3 days or less left for key End-of-year Investing and Tax actions, CERB repayments

While most people will be glad to put paid to the year 2020, there remain three business days and several actions on the investing or tax front must happen before December 31, or even today (Tue., Dec 29) if you want trades to settle in time to qualify as a year 2020 taxable event (capital gains or losses, chiefly).

Allow time for trade settlements

According to this piece from Taxtips.ca, the last trading date for 2020 for Canadian and US publicly traded stocks will be Tuesday December 29th in order to record the gain or loss in the 2020 taxation year.  Canadian stocks purchased or sold after this date are settled in 2021, so any capital gains or losses on sale apply to the 2021 tax year instead of to the 2020 tax year. 

The Canadian market was of course closed on Monday and reopens at 9:30 am today (Tuesday), although the US market was open on Monday too.

Courtesy RBC Direct Investing, where our family does much of our banking (with some editing):

2020 Year End Registered Retirement Savings Plan (RRSP) Withdrawals    

For an RBC Direct Investing RRSP withdrawal to be applied for the 2020 tax year, you must submit your online cash requests before Thursday, December 31 by 4:00 p.m. ET.

If you are requesting an in-kind withdrawal please ensure to call an Investment Services Representative prior to 3:00 p.m. ET on Thursday, December 31.

Note: RRSP withdrawals requested after these times will be applied to the 2021 tax year.

2020 Registered Education Savings Plan (RESP) Online Contributions Deadlines

Please note, to make a contribution to an RBC Direct Investing RESP account from an RBC bank account and still claim an applicable government grant for 2020, you must submit your request online before Thursday, December 31 by 7:30 p.m. ET.

If you are contributing from your non-registered RBC Direct Investing account to your RBC Direct Investing RESP account, the cut-off time is 4:00 p.m. ET on Thursday, December 31.

Kindly note online contributions are automatically split equally among plan beneficiaries.

2021 Tax Free Savings Account (TFSA) Contribution Limit
The annual TFSA contribution limit for 2021 is $6,000 Canadian dollars. Any unused contribution room from previous years carries forward.

Please be aware that due New Year’s Holiday, our normal trading hours will be impacted as follows:

Thursday, December 31
– GICs will close at 11:30 a.m. ET
– All other fixed income will close early at 1 p.m. ET

Friday, January 1
– Both Canadian and U.S. markets are closed
– Foreign exchange transactions will not be processed until Monday, January 4

Monday, January 4
– Markets resume normal trading hours

Last day to place trades for 2020 settlement
– Canadian and U.S. equities: Tuesday, December 29
– Canadian and U.S. options: Wednesday, December 30

That’s the input from RBC.

CERB repayment deadline

This year there are also some actions needed on the government grant Covid front, chiefly involving CERB and related programs. CIBC Wealth’s Jamie Golombek had a good summary of this in Saturday’s Financial Post: Click here.

Golombek says Canada Revenue Agency recently sent out 441,000 “educational letters” warning individuals that they may not be eligible for CERB:  individuals whom the CRA said it was “unable to confirm … employment and/or self-employment income of at least $5,000 in 2019, or in the 12 months prior to the date of their application.”

Golombek suggests that those who may not have been eligible for CERB might be better off returning the payment in 2020 rather than 2021 “because the CERB amounts are taxable and will be reported on your T4A tax information slip for inclusion on your 2020 tax return. The CRA has indicated that amounts returned by Dec. 31 won’t need to be included on your 2020 return “If you return the CERB in 2021, however, you will need to pay tax on the full CERB amount you received in 2020, and can claim a deduction for this amount on your 2021 tax return. While for many, this is simply a cash flow or timing difference, for others, who many not have enough income in 2021 to benefit from the deduction, you could end up effectively paying tax on CERB funds you ultimately had to return.”

Turned 71 in 2020? Deadline looming to deregister RRSPs

Finally, if you turned 71 this year, the deadline is fast approaching to convert an RRSP into a RRIF, or two alternative actions (annualizing, or cashing out). This was covered in my recent MoneySense column earlier this month: Retired Money: RRSP must start winding down after you turn 71 but TFSA is a tax shelter that lasts as long as you do



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