What better time than the lazy, hazy days of summer to get your tax affairs
in order. Here are Jamie Golombek's top 10 sizzling summer tax strategies:
1 SAVE THOSE STUBS Today marks the beginning of the new public transit pass
credit. If you purchase monthly passes, start keeping those receipts in a safe
2 CASH IN ON THE KIDS Got kids under six? If you are not already receiving
the Child Tax Benefit, you must formally apply for the new $100 per child
monthly UCCB payment, which begins on July 20. Complete the application form
available online at cra-arc.gc.ca
3 CHECK YOUR RECEIPTS Be vigilant about checking your sales receipts to
ensure that merchants have changed their systems to reflect the reduced 6% GST
4 THEN CHECK THEIR RECEIPTS If you have employees, ensure that you've updated
your payroll calculations as of today. The new payroll tables take into account
a slight increase in the tax rate to 15.5% (from 15%) on the lowest income tax
bracket (income up to $36,378).
5 GET A HEAD START If you received a tax refund instead of blowing it on a
round of golf, get a head start on your 2006 RRSP contribution. The limit this
year is 18% of your 2005 earned income, up to a maximum of $18,000.
6 ELIMINATE THAT TAX REFUND A tax refund is a sign of poor tax planning, and
means you're making an interest-free loan to the government. If you haven't
already done so, apply to the Canada Revenue Agency for a reduction of tax
withheld at source. Use CRA's Form T1213 available online.
7 MIX IT UP If you are at least 65, consider converting part of your RRSP to
a RRIF earlier than the mandatory age 69 deadline. This is to take advantage of
the recently doubled pension income credit available on the first $2,000 of
pension income, annuities and RRIF withdrawals.
8 THINK OF THE PAYBACK Make a contribution to your child's or grandchild's
RESP and give them a head start on university tuition.
9 CHRISTMAS IN JULY With the elimination of the capital gains tax on
donations of securities to charity, review your investment portfolio to
determine if you can make your 2006 charitable gifts "in kind." This beats
scrambling to write cheques to charities in December.
10 WHAT'S UP, DOCK? As the family gathers around the dock, review estate
planning strategies for passing on the family cottage, such as family trusts or
life insurance. - Jamie Golombek is the vice-president, taxation and estate
planning at AIM Trimark Investments in Toronto.