6 year-end money moves to make now

Most people’s financial focus this time of year is on how much they’re spending on presents and parties. But now’s also the time to make some simple money moves to finish the year with your fiscal house in order.

Make charitable donations
Dec. 31 is the last day to make a donation and get a tax receipt for 2013. New this year is the federal government’s First-Time Donor’s Super Credit (FDSC).

“If neither you nor your spouse or common-law partner has claimed the charitable donations tax credit in any of the five preceding tax years, from 2008 to 2012, then you’d be eligible to claim this credit on up to $1,000 of monetary donations made after March 20, 2013,” says Tina Tehranchian, branch manager and senior financial planner at Richmond Hill’s Assante Capital Management Ltd.

Gifting publicly-traded securities, including mutual funds, with accrued capital gains to a registered charity or a foundation has added benefits, she adds. “It not only entitles you to a tax receipt for the fair market value of the security being donated, but it also eliminates capital gains tax that you would have otherwise had to pay,” Tehranchian says. “Keep in mind that in-kind donations of securities are not eligible for the FDSC.”

Make a Registered Education Savings Plan (RESP) contribution
The sooner you start, the more you save. All you need is your child’s social insurance number to set up this savings plan for your child’s post-secondary education. You can contribute up to $50,000 per child and there are no taxes payable on the money earned in an RESP until it's withdrawn.

Plus, the federal government’s Canada Education Savings Grant (CESG) provides 20 cents on every dollar you contribute, up to a maximum of $500 on an annual contribution of $2,500. If you cannot make a contribution in any given year, you may be able to catch up in future years.

“If your child or grandchild turned 15 in 2013 and has never been a beneficiary of an RESP, no CESG can be claimed in future years unless at least $2,000 is contributed to an RESP by the end of 2013,” Tehranchian says. “By making a contribution by December 31, 2013, you can receive the current year’s CESG and create CESG eligibility for 2014 and 2015.”

Look back to see what you can improve going forward
“Take the time to review what you spent money on over the past year and re-visit the expenses to see if there are less expensive ways of accomplishing your lifestyle,” says Scott Plaskett, senior financial planner and CEO of Etobicoke’s IRONSHIELD Financial Planning.

“Look into renegotiating your cell-phone plan to see if there is a more cost effective plan. Do a full analysis of all of your property and casualty insurance, such as that on your car and home, to see if there’s a better overall solution for all of your insurance needs as opposed to purchasing your insurance on a piece-meal basis.  Grouping your coverage … will often provide for a lower-cost overall plan.”

Put money into a tax-free savings account (TFSA)
The maximum annual contribution limit is $5,500. Be sure to put anything you can in by Dec. 31 and consider setting up an automatic withdrawal for monthly contributions, no matter how seemingly small.

“If you have non-registered funds sitting in savings or investment accounts and you have not contributed to a TFSA, transfer the maximum allowable [$25,500 for those who have never contributed since the plan was established] to shelter the profits from taxation,” Plaskett says. “Consider moving your highest risk investments into a TFSA to help shelter a potentially higher profit from tax.”

Check your credit report
Financial experts say to do this once a year. If there are any errors, these can negatively affect your credit score and therefore your ability to get credit or decent interest rates. Request a copy from both national credit bureaus: Equifax Canada and TransUnion Canada.

Consider deferring your Old Age Security (OAS) benefits if you're turning 65
“If you start your OAS benefits at 65 and they will be clawed back, consider deferring them until age 70 because for each year you defer them, you get a 7.2 per cent increase in benefit,” Plaskett says. “If you're going to get clawed back anyways, defer them to potentially boost your future amount and then work at trying to find ways of reducing your future taxable income to help avoid the clawback.”

 

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