Peter Bowen and Michelle Munro’s top tax tips for Canadian investors
As busy as you may be in the lead-up to the December holidays, you would be well served to set aside some time to deal with your taxes. While you don’t have to crunch every number until April, if you want to minimize your 2022 tax bill, you should consider taking care of a few things before the new year. Of course, tax is complicated, and every individual’s circumstances are different, so it’s important to talk to your financial and tax advisors to see whether the ideas below will work for you.
Pay expenses before year-end
A number of expenses must be paid before December 31 if you want to deduct them on your 2022 tax return. Some of these include interest, investment counsel fees, child care expenses, accounting fees and professional dues. Similarly, expenses that can be claimed as tax credits for 2022 must be paid by the end of the year, including charitable donations, political contributions, tuition fees and medical expenses. Depending on anticipated income in 2023, you may want to consider paying these expenses by December 31 to benefit from the tax deduction or credit in 2022, rather than waiting until next year.
Deduction for employee workspace-in-home expenses
Many people continue to be working from home during the pandemic. If you are in this situation, you may want to consider the deduction for workspace-in-home expenses. The workspace must be either
the place where you mainly (more than 50% of the time) do your work; or
used exclusively for earning employment income, and used on a regular and continual basis for meeting customers or other persons in the course of performing your job.
This deduction is available for employees if your contract of employment required you to pay the expenses, and the expenses were not reimbursable by your employer. For the 2021 and 2022 tax years, employees working from home due to the COVID-19 pandemic may be able to claim up to a maximum of $500 using the temporary flat rate method.
Donate securities instead of cash
If you want to make a charitable donation, you might consider donating publicly listed securities or mutual funds instead of cash. With this strategy, you can claim the full value of the gift as a donation without the realized capital gain being subject to tax. To claim the donation credit on your 2022 return, you must make donations by December 31. Because the administrative process for donating securities in kind can take a while, it’s best to do this well in advance of the year-end, to ensure donation receipts have 2022 dates.
https://www.fidelity.ca/en/investor/investorinsights/year-end-tax-tips-2022/?Investor_ID=&utm_source=mk&utm_medium=email&utm_campaign=NL_November-Newsletter-112322&utm_content=en&mkt_tok=OTAyLU1ISy0yMDUAAAGIRRta2lKHgYNH1RFIvALSWutwuTMSEaianlA-yl_aLtxdhxBzZw8qdNvUIyYqoK9Gph2yke8DFVtnj7YAMO9oEcolyqFq6r4Ro1yHh7iL9talWbg
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