Effective wealth and tax planning should take place throughout the year, not just during tax season, however this an important time to check in and make sure you’re not missing any time-sensitive deadlines. By taking a few key steps now you can get ahead of the tax season rush and ignore the surrounding marketing hype knowing you’re on track.
The following list is not exhaustive, but it outlines the main time-sensitive things you need to address now for your 2019 tax return.
Important deadlines and reminders
- March 2, 2020 is the deadline to contribute to your RRSP for the 2019 tax year. This is the last day you can contribute to your RRSP to take advantage of potential deductions for the 2019 tax year. Any contributions made after March 2, 2020 will apply to your 2020 tax year.
- You can contribute 18% of your 2019 earned income up to a maximum contribution of $26,500, plus any unused contribution room from previous years. Your available RRSP contribution room can be found on last year’s Notice of Assessment (NOA). If you can’t find your NOA, contact the Canada Revenue Agency (CRA) and they’ll be able to tell you your RRSP contribution limit.
- Visit the CRA’s website for more information about RRSP contributions.
- The 2019 TFSA contribution limit is $6,000. The contribution limit for the year 2020 will remain the same, at $6,000.
- Your available TFSA contribution room will be the total of the 2019 TFSA contribution limit, any unused TFSA contribution room from the previous year, and any withdrawals made from your TFSA in the previous year. You can find your TFSA contribution room on last year’s NOA or by contacting the CRA.
- Visit the CRA’s website for more information about TFSA contributions.
- There is no annual contribution limit for RESPs, however, you can only receive the Canada Education Savings Grant (CESG) on the first $2,500 in contributions per year, per child, or up to the first $5,000 if you have carryforward room.
- The lifetime RESP contribution limit is $50,000 per child.
- Visit the CRA’s website for more information about RESP contributions.
- Make your charitable donations to qualifying charities before December 31, 2019 to be eligible for federal and provincial tax credits for the 2019 tax year. In general, your federal tax credit will be 15% of the first $200 of donations and 29% of any additional donations. All provinces have similar credits, which fluctuate between 4% and 24%. Use the CRA’s online tool to calculate your charitable donation tax credits.
- Read our Guide to Charitable Giving to see the different ways you can donate (including with investment securities).
As we said earlier, effective wealth planning is an ongoing affair, it’s not something that’s limited to RRSP or tax season. The best way to approach tax season is to largely eliminate it. You can do this by having a solid financial plan in place that outlines contributions and donations you’ll be making throughout the year, so you don’t have to feel like you’re scrambling come year-end. A financial plan will take into consideration all of your assets, goals, and estate planning wishes to ensure that you’re making the best choices with your money not only this year but for years to come.
By having a financial plan that outlines in advance what you’ll do with your money, you make the most of your wealth by ensuring you’re meeting your short and long-term financial goals while minimizing the tax you’ll pay over your lifetime.
Please contact us if you have any questions ahead of tax season or would like help reviewing or creating your financial plan.
Further reading: What is financial planning?