2020 Year End Tax Planning

Nov 26, 2020 | Shawn Eliovitz


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As year-end approaches, taking some time to review your financial affairs may yield significant tax savings. To ensure that you leave no stone unturned, here’s a summary of some common year-end tax planning strategies.

As year-end approaches, taking some time to review your financial affairs may yield significant tax savings. To ensure
that you leave no stone unturned, here’s a summary of some common year-end tax planning strategies:

 

Tax loss selling
If you have realized capital gains during the year, and you’re holding securities with unrealized losses, consider selling those securities to realize the losses. This strategy of selling securities at a loss to offset capital gains realized during the year is a year-end tax planning technique commonly known as “tax loss selling.” Review your portfolio with your RBC advisor to determine if any investments are in a loss position and no longer meet your investment objectives. Consider all costs, including transaction costs, before selling investments solely for the purpose of triggering the tax loss.
When disposing of a security, the sale for Canadian tax purposes will be deemed to have taken place on the settlement date. Assuming a two-day settlement period, in order to utilize the tax loss selling strategy for the 2020 tax year, transactions must be initiated by December 29, 2020, for both Canadian and U.S. securities in order to settle during 2020. Check with your RBC advisor for mutual fund settlement dates.

 

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