Tax Matters

Jamie Golombek

As managing director of tax and estate planning with Canadian Imperial Bank of Commerce's wealth advisory services division in Toronto, Jamie Golombek is quoted frequently in the national media as an expert on taxation.

Here are 10 strategies to help clients minimize their tax burden and maximize their financial positions

By Jamie Golombek |

Tax planning is a year-round challenge. So, what better time to lay out a roadmap for your clients so that they can tackle their tax burden than the beginning of the year?

Here are my top 10 tax resolutions for you to share with your clients to help them minimize their tax burden and maximize their financial positions in 2017 and beyond:

1. Contribute $5,500 to their TFSAs for 2017. Last year's dollar limit for TFSAs was also $5,500 so if they didn't maximize their 2016 contributions, they can still do so this year or in any future year.

2. If your clients expect to be in a lower tax bracket when they retire than the one they're in for this taxation year, consider reminding them to make an RRSP contribution. Although much of the focus over the next 60 days will be on the 2016 contribution deadline of March 1, why not encourage clients to get a head start on their 2017 RRSP contributions? The RRSP limit for this year is the lesser of 18% of their reported earned income for 2016 or $26,010.

3. If your clients have children, be sure they contribute at least $2,500 to each child's registered education savings plan (RESP) this year to take advantage of the $500 Canada Education Savings Grant. They may also be able to catch up on missed CESGs from prior years.

4. Consider opening up a registered disability savings plan (RDSP) for clients with a  family member who has a disability. Clients can contribute up to $200,000 over the disabled beneficiary's lifetime, which may be augmented by up to $90,000 in Canada Disability Savings Grants and Bonds.

5. Remind clients about the new home accessibility tax credit (HATC). If they're seniors or have a disability, they may be able to claim the new HATC, which is worth up to $1,500. It's a non-refundable credit that provides federal tax relief of 15% on up to $10,000 of eligible expenditures per calendar year, per qualifying individual.

6. Although income splitting for families, known formally as the Family Tax Cut, was eliminated soon after the Liberals won the last federal election, your clients may still be able to do some income splitting by taking advantage of the historically low prescribed rate. If they have a spouse, partner or kids in a lower tax bracket, consider a prescribed rate loan strategy whereby the higher-income spouse or partner loans funds to the lower-income spouse or partner to invest at the record low prescribed rate, which is set at 1% until at least March 31. Once the loan is extended, however, the rate is locked in for its duration.

7. When planning clients' charitable giving for 2017, remind them of the ability to donate appreciated securities directly to their charity of choice, thereby eliminating taxes on any accrued capital gains.

8. If clients have maximized their RRSP, TFSA and RESP contributions and have paid down all their debt, look into investing in a permanent life insurance policy. Even though the tax rules changed on Jan. 1, these policies still provide substantial tax-sheltering opportunities.

9. Make sure clients have updated wills to take into account any changes in their personal, familial or financial circumstances. Have clients pledge to make this a priority in 2017,

10. Plan now to avoid a tax refund next spring. If your clients get a large tax refund regularly each spring, consider having them apply now for a reduction of taxes at source using Canada Revenue Agency's Form T1213, which must be completed anew each calendar year. The increased cash flow can be redirected directly into their RRSPs, TFSAs or RESPs.