By David Rotfleisch

Special to the Financial Independence Hub

Want to pay less tax? The year-end brings with it your last chance for legitimate, allowable opportunities for tax planning that can lower your taxes payable to the Canada Revenue Agency (CRA) for 2016.

1.) Timing of Expenses

Taxpayers in business should accelerate expenses to make purchases that can be deducted this year rather than waiting for 2017. Employees can claim tax depreciation (CCA) on cars, planes, and musical instruments. Tradespersons and apprentices are permitted to deduct the cost of their tools up to a limit. Individuals planning on purchases should do so now to enjoy the benefit of depreciation claims this year.

Plan to purchase any capital property before the tax year-end to be able to claim CCA (at 50% of full rate) this year.

2.) RRSPs

RRSPs are a key tool for tax planning and allow Canadians to receive a deduction for the amount contributed, while also allowing the capital to accumulate tax-free until retirement.

Even though the deadline is March 1st, 2017, taxpayers should contribute to their RRSPs as soon as possible for compounded growth.

3.) Open TFSAs

While deposits to a Tax-free Savings Account (TFSA) are not tax deductible like RRSPs, accrued profits in the account are not subject to tax when earned or when withdrawn. Consider lending funds to a spouse or children to allow them to make their own TFSA contributions. Continue Reading…