As 2023 draws to a close, it’s crucial to stay ahead with your tax planning. At Bowie Financial, we’re here to guide you through some vital steps and new developments that could significantly impact your financial health. Let’s dive into the key strategies and updates:
Maximize Tax-Loss Selling
This year, remember that tax-loss selling is more pressing due to the weekend dates of Dec. 30 and 31. To capitalize on this strategy, ensure your trades are settled by Dec. 27. This move can help offset taxes on past or future capital gains.
Watch Out for Currency Fluctuations
Investments in foreign currencies need extra attention. What might seem like a loss could turn out to be a gain due to currency changes. Stay vigilant!
Avoid Superficial Loss Pitfalls
Be mindful of the superficial loss rule. Repurchasing an identical security within 30 days of a tax-loss sale is a no-go.
Investment Expense Deductions
To claim deductions for 2023, pay any investment-related interest expenses and counselling fees before year-end.
RRSP to RRIF Conversion for Clients Aged 71
Turning 71 this year? It’s time to convert your RRSP into a RRIF by year-end.
Prepare for the New Alternative Minimum Tax (AMT) Rules in 2024
The upcoming AMT rules, effective Jan. 1, 2024, will bring significant changes. These include a higher AMT rate, limited exemptions, and altered taxation for capital gains and employee stock options. To navigate these changes, consider realizing gains this year and exercising stock options before year-end.
Charitable Giving and AMT
For high-income earners, the new rules will affect charitable donations, especially in securities. To optimize your tax benefits, consider making substantial donations before the end of 2023.
First Home Savings Account (FHSA)
Introduced in 2023, the FHSA is a boon for first-time homebuyers in Canada. Open your account this year to start accumulating the $8,000 annual room, even if you can’t make the full contribution right away.
Remember, contributions to FHSAs made in the first 60 days of 2024 won’t count for 2023 deductions, so act before this year ends!
At Bowie Financial, we’re committed to helping you navigate these complexities and optimize your financial strategies.