You can loan funds to a spouse in a lower income tax bracket, which can then be used by the receiving spouse to invest in income earning investments. The loan must have bona fide repayment terms, including interest, which must be paid by January 30th of each year. The prescribed interest rate for such loans is at an all time low of 1%, making this an attractive strategy for couples where one spouse is in a significantly lower tax bracket.

The interest paid is taxable income to the spouse receiving the interest, and may be deductible for the paying spouse if the loan proceeds are used for an income earning purpose.

Please contact your professional tax advisor for more information.

For clients who own businesses, you may be eligible to provide your employees with tax-free gifts or awards of up to $500 per employee.

Specific conditions apply. Please contact your tax professional for additional information.

Many of our clients are familiar with the use of life insurance for providing a source of capital for dependents in the event of premature death.

There are also many other applications for life insurance including the following:

• Charitable giving
  
• Preserving non-liquid assets such as a business, cottage, or family farm for future generations
  
• Passing on liquid assets to heirs in a more tax efficient manner
  
• Tax sheltering investment income during the insured's lifetime and at death
  

Do you have surplus investment assets that you intend to pass on to your heirs upon your death? Are you discouraged with the high rate of tax (and the potential clawback of Old Age Security) that is applied to the investment income from these investments?

If so, you may be interested in the "Cascade Strategy", which allows you to pass investment assets to your heirs in a tax effective manner. Contact us to learn more about this strategy.

If you have investments or other capital property in a loss position, it may be advisable to realize these losses before the end of the year. These losses can be carried back to offset capital gains realized in the prior three years or carried forward to offset gains realized in future years.

Please consult your tax advisor before implementing any tax planning strategies.

We feel very strongly that the design and implementation of an effective financial plan should incorporate the expertise of a team of highly qualified professionals.

As tax laws become more complex, the services of a professional tax advisor are becoming even more valuable. We encourage you to consider engaging a professional tax advisor to assist you with filing your tax return, and to provide you with tax planning advice throughout the year.

Please let us know if you would like a referral to a qualified specialist.

The deadline for making an RRSP contribution for the 2009 tax year is March 1, 2010.  If you have funds available, consider making your 2009 contribution early in the year to benefit from an extra year of tax deferred growth. If you find it difficult to make a lump sum contribution, consider establishing a monthly pre-authorized contribution (PAC). This not only facilitates making your contribution, but also lets you take advantage of dollar cost averaging.

The current year's RRSP contribution limit is 18% of your previous year's "Earned Income" to a maximum of $21,000 (2009) plus any unused contributions carried forward from previous years.The RRSP limit has been increased to $21,000 for 2009 and to $22,000 for 2010.

Many of our clients receive a tax refund each year. Consider using these funds wisely to improve your financial picture for the next year. Some uses to consider include the following:

• paying down non-deductible debt
  
• contributing to RRSPs
  
• adding to tax-effective, non-registered investments to supplement your RRSPs
  
• investing in professional assistance to have your estate planning documents prepared or updated
  
• engaging a tax planning professional to assist you in minimizing taxes in future years

The RRSP limit has been increased to $16,500 for 2005 and to $18,000 for 2006. Qualifying for the maximum contribution in 2005 will require earned income of $91,667 in 2004.

For those of you who are self-employed and can control your earned income, please consult your professional tax advisor to consider whether you should be modifying your compensation structure in light of the new contribution limits.

A private health spending plan (PHSP) allows businesses to make payments for a wide range of medical expenses on behalf of their employees. The payments are tax deductible for businesses and tax-free for employees.

For more information on PHSPs, please contact us.

A common misconception among the holders of non-registered mutual funds is that the only time capital gains must be reported is when a pink T-Slip is received from the fund company. T-Slips are generated when a capital gain is triggered by the portfolio manager through selling off one investment to purchase another within a mutual fund portfolio. Although it is true that T-Slips are usually issued when a "capital gains" dividend is reported - it's not that simple!

There are other actions that also trigger capital gains or losses. In these cases a T-Slip is not issued, but you are still required to report the capital gain or loss. When a mutual fund owner decides to sell off some mutual fund units, either in a lump sum or through a Systematic Withdrawal Plan (SWP), it can also result in a capital gain or loss. In these instances, which are initiated by the fund owner and not by the fund manager, no T-Slip is issued and you must rely on the information provided in your year-end statement from the fund company. This is why it is so important so save those year-end fund company statements when the investments are held outside of RRSPs. The capital gain or loss must be reported by you, or your tax professional, on your annual tax return.

We strongly encourage you to use the services of an experienced tax professional to ensure that all aspects of your income tax are reported accurately.

Please let us know if you would like a referral to a qualified specialist.