We know, it’s almost holiday season and the last thing you want to hear about is saving and investing money. However the steps you take now could lead to significant savings for you in a short period of time. We are talking about taxes, and the amount you will either pay, or get back with a refund, when you file your 2009 income tax return.

Certain tax strategies must be completed before the end of the year. Others, such as your Registered Retirement Savings Plan (RRSP) contribution, can be made during the first sixty days of 2010 and be used on your 2009 tax return. However, spousal RRSP contributions are best made at the end of the year. This strategy will reduce the attribution rules by almost one year.

Don’t forget, if you turned age 71 this year you have until the end of the year to convert your RRSP to a Registered Retirement Income Fund (RRIF) or annuity. Otherwise, the rules dictate that you have collapsed your plan and will face the tax consequences on your entire RRSP amount next year.

We are all aware that equities were not favorable in 2008 and only turned positive since March 2009. This may have resulted in investment losses being reported on your 2008 tax return. Two strategies involving losses may be worth considering. Both involve selling your investments before the end of the year. The first is to determine if you have unrealized capital gains in your account this year. If so, you can sell your investment, realize the gain and then use your loss from previous years to reduce or eliminate the taxable gain this year. The second strategy involves a review your account holdings and determine if it makes sense to sell loosing investments this year to apply the loss against gains in the current or previous three years. Don’t delay, as the settlement date, not the trade date, must fall in 2009. It’s best to have all trades initiated by December 24. Remember that you must not repurchase an identical investment for at least 30 days or you will fall under the superficial loss rules and the Canada Revenue Agency can deny your claim.

You have until the end of the year to make your charitable donations. While donations below $200 receive a tax credit at the lowest marginal tax rate, donations above $200 receive a tax credit at the highest marginal tax rate. You can accumulate your receipts for up to five years in order to maximize your refund.

If you have a Registered Education Savings Plan (RESP) and your child turned age 17 this year you have until the end of the year to make your last RESP contribution and receive a 20% government grant. There are special rules that must be followed in the year the child turns age 17. The government no longer pays grant money into a plan beginning the year the child turns 18.

These are just a few of the more common tax strategies that can be implemented before the end of the year. Some are more complicated and require careful planning. It is recommended that you seek professional advice to implement these strategies.

We wish all our readers a safe and happy holiday season and may all your wishes come true. See you soon in 2010.

The foregoing is for general information purposes and is the opinion of the writer. This information is not intended to provide personal advice including, without limitation, investment, financial, legal, accounting or tax advice. Please call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., of FundEX Investments Inc. to discuss your particular circumstances or suggest a topic for future articles, at 613-798-2421 or e-mail rick@invested-interest.ca.