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With year-end comes the time to take stock of your finances. As a professional, you can optimize your personal or professional financial situation by following our recommendations.

Here is a summary of the steps to take now.

Use the tabs below to access the strategies that concern you.

Your individual tax strategies

Your registered savings plans

Your Registered Education Savings Plan (RESP) 

  • December 31, 2018: deadline to benefit from the government grants available in 2018

Your Registered Retirement Savings Plan (RRSP) 

  • March 1, 2019: deadline for contributions deductible in 2018

If you turned 71 in 2018 and you earned professional or rental income, you can make a final contribution to your RRSP in December, based on your 2018 income. This excess contribution will be subject to a penalty of 1% per month from the date of the contribution, so it’s important to make it in December.

However, if your spouse is younger than you, you can still contribute to his or her RRSP if you earned income during the year, even if you are over the age of 71.

Your investment portfolio

You could use the losses incurred on the sale of poor performing stocks in your non-registered investment accounts and your corporate investment account  to reduce your tax payable on capital gains realized this year (or in the past three years, or on future capital gains).  If you still want to keep these stocks in your portfolio, you can always buy them back 30 days after you sold them.

You may be considering buying mutual funds at year-end. Be cautious. Some funds pay year-end distributions which are taxable for the current year and which can result in substantial taxes for a short holding period. Inform yourself and wait until the beginning of 2019 to buy securities that have a high tax cost.

 

General conclusion

Obtain a more personalized assessment of your situation by contacting an advisor with the Financial. Backed by our team of specialists, the advisor can answer your questions and make recommendations to improve your and your family’s well-being.

Shan-Shan Chua, CPA, CGA, DESS Fisc., Fin. Pl.
Tax Specialist and Financial Planner

 

 

Professionals’ Financial – Mutual Funds Inc. and Professionals’ Financial – Private Management Inc. are wholly owned by Professionals’ Financial Inc. Professionals’ Financial – Mutual Funds Inc. is a portfolio manager and a mutual fund dealer which manages the funds of its family of funds and which offers financial planning advisory services. Professionals’ Financial – Private Management Inc. is an investment dealer member of the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund (CIPF) which offers portfolio management services.

The information contained herein has been obtained from sources deemed reliable, but we do not guarantee the accuracy of this information, and it may be incomplete. The opinions expressed are based upon our analysis and interpretation of this information and are not to be construed as a recommendation. The tax strategies mentioned in this article may not apply in all cases. For any questions, don’t hesitate to contact your Wealth Management Advisor or your tax specialist, accountant or legal advisor.

Your corporate tax strategies

Your loans or advances

Your corporation may have granted you a loan or an advance in 2018. Don’t forget that you have to pay back this amount within one year following the end of the fiscal year in which the loan or the advance was made. If you don’t, you will have to declare this amount on your tax return and you will be taxed accordingly.

Your incorporation

Certain federal tax measures concerning private corporations adopted over the past year will come into effect in the fiscal years beginning after December 31, 2018.

If you have investments in your corporation, or in one of your management companies, and if the value of these investments is material, or if the income from these investments could exceed $50,000 over the next year, the tax payable on your business income could increase significantly. Note that:

  • Currently, business income that does not exceed the business limit (normally $500,000) is taxed at a lower rate.
  • For the fiscal years that begin after December 31, 2018, the business limit of $500,000 will be reduced if the investment income of the corporation or of one of your management companies exceeds $50,000.
  • Whatever your situation, adaptive planning could limit the tax implications for your corporation.

The following factors could be reconsidered:

  • Your compensation method
  • Your types of investments
  • Your insurance

 

General conclusion

Obtain a more personalized assessment of your situation by contacting an advisor with the Financial. Backed by our team of specialists, the advisor can answer your questions and make recommendations to improve your and your family’s well-being.

Shan-Shan Chua, CPA, CGA, DESS Fisc., Fin. Pl.
Tax Specialist and Financial Planner

 

 

Professionals’ Financial – Mutual Funds Inc. and Professionals’ Financial – Private Management Inc. are wholly owned by Professionals’ Financial Inc. Professionals’ Financial – Mutual Funds Inc. is a portfolio manager and a mutual fund dealer which manages the funds of its family of funds and which offers financial planning advisory services. Professionals’ Financial – Private Management Inc. is an investment dealer member of the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund (CIPF) which offers portfolio management services.

The information contained herein has been obtained from sources deemed reliable, but we do not guarantee the accuracy of this information, and it may be incomplete. The opinions expressed are based upon our analysis and interpretation of this information and are not to be construed as a recommendation. The tax strategies mentioned in this article may not apply in all cases. For any questions, don’t hesitate to contact your Wealth Management Advisor or your tax specialist, accountant or legal advisor.

For an analysis of your situation,
get in touch with one of our advisors