2011 YEAR-END TAX PLANNING CHECKLIST
Parents and Spouses
The following checklist provides tactics you should consider as part
of your year-end tax planning. If you need further explanation, please
contact Chaplin & Co., Chartered Accountants at 416 667 7060.
- Income splitting
- If you have excess cash to invest and a lower-tax bracket spouse
or children, consider an income-splitting plan by lending money to a family
member to take advantage of the low prescribed
interest rates (1% to December 31, 2011)
- Deposit child tax benefits payments into a bank account in the
name of your child so that income earned thereon is taxed in the
child’s hands.
- Registered Education Savings Plan (RESP) - Contribute
to an RESP for your child. You are allowed to contribute up to $4,000
each year for each college or university student. You are not able to
carry-forward unused contributions.
- Consider giving investments to a child - Consider
transferring investments to a child where that investment has dropped
in value. This will trigger a capital loss that parent can use and any
future growth will be taxed in the child’s name. Capital gains
are not attributed to the parent.
- Personal residence - For each personal residence
owned by our family that was acquired before 1982, consider
- the need to establish the value of the residence at December 31,
1981; and
- the need for separate rather than joint ownership.
- where more than one residence is owned by a family, the personal
residence designation should generally be used for the property
with the largest gain per year. However, the timing of the tax liability
must also be considered.
- Childcare expenses -
- Pay childcare expenses for 2011 before December 31, 2011 and get
a receipt.
- Boarding school and camp fees qualify for the child care deduction
(subject to certain limits) as does the cost to advertise or use
a placement agency to find a child care provider.
- Employment leave by spouse - If your spouse is leaving
the workforce, time contributions and withdrawals from a spousal RRSP
to provide your family with extra disposable income.
- Contribute to a spousal RRSP - Review each spouse’s
RRSP and make RRSP contributions designed to equalize RRSPs so that
each spouse will have the same retirement income
- Separation agreements -
- Review terms to ensure that you will be entitled to the maximum
deduction or the minimum income inclusion.
- Segregate child support component from alimony. Otherwise, the
entire amount will be considered child support and will not be deductible.
- Alimony payments - Ensure that all alimony or maintenance
payments for the year are made by December 31.
- RRSPs
- contribute by deadline of first 60 days of year to
be able to claim deduction in previous tax year.
- to maximize your 2012 RRSP contribution of
$22,970, your earned income must be at least
$127,611 in 2011.
- Children abroad - Consider whether your will and
estate plan need to be updated for children who no longer reside in
Canada.
- Children under 6 - Ensure that you made the claim
for the Universal Child Care Benefit of $100 per month.
- Children’s Fitness Tax Credit - A non-refundable credit based on up to $500 of eligible fees for physical-activity-programmes.
- Children’s Arts Tax Credit - A non-refundable credit based on up to $500 of eligible fees for artistic, cultural, recreational or developmental activity
- Child Tax Benefit - Ensure claims are made for the child disability benefit if eligible.
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