‘You are getting a donation receipt and also you’re paying no tax on these beneficial properties,’ says tax professional Jamie Golombek
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For those who’re pondering of giving to charity this yr, a securities donation could be probably the most tax-effective method to take action, in response to one tax professional.
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“That’s in all probability the very best alternative when it comes to tax-effective charitable giving,” Jamie Golombek, managing director of tax and property planning at CIBC Personal Wealth Administration, mentioned in a latest interview with the Monetary Publish’s Larysa Harapyn. “You’re getting a donation receipt and also you’re paying no tax on these beneficial properties.”
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He mentioned that donating shares or mutual funds on to a charity has further advantages in contrast with money or bank card presents. One profit is that you just obtain a charitable tax receipt for the truthful market worth of the securities to say as a donation in your tax return. Along with that, you keep away from paying capital beneficial properties tax on the whole accrued achieve on these shares.
The charitable tax donation deadline for 2024 has been prolonged to Feb. 28 however the extension doesn’t apply to securities donations. That doesn’t imply you could’t make the most of the chance whereas planning for the 2025 tax yr, nevertheless.
Golombek recommends placing collectively a price range of how a lot you wish to give to charity and making these donations by shares through which you’ve amassed giant capital beneficial properties.
The federal authorities’s capital beneficial properties inclusion price improve, which was purported to be carried out on June 25, 2024, has been postponed to Jan. 1, 2026. Canadians would possibly already discover some modifications to the Canada Income Company‘s varieties when submitting taxes this yr, Golombek mentioned, however they gained’t influence something but.
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A brand new rule that Airbnb-owners ought to take note for the 2024 tax yr is the limitation for bills on short-term leases. For those who hire out a property in a zone the place it’s unlawful to take action, in response to your municipality, you gained’t have the ability to write off any bills, together with mortgage curiosity, in opposition to that rental earnings. “So, simply be forewarned,” Golombek mentioned.
He additionally reminded Canadians who’ve made contributions to the First Dwelling Financial savings Account this yr that they don’t want to say that quantity in 2024. As an alternative, Golombek mentioned it could possibly be extra useful to reserve it for a future yr when they’re in a better tax bracket.
College students with a Registered Schooling Financial savings Plan will also be strategic with their use of the fundamental private quantity on which they don’t pay any earnings tax. Golombek mentioned they’ll take out as much as that greenback quantity from their RESP yearly and pay no tax on their withdrawals.
“One thing for fogeys and youngsters to consider,” he mentioned. “For those who don’t declare that fundamental private quantity, you lose it endlessly for a selected yr, so it’s one thing you wish to attempt to make the most of yearly.”
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Golombek suggested self-employed Canadians to maintain receipts of their bills for his or her assertion of enterprise earnings. For those who’re travelling or taking shoppers out to lunch, it’s additionally a good suggestion to write down down who you met with and the aim of that assembly on the receipts in case the CRA audits you and asks you to justify why that was a respectable enterprise expense.
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“CRA is taking a look at them so that you wish to be sure to’ve received backup to your bills,” Golombek mentioned.
The 2024 tax submitting season formally begins on Feb. 24.
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