Dear valued client,
Markets finished with gains this week as investors deliberated how interest rates will play out over the next 9-12 months. Per the Federal Reserve’s meeting minutes released Wednesday, interest rates will not necessarily be increased much more, but how long they linger around the 5% mark remains to be seen. Assuming the Fed sees economic metrics moving in the appropriate direction, my guess is interest rates will begin to decrease in Q3 (summer 2023) which is also when equities have historically performed best.
I would like to dedicate this week’s email to some tax-saving tips. Given that taxes have been the single biggest expense for Canadians over the past 46 years, it’s advantageous to find ways to mitigate your tax bill. Some of these tips require receipts. If these tips apply to you and you do not have receipts, now would be the time to reach out to the appropriate organizations and ask for a copy. If that’s not possible, these tips are valuable to keep in mind for next year.
1. RRSP contributions: the amount contributed to your RRSP lowers your taxable income (and could result in a tax refund from the government).
2. Fitness Tax Credit: a tax credit for expenses paid to register a child (under 16 years of age) in a prescribed program of physical activity. This credit allows parents to claim up to $500/year for each child. The programs in question must be:
– ongoing (minimum of 8 weeks or 5 days of camp).
– be supervised.
– require a “significant” amount of physical activity.
3. Moving: if you moved at least 40 kilometers to start a new job or business, you can deduct most of the moving expenses.
4. Child care expenses: If you are making a payment for child care and getting a receipt for it, you can claim it, even if it’s not a registered child care facility.
5. Public transit passes: if you use a public transit pass for at least one month, you can claim up to $100 as a tax credit.
6. Consultation fees: if your tax return is prepared by someone who charges a fee, that amount can be deducted.
7. Political contributions: on the first $100 you donate to a political party, the government gives you a $75 credit (the donation really only cost $25).
8. Interest on loans: if you have debt that is used to produce income (through investments or through business activity) you can use the interest of the debt as a tax deduction.
9. Life insurance gift: if you take out a life insurance policy with a charity as the beneficiary, you are permitted to claim the premiums as a charitable donation.
“Taxation is the price which civilized communities pay for the opportunity of remaining civilized.” – Albert Bushnell Hart
Have a terrific weekend,
PW
