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. LLP, Chartered Professional Accountants at 416 667 7060 or cpa@chaplinco.com.

• 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% in Q1 2022)
  • 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.

• Childcare expenses -
  • Pay childcare expenses for 2022 before December 31, 2022 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 - To maximize your 2023 RRSP contribution of $30,780 your 2022 earned income must be $171,000.

• Children abroad - Consider whether your will and estate plan need to be updated for children who no longer reside in Canada.

• Canada Child Benefit - Ensure that you made the claim if you are eligible for this tax-free benefit.