income that you will have by the end of the year so that you can take advantage of any deductions that may be available to you to reduce your taxable income and/or taxes payable. Examples would be moving expenses, child care expenses, safety deposit box fees, charitable donations, political contributions, medical expenses, any eligible employment expenses, union dues, carrying charges on investments, public transit and children’s fitness and arts amounts. If you have investments, you need to keep track of
the purchases and sales of your investments as well as the return of capital amounts on any of the income trusts that you may have sold during the year as this will affect the adjusted cost base of your investment. By being aware of your investments, you will know how many T3 and T5 slips that you can expect at the beginning of next year before you can complete your personal tax return. Please note that investment income that is interest
ROAD CENTS
income is taxed at a higher personal rate than dividend income which has the benefit of the dividend tax credit. You may want to consider moving some of those interest bearing investments over to dividends. Subject to some limitations, the interest on loans taken out for investment purposes may be deductible.
GETTING READY FOR THE END OF THE YEAR Contrary to popular belief, now is the time to get ready for the end of the year’s taxes instead of early next year just before the RRSP deadline. Here are just a few ideas that you may find helpful. If you are a small business that has payroll, and
you do your own payroll, you can reconcile your payroll records up to this point so that the creation of the T4’s will be easier and you will avoid any penalties and interest when you file your T4’s in February. Te end of the year is always a good time to purchase
assets for your company as you will receive the benefit of a half year’s worth of depreciation/capital cost allowance on your tax return. If you are operating at a loss, you can elect not to take capital cost allowance on your tax return saving the deduction for a future year when you will have income. Conversely if you sold an asset and have capital gains, a portion of those capital gains may be deferred to a future year if the proceeds are not all receivable in the current year. If you use your home as your principle place of
business and you regularly meet clients at your home, you can write off a portion of your household expenses against your income, so you would want to begin to organize and collect your household items. As an individual, you would want to estimate the
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