SOMEWHERE BETWEEN THE CHAOS of the children going back to school and the hectic holiday season, your clients will need to turn their attention to their finances – specifically, their taxes.

“The fall is always an interesting time,” says Cynthia Caskey, vice president, portfolio manager and sales manager with TD Waterhouse Private Investment Advice in Toronto. “People go away for the summer [and] they’re really not thinking a lot about finances. They come back in September – back to school, back to investing, back to thinking about money.”

Although a client’s tax situation may be more or less complete by autumn, there are still things he or she can do to lessen taxes for the year. Here are seven last-minute tax tips to discuss with your clients:

TIME TO GIVE BACK Although it’s becoming routine to talk about charitable giving with clients, according to Beth Webel, tax partner with PricewaterhouseCoopers LLP in Hamilton, Ont., it’s still worth another mention as yearend approaches.

A client who makes a contribution to a charity before yearend, Caskey says, is eligible for a full tax receipt. The client should be reminded of the opportunity to donate securities, as such a donation could lower his or her capital-gains tax liability. “[The gain is] considered zero,” Caskey says, “but you get the full donation tax receipt for the full fair-market value of the stock.”

WRITE OFF EXPENSES Before the year is out, your clients should remember to pay for any deductible expenses. Such items as child-care costs, medical expenses and union dues all can be claimed on tax returns, Caskey says, as long as they are paid before Dec. 31.

SELL STRATEGICALLY Clients who currently have capital losses in non-registered accounts can consider selling those securities to lessen taxes on other stocks that have done well this year or on gains from previous years, says Aurèle Courcelles, director of tax and estate planning with Investors Group Inc. inWinnipeg.

Although capital losses can be carried forward indefinitely, in carrying them back, losses can be applied to gains from only the three previous years. For example, if the client’s capital losses from 2012 exceed his or her gains from 2009, 2012’s losses can be applied to recoup some of the 2009 taxes.

@page_break@ Before selling anything, however, it’s important to consider whether the investments are in Canadian dollars or a foreign currency. In some circumstances, an investment that is valued in a foreign currency may be a loss on paper, Webel says, but that loss may be offset when the value of the security is converted to Canadian dollars. In such cases, selling would no longer be an effective tax-reduction strategy.

WATCH OUT FOR BONUSES Although yearend bonuses might seem great to your clients, it could have a negative impact on their tax situation. It may be advisable for a client to consider deferring the payment. “Maybe there’s an opportunity to defer it a few weeks into January,” Caskey says. “That way, [the client] can defer the taxes for a year.”

USE A PENSION CREDIT Even if it’s late in the year, says Courcelles, clients who are 65 years old in 2012 can take advantage of the pension income credit, in which the first $2,000 of pension or annuity income is eligible. And although your client may not think he or she needs a registered retirement income fund (RRIF) because of income from the Canada Pension Plan or other investments, the tax credit may make converting an RRSP into a RRIF worthwhile.

“If [your client is] in the low tax bracket,” Courcelles says, “the income will effectively be tax-free, federally.”

Most provinces have similar credits, he adds, that minimize taxes payable.

REVIEW TFSA RULES Clients with tax-free savings accounts (TFSAs) might need a refresher on the rules. (See story on page B12.) Most know they have $5,000 in annual contribution room, and that unused room is carried forward each year. Although withdrawals create room for additional deposits, those deposits cannot be made before the beginning of the following calendar year.

For example, it’s often better to withdraw money in December for a large purchase in the following month. If the withdrawal is in January, the client would have to wait 12 months before replenishing the TFSA.

DON’T WAIT Although the filing deadline is months away, begin yearend tax planning with clients now. If the client takes too long deciding whether to execute a trade in order to take advantage of a previous year’s loss, it might be difficult to make the sale at the end of December.

© 2012 Investment Executive. All rights reserved.