Lower Your Tax Bill

There are several things you can do before the end of the year to lower your tax bill for next April.

You can ensure that you are taking advantage of the government’s increased pension tax credit of $2000; if you do not receive eligible pension income, and, as long as you are 65 or older, you can transfer a portion of your Registered Retirement Savings Plan into a Registered Retirement Income Fund and withdraw $2000 for 2006.

Although you have until 60 days into the New Year to contribute to your RRSP, why not give yourself an early Christmas present and take care of it now.

Canada Savings Bonds were always popular gifts for children, especially grandchildren. Why not take advantage of the government adding 20% to your contribution of up to $4000. by contributing to a Registered Education Savings Plans for your child, grandchild, niece or nephew.

If your income for 2006 is more than you anticipated, consider an investment such as a flow-through share. Please note, these investments are high risk, and not for everyone’s portfolio; discuss with your financial advisor.

If you have plans to contribute to your favourite charity, make sure you contribute by December 31 and keep the receipts for your tax return.

A donation of securities to a charity, especially with an unrealized taxable capital gain, will be a better tax decision than a cash donation.

Review your investments – how do your trades stack up for 2006 in your non-registered accounts. Do you have a gain or a loss? It may be time to take some profit off the table by selling some top performers to rebalance your portfolio. If you have a carryover loss, you may have the opportunity to shelter some of the gain from the sale of a good performer. Don’t be afraid to get rid of a loser; are you holding on to it because you’re ‘attached’ to it? Are you are waiting for it to bounce back?

Be careful which mutual funds you purchase close to the end of the year. Check to see if that fund will pay out distributions; if yes, remember that the share price will drop the equivalent value that day and you will have the same tax consequences as if you owned the fund all year.

If you are purchasing an interest bearing GIC with maturity longer than one year, consider waiting until the first of January 2007. By waiting a few weeks, you can delay paying tax on the interest you earn for one year.

A full financial check up at this time is a good opportunity to review your debts as well as your investments. Are you paying high interest rates? Is your interest tax deductible?

If you are unable to deduct interest this 2006 tax year, talk to your advisor and see if you can take steps to change the situation for next year I would like to take this opportunity to send good wishes to the members of the community and wish all of you a happy, healthy and prosperous New Year!


HollisWealth® is a division of Industrial Alliance Securities Inc. a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.

This information has been prepared by Carol Plaisier Investment Advisor for HollisWealth®, a division of Industrial Alliance Securities Inc. and does not necessarily reflect the opinion of HollisWealth®. The information contained in this website comes from sources we believe to be reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any the securities mentioned. The information contained herein may not apply to all types of investors. The Investment Advisor can open accounts only in the provinces where she is registered. For more information about HollisWealth®, please consult the official website at

Insurance products are provided through Hollis Insurance. Only services offered through HollisWealth®, a division of Industrial Alliance Securities Inc., are covered by the Canadian Investor Protection Fund.