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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 yr 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 revenue or equities takes place.
Learn extra: Tax planning not a year-round precedence for many Canadians | Wealth Skilled
Courcelles notes that if losses exceed beneficial properties in a selected yr, the surplus will be carried again as much as three years or ahead indefinitely. A loss triggered this yr, in extra of any beneficial properties, may very well 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 is usually a large benefit. Any losses triggered now, too, may act as a type of credit score towards the debit of beneficial properties triggered later within the yr.
Charitable donations are one other space that advisors can evaluate with their purchasers in 2024. Within the scramble to finish 2023, some methods and alternatives for revision may need been neglected. 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 larger 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 yr and never donating the following yr, pulling ahead a far larger tax profit.
Donations in type of securities will be much more useful from a tax perspective. If a shopper was to promote their holding and donate the proceeds, they’d need to pay capital beneficial properties tax on 50% of their beneficial properties earlier than getting a credit score. Donating the safety in form wouldn’t set off any cap beneficial properties, however would ship the equal tax credit score.
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