As we prepare to close out 2022, it’s a good time to take a closer look at your finances and think about if there are any ways to improve your tax position. This year, inflation in Canada rose significantly due to the high cost of energy and food. In response, the Bank of Canada announced a series of interest rate hikes throughout 2022. Given these economic pressures, it is important to consider available opportunities and planning choices before the end of this year to ensure you are achieving your financial goals in a tax effective manner.
As part of your year-end planning, there are also upcoming changes to consider. You may want to think about whether the new trust reporting requirements proposed to apply to taxation years ending after December 30, 2023 could affect you, and whether it may make sense to either wind up or restructure any affected trust arrangements before December 31, 2022.
Year-end planning checklist
You can use this checklist of top tax issues to help you make the most of your potential tax savings opportunities for 2022. This checklist outlines important issues, deadlines and tax tips that you should consider, and includes an appendix outlining the 2022 top marginal income tax rates for individuals in each province/territory. While these suggestions can be helpful when considering your annual personal income tax return, don’t forget that scheduling regular reviews can ensure your tax planning is effective all year round.
Checklist — Top tax issues you should consider before 2023 Your tax deadlines
- Are you prepared to meet upcoming deadlines to achieve 2022 tax savings?
- Your investments
- Have you maximized your TFSA contribution?
- Should you sell investments with unrealized capital losses/gains?
- Your family
- Have you considered income splitting loans with family?
- Are you moving to a new province/territory?
- Did you sell your home?
- Are you saving for your first home?
- Your retirement and estate planning
- Have you maximized your RRSP contribution?
- Is it time to wind up your RRSP?
- Do you have a trust (including a bare trust)?
- Other planning opportunities
- Did you contribute to an RESP for a child?
- Have you made a charitable donation?
- Do you drive a company car?
- Have you paid your personal tax instalments?
- Do you need to make a taxpayer-relief request?
Your tax deadlines Are you prepared to meet upcoming deadlines to achieve 2022 tax savings?
In some cases, you have to make payments by December 31, 2022 to be eligible for tax deductions or credits on your 2022 personal income tax return. Certain payments due during the first 60 days of 2023 may also be eligible for 2022 tax savings. Ensure you are aware of the upcoming deadlines:
Payments due by December 31, 2022
- Charitable gifts
- Medical expenses
- Union and professional membership dues
- Investment counsel fees, interest, and other investment expenses
- Certain child and spousal support payments
- Political contributions
- Deductible legal fees
- Interest on student loans