April 20th, 2009

Question: Does Tax Season Stress You Out?

Answer: No, just finances in general!

The Truth: The above scenario doesn’t have to be this way. The age of the Internet means information is at your finger-tips. You can’t trust everything you read online, but would you trust information coming from the managing director, tax and estate planning with CIBC Private Wealth Management in Toronto? How about if they had a bunch of official-looking fancy initials like:  CA, CPA, CFP, CLU, TEP?

Meet Mr. Jamie Golombek.

Jamie is a contributing writer to the Financial Post and National Post. His number one resolution is to open a TFSA. According to Golombek “the new tax-free savings account, launched Jan. 1, is the ideal place to put up to $5,000 of savings and earn tax-free income and/or gains for life. Any withdrawals are not taxed, do not negatively affect eligibility for government-tested benefits and can be re-contributed the following calendar year.”

Here are a few more of his financial resolutions. The full article including the rest of Golombek’s Top 10 tax tips for 2009 is available here: 

Resolution #2: Maximize RRSP contributions. The RRSP limit for 2009 is the lesser of 18% of 2008 earned income or $21,000. Get a head start on your 2009 contribution today.

Resolution #3: Set up a spousal RRSP. The primary benefit of a spousal RRSP is that funds withdrawn can generally be taxed in the hands of the (hopefully) lower-income spouse.

Resolution #4: Earn tax-efficient investment income. For those who have maxed out their RRSP and TFSA contributions, consider tax-efficient investment income outside of these tax-sheltered plans by investing in Canadian dividends, which are eligible for the dividend tax credit, and capital gains, which are only half-taxable.

There are many other good ideas that Jamie lays out in his article. I recommend you go and read it at your first convenience. If you are looking for more information on whether to contribute to the TFSA or RRSP this season click here.