Looking to reduce your tax bill? You’ve still got a few weeks left.

There are a few solid options to minimize the tax hit, says Ian Calvert, vice-president and principal at HighView Wealth Management.



The most high-impact way is still putting money into your RRSP, because it comes straight off your taxable income. Tax credits from charitable donations aren’t as effective, he said.

“Anything that’s a straight deduction like an RRSP is going to give you the most bang for your buck in terms of reducing your tax bill,” said Calvert. You can put money into your RRSP right up until March 1.

A couple of good ways to reduce your tax hit are to sell underperforming stocks, or make a charitable donation.

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The “tax-loss” selling is something to do if you’re anticipating a big capital gains tax hit, perhaps from cashing in other investments which you sold at a profit, such as stocks, a small business, or a cottage, said Calvert. If you’ve got a stock that has fallen in price since you first bought it, selling it now would give you a capital loss, which will wipe out some of the gains from the other sale, and cut your tax bill.

But be careful not to buy that same sinking stock back too soon. If you buy it back within 30 days, you can’t use it as a tax shelter. The Canada Revenue Agency calls that a “superficial loss,” Calvert warned.

One other way to delay your tax hit is to delay selling part of a profitable investment until after Dec. 31, Calvert said. If you need to cash in $25,000 worth of shares to buy a car, for example, sell half the shares now, and half in January. That puts off the capital gains hit for another year.

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Michael Thorne
Financial Planner
Thorne Financial Planning