2023 tax considerations you may have missed

As the year comes to a close and the holiday season approaches, it’s easy to get caught up in the hustle and bustle. However, amidst the festive chaos, there’s one thing you definitely shouldn’t overlook – taxes. In this week’s live session with Jackie, she explored some last-minute financial moves to consider before the year’s end, ensuring you make the most of potential tax benefits.

Bringing Cheer to Your Finances

Jackie kicks off the discussion by emphasizing the importance of keeping taxes in mind during the holiday season. The aim is to uncover ways to put more money in your pocket, especially when those credit card statements start rolling in.

RESPs and RDSPs: A Gift for Your Child’s Future

The first financial move discussed involves contributing to Registered Education Savings Plans (RESPs) and Registered Disability Savings Plans (RDSPs). Jackie breaks down the benefits, including government grants, and highlights the crucial step of making contributions before December 31st to maximize returns.

You can typically receive grants for contributions made to RESPs of 20 percent or $500 per year to a maximum of $1000 for two years as long as contributions are made before Dec 31st. Same is true for RDSP- for a $1500 contribution you can receive $3500 in grants up to $7000 for 2 years of contribution

Tax Loss Selling: Turning Market Losses into Gains

For those who faced losses in the market, tax loss selling is a strategic move to consider. Jackie explains the process of selling investments at a loss and buying them back 30 days later, creating opportunities for capital loss deductions against future gains. If you have lost money in the markets did you know that in your non registered accounts if you sell these funds and buy them back thirty days later this can register as a capital loss against any future gains? In years when the market is down this can be a extremely helpful way to reduce further gains when you are ready to sell out of the markets

FHSA: Your Ticket to Homeownership

Jackie introduces the concept of First Home Savings Accounts (FHSAs), a valuable tool for saving towards your first home. With a deadline of December 31st to make contributions count for the current tax year, FHSAs provide a unique opportunity for tax deductions on your 2023 return.

You can contribute up to $8,000 per year (up to a lifetime limit of $40,000) towards saving for your first down payment. You can claim a tax deduction for contributions you make by Dec. 31 on your 2023 tax return, or you might choose to claim it in any future year when perhaps you are in a higher tax bracket. Note, however, that unlike RRSPs, contributions you make within the first 60 days of 2024 cannot be deducted on your 2023 return.

Short-Term Rentals: Navigating Tax Changes

Property investors, particularly those involved in short-term rentals, need to be aware of upcoming tax changes in 2024. The government’s crackdown on non-compliance with licensing processes may impact income tax deductions for related expenses.

Charitable Donations: Giving Back Before the Tax Rules Change

As the year closes, Jackie encourages generous donations to charities, especially for those in higher income tax brackets. With the alternative minimum income tax set to increase in 2024, making larger contributions this year allows for a more significant tax credit.

If you earn over 220,000 and you donate to charity this will be your last year to get a higher tax credit based on the alternative minimum tax.

Starting in 2024, the alternative minimum tax (AMT) flat rate on charitable donations will increase to 20.5 per cent from 15 per cent. The AMT aims to prevent wealthy donors from paying little or no tax by claiming certain deductions relating to capital gains and dividend tax credits.

Wrapping Up 2023 on a Financial High Note

Jackie concludes the session by expressing gratitude for the community’s support throughout the year. She encourages viewers to share the valuable insights and promises fresh content for 2024. This live session serves as a guide to financial peace, ensuring you enter the new year with confidence and a well-prepared wallet.

For personalized financial guidance and support, you can reach out to our client experience manager at jody.euloth@askjackie.ca.

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