October 2019 Update
Well, that’s it. We are truly in the thick of it now.
It’s holiday season.
If you’re here with us in Canada, you’ve just packed away your Thanksgiving dishes, cast your vote in the federal election, and may have already started carving pumpkins for Halloween. If you’re in the U.S., you’re still several weeks away from Thanksgiving, when the consumerism gets a bit crazy. You all know what comes after that.
In this small window of time before the holidays start exploding your mind and your wallet, we want to remind you that this is a great time of year to think about taxes.
That’s not right, Spring folks, you may be thinking. Tax season isn’t for months and months! Well, dear reader, you are correct. But you know what tax season is?
Tax season is too late.
Too late to harvest capital losses in your portfolio. It’s too late to take money out of your TFSA instead of your RRIF, or vice versa. It’s too late to make decisions.
We don’t want that for you. We want you to make great decisions, with ample time to consider the consequences. We want you to feel unhurried, thoughtful, and calm about your money.
Each fall, between Canadian Thanksgiving and U.S. Thanksgiving, we encourage you to stop and take a good look. Take a look at the income you’ve earned so far this year, and the tax you paid on it. Take a look at the government benefits you’ve received, and the tax you’ve paid on those. Take a look at your investment income, or your investment losses. Calculate what you have contributed to retirement plans, and what others (like employers) have contributed to plans on your behalf. With the help of your accountant, or your Friendly Neighbourhood Financial Planner, estimate what your income taxes might be this year. Is it more or less than what you’ve paid to date?
From there, work with your financial advisory team to find opportunities to make changes before December 31st hits. Perhaps it is as simple as topping up your RRSP, or stopping your automatic contributions so you don’t end up going over your limit. Perhaps it is asking your investment manager to look for opportunities to harvest some tax losses before year end. Maybe it’s a great year to take an extra chunk out of your RRIF, because you just happen to be earning in a low income tax bracket this year.
Whatever the result is, taking this action long before the craziness of the Big Winter Holidays hit will ensure that you don’t have to utter the words I should have… come tax season 2020 – and your accountant will be so proud of you.
When you’re done flipping through your numbers, we have a few reads for you, including Kathryn’s review of Profit First by Mike Michalowicz (a particularly useful read for those of you operating your own businesses), a new Design Thinking article focused on charitable giving (also a great way to save taxes before the end of the year), and a full introduction to the newest member of our team and Director of Portfolio Strategies, Darryl Brown (we know you’ll love him!).
Got a question about your cash flow or financial plan? Got a decision that needs a design thinking framework? Email us at [email protected].
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