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Year-end Tax Tips

Erica Stephenson - Dec 15, 2019
End of the year tax tips and deadlines and important reminders.
Person using a calculator

Year-end Tax Tips

It's easy to forget about income taxes, since the reckoning is done only once a year. Remember that different forms of investment income are taxed at different rates. As an example, a nominal return of 3 percent through dividends can beat higher fixed-income interest returns on an after-tax basis. Capital gain returns are taxes at even lower rates.

Also important: A reluctance to sell a security for tax reasons. An investor often may refuse to sell or pare down a holding because it means taxes will be triggered. But, if the fundamentals of the security suggest change and/or portfolio balance is involved, don't let the tax tail be in control.


Here are key end-of-year tax planning strategies:

Charitable Donations. December 31 is the deadline for making a charitable donation that can be claimed for the 2019 tax year.

Tax Deductions and Credits. December 31 is the final payment date in order to receive a 2019 tax deduction or credit for expenses such as childcare, medical and tuition tax credits.

Tax-Loss Selling. You have until late December to sell a security that settles in 2019 — December 27 is the expected last buy or sell date for Canadian securities to settle in calendar year 2019, based on trade date plus two business days. However, it is recommended that you review your non-registered investment portfolio earlier.

RRSP Conversion. If you turned or are turning 71 this year, December 31 is the deadline for collapsing your Registered Retirement Savings Plan. However, planning for this important financial change should be done well in advance of the December deadline.