Financial Health of Canadians: We’re In Good Shape

By Evelyn Jacks

Happy New Year! The tax preparation and wealth planning process will take on new importance this quarter with tax season beginning again for over 24 million Canadian tax filers in the aftermath of an unprecedented financial stimulus into the global marketplace, over the past two years.

It appears Canada is poised for a significant economic recovery in 2010, and with that comes some tax planning opportunities. The personal net worth of Canadians has rebounded above its ten-year average and Canadian savings rates are at an eight-year high, according to statistics from the Bank of Canada and the Department of Finance.

In addition, millions of Canadians have responded to the economic stimulus provided by the Home Renovation Tax Credit. This provision might well result in significant bottlenecks in tax preparation services, as busy tax advisors prepare for the increased data entry required on new Schedule 12, which requires an itemization of home renovation receipts.

Specifically then, investment and financial advisors and their clients will want to focus on a review of the following provisions, sooner rather than later, to maximize tax preferences and reduce waiting time for tax refunds and their related investment benefits:

• RRSP top-ups for 2009 tax year
• TFSA contributions for 2010
• A 2010 income projection and quarterly instalment tax review for March 15, 2010
• Completion of source deduction and reduction forms: TD1 and T1213
• A review of personal amounts for 2010 to ensure receipting is properly started for the calendar year
• A review of remaining opportunities under the temporary Home Renovation Tax Credit, under which work must be completed by February 1, 2010, but materials can be acquired for later use by the same date.

Additional Educational Resource: EverGreen Explanatory Notes: Your online gateway to the latest changes at the Department of Finance and CRA.