Parents and Spouses

Parents and Spouses

Parents and Spouses

Year-End Tax Planning Checklist

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 incomesplitting plan by lending money to a family member to take advantage of the low prescribed interest rates (2% to December 31, 2018 and for the first quarter of 2019)
    • Deposit Canada Child Benefit 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 until the end of the year in which the child turns 17. There is no annual contribution limit but there is a lifetime limit of $50,000 for each beneficiary. However, there is an annual limit of $500 for the Canada Education Savings Grant with a lifetime limit of $7,200. Contributions should be planned to maximize government grants received under the program.
  • 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.
  • Child Care expenses -
    • Pay childcare expenses for 2018 before December 31, 2018 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 fromalimony. 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 March 1, 2019 to be able to claim deduction in previous tax year
    • to maximize your 2018 RRSP contribution of $26,230, your earned income must have been at least $145,722 in 2017.
    • to maximize your 2020 RRSP contribution of $27,230, your 2019 earned income must be $151,278.
  • Children abroad - Consider whether your will and estate plan need to be updated for children who no longer reside in Canada.
  • Canada Child BenefitEnsure that you made the claim if you are eligible for this tax-free benefit