Year-end money-saving tax strategies

As 2015 winds down, the taxman’s watch is ticking. Here are some year-end strategies for putting a little extra cash in your pocket while you still can.

Realize gains in testamentary trusts

Income generated in testamentary trusts that have been in existence for more than three years will be taxed at the highest marginal tax rate starting in 2016. If you are the trustee of this type of trust, consider realizing gains in the trust this year so that they will be taxed at a lower marginal tax rate for one final year.

Tax loss selling

You may have unrealized losses on certain investments in your portfolio that you don’t expect to rebound any time soon. In this case, you may want to sell them before the end of the year and realize the losses. You can then apply these losses to capital gains on your tax returns from the past three years, assuming there are no gains in the current year. You should only apply these losses to these gains if you paid tax in those three years. Otherwise, you can carry forward the losses on your tax returns indefinitely. In both of the above cases, keep in mind that for your trades to be included on your 2015 tax return they must settle in 2015. This year, the last trading date for 2015 for Canadian publicly traded stocks is December 24th.


If you usually wait until the end of the year to make the majority of your charitable donations, you don’t have much time left. If you use your credit card to make your donations you probably won’t have to actually pay for them until 2016. And depending on the credit card you have, you may benefit from the donation if you receive reward points. If you have stocks that have a large capital gain you may want to donate these to a charity instead of using cash. In this case, not only will you receive the usual donation credit but you also will not have to pay tax on the stock’s capital gain. You can also donate shares from a publicly traded company that you received after exercising stock options. If you make this donation, you will receive your donation credit and you will not have to pay tax on the income you receive from exercising the stock option. Remember: the stock must be donated to the charity within 30 days of exercising the options.

Take advantage of lower tax rates this year

If your income is going to be more than $200,000 next year and your stock options are going to vest soon, you may want to consider avoiding the new federal tax bracket of 33% (or 53.53% for income above $220,000 in Ontario) by exercising your options before the end of the year. If there are any other types of income that you can claim this year instead of next year, you may want to do that as well. Don’t delay if you are able to use some of these strategies before the end of the year. Contact your tax advisor or financial planner for more details on how to execute them correctly.

Marcy Ages is a passionate, detail-driven provider of financial planning services, including investment management and tax preparation. As founder of The Care Network, Marcy also works with other service professionals to support high-net-worth individuals with their estate planning and assisted living issues.

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These articles are for general informational purposes only. Please obtain professional advice before taking any action based on this information. No endorsement or approval of any third parties or their advice, information, products or services should be implied by any references to third parties contained in any article. Trademarks cited in these articles are the respective properties of their owners.

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