Whereas it’s now too late to set off any tax loss gross sales for 2023, the rocky efficiency on markets all through the final 12 months should imply there’s a possibility to lock in some tax loss gross sales now. Relying in your market outlook, this can be a second to set off some tax loss gross sales for 2024 earlier than any potential rally in mounted earnings or equities takes place.
Learn extra: Tax planning not a year-round precedence for many Canadians | Wealth Skilled
Courcelles notes that if losses exceed positive aspects in a selected 12 months, the surplus might be carried again as much as three years or ahead indefinitely. A loss triggered this 12 months, in extra of any positive aspects, might be utilized again to tax payments as current as 2021. Early in 2024, if losses can nonetheless be triggered, Courcelles notes that the surplus loss generally is a big benefit. Any losses triggered now, too, may act as a type of credit score towards the debit of positive aspects triggered later within the 12 months.
Charitable donations are one other space that advisors can evaluation with their shoppers in 2024. Within the scramble to finish 2023, some methods and alternatives for revision may need been ignored. Courcelles notes that in most provinces, the primary $200 of donated cash is eligible for a a lot smaller tax credit score, whereas any donations in extra of that $200 can qualify for a far better credit score. If in reviewing tax plans early in 2024, an advisor sees their shopper donates $300 annually to a charity, Courcelles recommends making a $600 donation one 12 months and never donating the subsequent 12 months, pulling ahead a far better tax profit.
Donations in form of securities might be much more useful from a tax perspective. If a shopper was to promote their holding and donate the proceeds, they’d must pay capital positive aspects tax on 50% of their positive aspects earlier than getting a credit score. Donating the safety in type wouldn’t set off any cap positive aspects, however would ship the equal tax credit score.
