Five tax and investment planning tips for 2022 year-end
By ATB Wealth 17 November 2022 3 min read
Give yourself and others a gift this season by taking advantage of some of the annual tax and investment opportunities available. There are still a few weeks left to consider these five options that can support your planning and help set you up for success in 2023.
1. Charitable donations
To be eligible to receive a tax credit for the 2022 tax year, charitable donations must be made by Dec. 31, 2022. For Alberta residents, the 2022 combined federal and provincial charitable donation tax credits will represent 25% on the first $200 donation in the year, 50% on donations in excess of $200 (where the taxpayer is not in the top federal marginal tax bracket) and 54% on donations in excess of $200 (where the taxpayer has sufficient income above $221,708).
For more information on this topic including helpful examples, refer to our article, ‘Tis the season for charitable giving.
2. Registered Education Savings Plan (RESP) contributions
Contributing to an RESP is a tax efficient way to save for a child's education. The Canada Education Savings Grant (CESG) is available from the federal government and will match up to 20% of the first $2,500 of contributions each year, equal to $500 per beneficiary, per year. Consider making an RESP contribution by Dec. 31 if you have not already maximized the current year's CESG. Families with low income may be eligible for additional government incentives.
3. Registered Disability Savings Plan (RDSP) contributions
An RDSP is a tax-deferred savings plan to help people with a disability save for their future financial security. Contributions to an RDSP can be made for individuals that qualify for the disability tax credit until the end of the year the beneficiary turns 59. Additional government incentives are available in the form of Canada Disability Savings Bonds (CDSBs) and Canada Disability Savings Grants (CDSGs) until the end of the year the beneficiary turns 49.
An RDSP beneficiary may receive up to a maximum of $3,500 CDSG and $1,000 CDSB per year of eligibility, depending on the beneficiary's family income. Consider contributing to an RDSP before Dec. 31 to receive the CDSG you may be entitled to in the year. The CDSB is determined based solely on the beneficiary’s family income with no contributions required.
4. TFSA withdrawal planning
If you anticipate accessing money from your TFSA in early 2023, it may make sense to withdraw the funds before the end of 2022. This will allow you to re-contribute the amount withdrawn in the 2023 calendar year rather than having to wait until 2024 to make this re-contribution. This will be beneficial if you anticipate having funds available to re-contribute to your TFSA in 2023. Your 2023 TFSA contribution room will be made up of:
- The annual TFSA dollar limit ($6,500 for 2023); plus
- Any unused TFSA contribution room from the previous year; plus
- The total amount of withdrawals from TFSAs in the previous year (excluding qualifying transfers and withdrawals of TFSA “excess”).
5. Tax-loss selling
If you own property whose value has fallen below its original cost, you may be interested to learn more about tax-loss selling, a strategy where a non-registered investment is intentionally sold to trigger a capital loss. Selling securities at a loss should only be done as part of an overall investment plan and any tax-loss selling plan should be discussed in detail with both your financial advisor and tax advisor. For more information on this topic, refer to our article, The simple way to reduce tax in a market downturn.
Get in touch with an ATB Wealth financial advisor to discuss how these and other investment strategies can help you achieve your financial goals and objectives.
For further information on the various registered accounts mentioned in this article, refer to the following resources:
Registered account reference guides
ATB Wealth Registered Education Savings Plan reference guideView Guide
ATB Wealth Registered Disability Savings Plan reference guide.View Guide
ATB Wealth Tax-Free Savings Account reference guideView Guide
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