New report helps Canadians unlock potential tax
savings strategies before year end and offers timely advice to
small businesses on proposed tax changes
TORONTO, Nov. 2, 2017 /CNW/ - CIBC (TSX: CM)
(NYSE: CM) -- While tax planning should be a year-round affair, the
window for Canadians to take advantage of certain tax savings is
fast approaching, particularly for small business owners in light
of the recent tax change proposals, says Jamie Golombek, Managing Director, Tax and
Estate Planning, CIBC Financial Planning & Advice.
"We know that for most Canadians, their tax bill isn't top of
mind until crunch time," says Mr. Golombek. "But, everyone – from
investors to students and small business owners – can save money on
their 2017 tax bills through various tax credits and benefits if
they take certain steps before year-end. If you don't consider them
by December 31st, it will be too late
when you file your tax return next April."
In his new CIBC report, 2017 Year End Tax Tips, Mr.
Golombek provides a comprehensive overview of some notable
tax-planning opportunities that should be considered before the
December 31 deadline:
- New deadline for tax-loss selling
- Charitable donations for first-time donors
- Home renovation tax credits
- Private corporation business owners
For investors, tax-loss selling to offset capital gains realized
on other investments is an important tax savings strategy. New for
2017, Canada has adopted a shorter
settlement period for equity and long-term debt market trades. This
means that, rather than the previous three-business-day settlement
period, trades are now settled in two business days. To ensure that
your trade settles in 2017, your trade date must be no later than
December 27, 2017.
Mr. Golombek adds that while it may be tempting to transfer an
investment with an accrued loss to your Registered Retirement
Savings Plan or Tax-Free Savings Account to realize the loss
without actually disposing the investment, such a loss is
specifically denied under current tax rules – and there are
also substantial penalties for swapping an investment from a
non-registered account to a registered account for cash or other
consideration.
For private corporations, some of the recently proposed tax
changes could impact income sprinkling and passive investment
income earned within corporations. These changes could result in
tax rates of more than 40% (depending on the province) when small
business income is distributed as dividends to family members after
2017 and may be of particular concern for families that have
implemented estate freezes.
"Business owners should seek specific advice from their tax
expert to understand how the revised tax rules will impact them,"
says Mr. Golombek. "The tax environment is constantly evolving,
which is why it is important for tax planning to be part of ongoing
business planning. It will be particularly important to plan
before year end for changes that are expected to be implemented in
2018, which may involve paying extra dividends to non-contributing
family shareholders before January 1,
2018."
Federal and provincial tax credits for charitable donations can
result in combined tax savings of up to 50% of the value of your
gift in 2017. But, as Mr. Golombek points out in his report, 2017
is the last year you can claim the federal First-Time Donor's Super
Credit (FDSC) if neither you nor your spouse or common-law partner
has claimed the donation tax credit from 2008 to 2016. The FDSC
provides an additional 25% tax credit on total monetary donations
of up to $1,000.
"While many Canadians regularly donate to various charities,
this tax credit can be an important consideration for millennials,
many of whom are students or just joining the work force and may
not have had the disposable income to make charitable donations in
the past," says Mr. Golombek.
Many Canadians may not be aware of the tax credits available for
home renovations related to accessibility for seniors and people
with disabilities, he says. The non-refundable Home Accessibility
Tax Credit is equal to 15% of up to $10,000 of expenses per year towards renovations
that permit individuals to gain access to, or to be more mobile or
functional within, their homes or reduce their risk of harm within
their homes or from entering their homes.
Regardless of your tax situation, being mindful of the tax
deadline and understanding tax credits and benefits with the
support of an advisor can result in significant savings for many
Canadians who may be paying out more than they should."
"The key to successful tax planning is to work with an expert to
help you identify potential savings. It can result in significant
savings for many Canadians who may be paying out more than they
should," he says.
Mr. Golombek discusses in a video here the key takeaways from
his report.
About CIBC
CIBC is a leading Canadian-based global financial institution
with 11 million personal banking, business, public sector and
institutional clients. Across Personal and Small Business Banking,
Commercial Banking and Wealth Management, and Capital Markets
businesses, CIBC offers a full range of advice, solutions and
services through its leading digital banking network, and locations
across Canada, in the United States and around
the world. Ongoing news releases and more information about CIBC
can be found
at www.cibc.com/en/about-cibc/media-centre.html.
SOURCE CIBC - Consumer Research and Advice