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Your Year-End Financial Checklist

By Isaac Schweigert | November 30, 2015

With December fast approaching, now is a good time to start thinking about year-end financial planning. While December is usually a busy month for most people, a little advance planning can save you come tax time. The usual focus is on tax loss selling (which we will get to), but there are other things to consider that will impact your financial life.

Find out what your refund will be (or how much you owe)

Do you know what your tax refund will be for 2015, or will you end up owing money? If you enter all of the information available to you (pay stubs, RRSP, receipts, donation receipts, etc.) into a tax calculator like this one, you can estimate what your refund will be, or have an estimate of an amount owing to start planning for.

Make donations now

If you are planning on making charitable donations in the next few months, make sure you make them before the end of December so that you can take the tax deduction on your 2015 tax return. Similarly, pay any other tax deductible expenses so that the tax deduction will apply for 2015.

Consider postponing ETF or mutual fund purchases

If you have a taxable investment account (not an RRSP or TFSA), consider putting off buying investments such as ETFs or mutual funds that make year-end taxable distributions. Why own an investment for one month and be dinged with a full years’ worth of taxable income?

Tax Loss Selling

If you have a taxable investment account and have already sold investments with a gain, consider selling investments with accrued losses before year end to offset capital gains from this year. If you declared capital gains in any of the previous 3 years you can apply the capital loss to those gains by filing a T1 adjustment with CRA. For the losses to be usable on your 2015 tax return, you would need to sell the investment on or before December 24 to ensure the trade settles in 2015.  If you want to repurchase that investment, make sure you wait 30 days to do so.

Make TFSA withdrawals

If you were planning on making a TFSA withdrawal in the next few months, consider making the withdrawal before the end of December. If you make the withdrawal in December, you could recontribute that amount as early as January 1, 2016. But if you waited until January 2016 to make the withdrawal, you won’t get the contribution room back until January 1, 2017.

Delay HBP withdrawals

Consider delaying Home Buyers Plan (HBP) withdrawals until after December 31. Repayments to your RRSP under the HBP begin 2 years after the year in which the withdrawal was made. So if you make the withdrawal in December 2015, you have to start making HBP repayments in 2017. But if you wait until January 2016 to make the withdrawal, you don’t have to make your first HBP repayment until 2018.

A few other items for you to consider

While these don’t have be done before the end of the year, you should start thinking about them or plan to do them in January.

Did you get married or divorced in 2015? Make a point of reviewing the beneficiaries on RRSPs, TFSAs, life insurance and other accounts if you have forgotten who the beneficiaries are. Make changes to the beneficiaries if needed.

Review your will. A will should be reviewed at least once per year or whenever there is someone who should be added or removed from the will. If you have children under the age of 18 (or 19 in some provinces), make sure your will specifies who will take care of them in the event that you or their other parent is unable to care for them. If your will was written several years ago, make sure those designated to care for your children are still able to do so.

Review life insurance policies. If you had a child in 2015, make sure you have sufficient life insurance coverage to take care of them in the event that you were no longer able to.

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Isaac Schweigert

Isaac Schweigert

Isaac is a CFA charterholder and is Portfolio Manager and Chief Compliance Officer at ModernAdvisor. He has over 11 years of investment industry experience, including asset allocation, portfolio management, due diligence, compliance and reporting.