Rebalancing Portfolios. Many clients had fled into fixed-income investments during the downturn and have been reluctant to rebalance and move back into equities. Tax time could provide you with the perfect opportunity, Tew says, to talk with clients about the tax consequences of interest income earned outside of tax-sheltered vehicles.

“You can remind them of the tax benefits of earning dividend or capital gains,” Tew says, “rather than interest income.”

> Reducing Deductions Through The Year. If your client is receiving a large tax refund, it may be a sign of poor tax planning, Golombek says. Clients who make significant RRSP contributions, either all at once or throughout the year as part of a regular contribution plan, can find that more taxes than necessary are withheld on every paycheque.

Taxpayers can file a T1213, known as a Request to Reduce Tax Deductions at Source, to reduce the amount of taxes that are withheld on each paycheque.

Says Golombek: “It leaves clients with more money to invest through the year.” IE