5 Financial Tasks To Complete Before The End of the Year

Financial tasks to complete

With the end of 2015 fast approaching, you’re probably busy getting ready for or recovering from holiday parties. But you should also be thinking about your finances. January 31 is your last opportunity to do some important things that could have a big impact on your 2015 tax return.  Here are five financial tasks you should consider doing before you ring in the new year:

1: Selling Stocks

If you are currently holding stocks that have declined in value and you’re thinking about selling them, it’s best to do so before the end of the year. This will help you offset any capital gains that you might have from selling stocks this year that increased in value. It could also potentially reduce or eliminate tax that you would have had to pay on these gains.

Don’t have capital gains from this tax year? No problem! You can carry forward a capital loss up to three years or back three years. That could result on a refund of taxes that you previously paid. Since you don’t have to pay capital gains taxes on stocks held in your RRSP or your TFSA, this advice only applies to stocks that you’re holding outside a registered account. You can also buy back these stocks in the future so long as you wait at least 30 days to do so. So, if you want to offset a capital gain but still believe in the stock that has declined in value and want to remain invested in it you can do so. Just be sure you wait those 30 days since if you buy the stock again before that date, then the CRA will only consider it a ‘superficial loss’ and you won’t be able to count it.

2: Taking Money Out Of Your TFSA

If you’re considering taking money out of your TFSA (and don’t have any remaining room left over from previous years), and hoping to recontribute that amount in 2016, then you’ll have to take that money out before the end of 2015. If you take money out of a TFSA, you have to wait until the following calendar year to recontribute it. For example, if you took out the money on December 31, 2015 you could put it back in on January 1, 2016. But if you took out money on January 1, 2016 you would have to wait until January 1, 2017 to recontribute.

Also read: TFSAs Cut to $5,500 in 2016>

3: Contributing to an RESP

If you’re saving money in RESPs for your children’s education, remember to make a contribution before the end of the year. Each year, the Canada Education Savings Grant will match up to 20 per cent or $500 of a $2,500 contribution up to a lifetime amount of $7,200 per child. While unused matching money does carry over each year until your child turns 17, the earlier you make the contributions, the longer the money will have to grow.

4: Donating to Charity

A lot of people use the end of the year to contribute money to the charities and causes that they care about. This is a great way to offset taxes while helping out your community. By contributing before the end of the year, you ensure that you can count your contribution on your 2015 tax return.

If you really want to maximize your tax savings, consider donating a gift of appreciated securities or stocks to a charity. By doing so, you will not be charged the capital gains tax that you would have to pay if you sold the stocks and you’ll get a charitable tax receipt for the full amount.

5: Take Your Minimum Pension Distribution

If you’re over the age of 71, then you are required to convert your RRSP into a Registered Retirement Income Fund by the end of this year. If you already have an RRIF, be sure to check that you have withdrawn a sufficient amount of money for this calendar year. Depending on how old they are, each year RRIF holders must withdraw a specified amount from the fund.

Other Financial Tasks to Consider

Since you’re already thinking about your finances and tax planning, it might make sense to make an appointment to update your financial plan or to create a new one. The new year is a perfect time to start fresh so take this opportunity to begin working towards a better financial future.

You might also want to make an RRSP contribution. While you have until February 29, 2016 to do make your contribution for 2015, if you think you’ll forget or if you have the money available it’s better to do it sooner rather than later.

And while you’re at it – make sure you contributed to your TFSA this year. While there is no deadline for TFSA contributions and unused contribution room will simply roll over, you might want to start contributing some of the $10,000 that you were able to add in 2015. If you’ve never contributed before, you have up to $41,000 in contribution room.

What do you plan to do for your finances before the year is up? Tell us in a comment, or visit us on Facebook and Twitter.

Related Topics

Personal Finance / Personal Finance News / Saving for Education / Saving For Retirement / Savings / Savings News / Taxes

Leave a Reply