Resolve to be Tax Efficient in 2017
Now that 2016 is history, it’s time to start implementing those New Year’s resolutions. It is also a time to reflect on your financial, investment, tax and estate planning, as well as what you may need to accomplish this year. Here are a few strategic tax considerations to start 2017:
1) Your RRSP Contributions
If you have not made your 2016 RRSP contribution, consider making it by March 1st, 2017. Contributions made in the first 60 days can be deducted on your 2016 personal tax return. The maximum RRSP contribution limit for 2016 is $25,370. Additional contributions in 2017 can be used towards your 2017 RRSP contribution limit. Get those contributions in as early as possible to maximize the tax deferred growth of your investments.
2) Your TFSA Contributions
At the time of writing, the TFSA contribution limit for 2017 has not been set; however, it is predicted to remain at the current $5,500 maximum. If this is the case, consider contributing the maximum to your TFSA as soon as possible. Barring any changes to the 2017 TFSA contribution limit, the cumulative total that can be contributed to a TFSA if you have not started one is $52,000 (including 2017). Income earned within a TFSA, as well as any withdrawals, is tax-free, providing you the flexibility to save for specific goals without tax implications.
3) Your Non-Registered Investments
Corporate class investments remain a very tax efficient vehicle for your non-registered investment portfolio. Keep in mind that as a result of new tax rules that will come into effect on January 1st, 2017, any switches between corporate class mutual funds are no long tax-deferred. Instead, they will be treated like other switches between investments, where they are deemed to occur at fair market value. This means that you may trigger capital gains taxes, if the investment has appreciated in value.
RRSP @ the Big 6-0
The registered retirement savings plan (RRSP) hits its 60th anniversary in 2017. Over the decades, the RRSP has evolved as a tax-planning strategy that combines simplicity with tax savings for Canadians.
Celebrate the RRSP by making a contribution to your plan before the deadline (March 1, 2017)!