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The race is on: trim your taxes in time for 2009
CIBC's Jamie Golombek provides year-end tax advice for Canadians TORONTO, Dec. 2 /CNW/ - For most Canadians, the weeks leading up to the holiday season are chaotic enough without the added stress of thinking about your annual tax filing. While it is tempting to put off tax-planning until the spring, by then it may be too late to realize a variety of 2008 tax-savings opportunities. "Even though its four months ahead of the filing deadline, December is the best time of the year to evaluate what tax breaks you may be eligible for and adopt a strategic approach to tax-planning," advises Jamie Golombek, Managing Director of Tax and Estate Planning for CIBC. "While each individual's financial situation is unique, there are a number of simple and effective strategies all Canadians could consider using to maximize their tax savings before the end of the year," says Golombek. "Given new savings options and changes to certain tax policies in 2008, it's worth a talk with your financial advisor to make sure you're aware of the savings opportunities available to you."Golombek offers the following tax-planning checklist to discuss with your financial advisor: 1) Maximize RRSP contributions - It's especially important to those who are in their prime earning years to start saving for retirement now. RRSPs offer investors tax deductions on contributions and tax-deferred savings on all income and growth generated until you start making withdrawals. If you turned 71 earlier this year, you only have until December 31st to make your final RRSP contribution and convert the plan into a Registered Retirement Income Fund (RRIF) or an annuity. 2) Explore other registered savings options - RESPs remain the single best way to save for a child's post-secondary education, as recent enhancements resulted in both more time and additional room to contribute. RESPs also offer investors the opportunity to supplement their savings with a number of government grants. 3) Turn interest payments and losses into gains - If you have investments which are in an accrued loss position at year end, consider selling them before December 31st to realize those losses and offset capital gains elsewhere. Additionally, interest charged on loans used to purchase non-registered investments must be paid by December 31st to claim a tax deduction for 2008. 4) Pursue income-splitting strategies - Income splitting is the practice of shifting income from the higher income spouse to the lower income spouse to reduce taxes. One strategy is to split pension income with a lower-income spouse or partner. Additionally, a spouse can loan money to a lower income spouse or partner for investment purposes, charging the CRA's prescribed rate, currently set at only 3% and the spouse will include the net profit in his or her income. The higher income spouse must only record in income the interest charged. This is commonly known as a 'spousal loan strategy.' 5) Donate and benefit from tax credits - December 31st is your last chance to make a charitable donation and receive a tax credit for 2008. Under recent changes to the rules, Canadians can now donate securities, mutual funds and other qualifying, publicly-traded investments to charity and pay no capital gains tax on any accrued gains. Consider making a donation online if you're pressed for time to receive an electronic receipt. 6) Don't wait for your refund - Contrary to popular belief, a hefty tax refund received in the Spring is actually a sign of poor tax planning; it means you've loaned your money to the government on an interest-free basis for up to a year. Consider completing the CRA's Form T1213 before December 31st, which enables your employer to reduce the amount of tax withheld at source (taking into account deductions such as RSP contributions or child care expenses) starting with your first January 2009 pay cheque.Looking ahead to 2009, consider the advantages of opening a Tax Free Savings Account where contributions can be made beginning January 2, 2009. The TFSA could become an integral part of your overall savings and investment plan as it lets investors set aside money in eligible investment vehicles without paying tax on the income and gains earned within the TFSA on contributions up to $5,000 per year. Beat the rush by pre-registering for a CIBC Tax Advantage Savings Account today. "Try thinking about tax-planning as a continuous, year-round activity which evolves over time - not a dash to cram in filings at year's end," Golombek adds. "Be aware of tax factors affecting you, your family and your business and work with a professional to develop a long-term approach which addresses tax situations now and down the road." CIBC is a leading North American financial institution with nearly 11 million personal banking and business clients. CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada, in the United States and around the world. You can find other news releases and information about CIBC in our Press Centre on our corporate website at www.cibc.com.
For further information:
For further information: Doug Maybee, Director, External Communications and Media Relations, CIBC, Tel: (416) 980-7458, doug.maybee@cibc.com