The end of the year is a crazy time of year. Packing for holidays, school holidays, family visiting, gift shopping, AND closing off your financial tax year!
When closing off any finance phase, be it a project or a business year, it is the time that you take the strategic information and plan for the year ahead. Another priority item on your to-do list!
We prepared this checklist to help with efficiency and speed!
This is the time for a review in order to facilitate projections:
1) Were fiscal goals achieved?
2) Were budgets appropriate or far off?
3) Was the debt repayment plan effective? Can you consolidate it to a lower rate?
4) Has the contingency capital buffer been dipped into, or do you have half a year of expenses saved?
5) Has your fiscal, asset and liability makeup changed, thus requiring a Will or Trust Fund update?
6) Do insurances need to be increased, reduced or have listed items updated? Do you need gap cover?
7) Redo your net worth and update your financial long-term goals graph.
TFSA – Tax-Free Savings Account
The total additional funds that can be contributed to TFSA in 2021 $6,000. This adds to the existing balance.
TFSA is a great option if you need to access funds before retirement, have an annual income <$50k, are expecting a high tax rate in retirement, or your RRSP contribution limit is reached.
RRSP – Registered Retirement Savings Plan
In 2020, 18% of income (max $27,230) could be paid to an RRSP (excluding carry-overs of unused limits from previous years).
Any contributions to RRSP accounts made by 01 March 2021 can have the tax deduction claimed on a 2020 tax return. The total contributions allowed in 2021 are $27,830.
RRSP contributions lower your taxable amount and could increase your CCB (Child Benefit) for any children you have.
RESP – Registered Education Savings Plan
The government assists (Canada Education Savings Grants) with savings for your child’s education by adding 20 cents for every $1 you contribute to RESP with an annual maximum of $500.
RESP funds are taxed when withdrawals are made by your children. The tax rate is either lower or free depending on their income.
Attend to your investments; ignore them at your peril. Things to consider are rebalancing your portfolio categories, tax-loss harvesting, and checking if your risk profile can tolerate the levels of risk of your investments.
Set up scheduled payments to your investments to avoid the temptation of spending the funds or forgetting.
Salaried citizens must file 2020 income tax returns by the end of April 2021, while self-employed individuals can request an extension to submit by the middle of June.
Throughout the year, store ALL your transaction documentation in files so that you can maximize deductions and credits at tax return time.
2020 might have been a tough year, or you might be in the PPE industry and had a cracker of a year. Be that as it may:
Failing To Plan For Your Future Is Planning To Fail In The Future. (Pres.B Franklin) #successplanning
Let our Tax Accountant Vancouver BC help you to profitably conclude your tax return and realign your investments. Get in touch today and let us get you the best solution possible.