Two-thirds (66%) of Canadians are unaware of any year-end benefits or strategies that can help them reduce their taxes and save money on their 2016 tax return, according to a new report Toronto-based Canadian Imperial Bank of Commerce (CIBC) released on Wednesday.
In addition, an even greater percentage (77%) of Canadians do not think about their taxes until the New Year, with 48% of those individuals saying they begin to consider their taxes in March or April, when they are getting ready to file.
Canadians who avoid looking at their taxes until the New Year do themselves a disservice as there are strategies that have an end-of-year expiration date that can be incorporated into their tax planning, says Jamie Golombek, managing director of tax and estate planning for CIBC's wealth strategies group.
Thus, the final weeks of 2016 are a good time for financial advisors to sit down with their clients in order to discuss ways to reduce those clients' tax bills, adds Golombek.
This conversation could include the use of fitness and art tax credits for children, which will no longer be available after 2016.
There are also new tax credits that are in place for this year that advisors can help their clients consider, Golombek says. The home accessibility tax credit is one such new tool and allows Canadians to claim 15% of up to $10,000 for home renovations that will assist the mobility of seniors and those who are already eligible for the disability tax credit.
CIBC's poll also found that 61% of Canadians received a refund on their 2015 tax return and 50% of all Canadians believe that getting a tax refund is a sign of good tax planning — the latter of which is a point that should be dispelled through financial advice, Golombek points out.
"Getting a tax refund isn't really a windfall," he says, "it means that [Canadians] haven't been efficient in [their] tax planning."
Additional details on how advisors can help their clients reduce their 2016 tax bill are available on Golombek's most recent column for Investmentexecutive.com.
Angus Reid Forum conducted the online survey for the bank using a randomly selected sample of 1,510 Canadian adults, who are forum panelists, between Oct. 11 and Oct. 12.
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