News Releases

While the annual tax filing deadline is still a few months away, Canadians should take action now to ensure they meet applicable year-end tax deadlines and take advantage of available tax breaks.

According to John Waters, tax expert with BMO Nesbitt Burns, most people wait until April to start thinking about their taxes, having forgotten or perhaps not realizing that many of the cut-off dates that could impact their tax savings fall prior to the calendar year-end. “If you don't plan and act ahead of these dates, by the time the filing deadline approaches, it may be too late to take steps to save on 2007 taxes,” says Mr. Waters.

As a starting point, Mr. Waters suggests Canadians consider the following tax saving strategies that have looming deadlines:

Tax instalments – Deadline: December 15th
Some Canadians may be required to pay 2007 income tax instalments if their estimated income tax payable for the year or their actual income tax payable for either of the two preceding years exceeds $2,000 (or $1,200 for Quebec residents).

Instalments are due four times a year, with the final instalment due December 15. Canadians could incur non-deductible interest if they fall short on any of their instalments, so now is a good time to revisit the instalments made to date to determine if a top-up is required instead of waiting until filing their tax return in April.

Tax-loss selling – Deadline: December 21st
Investors often consider selling investments which have depreciated in value so that the capital losses can be used to offset any realized gains. Typically, they'll review their capital gains and losses near the end of the year and then consider selling certain securities for losses to reduce their overall tax bill.

To be effective for tax purposes in the current year, tax-loss selling transactions must settle before the last business day of the year. Since settlement can take up to three days, BMO Nesbitt Burns is advising clients to do this by December 21st.

Donations – Deadline: December 31st
Another way to offset capital gains is to donate appreciated qualifying publicly-traded securities to charity. This will produce a tax receipt equal to the fair market value of the investment donated, while at the same time potentially eliminating any capital gains tax otherwise payable on the donated security. Donations must be made before December 31st in order to receive a tax receipt for 2007.

December 31st is also the final payment date for a 2007 tax deduction or credit for expenses such as childcare, medical, tuition and alimony payments.

“There are many strategies, some very simple, that you may be able to use to reduce the amount of income tax you pay. The best strategy is to plan ahead and act on time,” stated Mr. Waters.

In addition to the tax saving strategies outlined above, Mr. Waters can also discuss:

• Tax planning and savings tips: simple things almost everyone can do to improve their tax situation.
• Understanding the potential impact of recent significant changes to Canadian tax law and how to take advantage of the new tax credits and deductions available in 2007, such as: pension income splitting, children's fitness tax credit, charitable donations to private foundations, RRSP and RESP changes.
• Options for BCE shareholders - what tax strategies should they consider before the company goes private next year?
• Importance of planning, not just filing your taxes. Why entrepreneurs in particular need to look at the big picture, including taking into consideration their personal, business and family situations.

- 30 -