Canadians not familiar with specific tax deadlines: Study

Ninety-three per cent of Canadians believe they are familiar with income tax deadlines, according to a study released today by BMO Nesbitt Burns. However, when asked about various, specific tax deadlines, many did not know the correct dates for:

· charitable donations and tax credit/deduction deadline (61 per cent unaware of the correct date)

· RRSP contribution deadline for those turning 71 (70 per cent unaware)

· payment of quarterly tax installments deadline (73 per cent unaware)

· TFSA withdrawal deadline (78 per cent unaware)

· tax-loss selling deadline (85 per cent unaware)

"It's important for Canadians to educate themselves on the various end-of-year deadlines to help ensure there are no missed opportunities to reduce their tax bill," said John Waters, vice president, head of tax and estate planning, wealth group, BMO Nesbitt Burns. "Many tax strategies require foresight to be effective, and tax planning should be a year-round activity."

Payment of quarterly tax installments — deadline is Dec. 15

Individuals whose estimated income tax payable for the year, or payable for either of the two preceding years, exceeds $3,000 ($1,800 for Quebec residents) may be required to pay income tax installments. Personal tax installments are due four times a year, with the final installment due Dec. 15.

Canadian investors are often required to pay by installment since tax is not deducted at source on investment income. If an investor falls short on any required installments, he/she could incur non-deductible interest or penalties.

Tax-loss selling — deadline is Dec. 24

If there are investments that have depreciated in value, consider selling these investments before year-end to offset capital gains realized earlier in the year to reduce your overall tax bill. It is important to ensure a sale makes sense from an investment perspective, since stocks sold at a loss cannot be repurchased until at least 30 days after sale to be effective.

Charitable donations and other tax credits/deductions — deadline is Dec. 31

Instead of donating cash to charities, consider donating appreciated publicly-traded securities. This strategy can provide a tax credit equal to the value of the securities donated, while also potentially eliminating the capital gains tax otherwise payable on the gain accrued on the security. Ensure all charitable donations are made before Dec. 31, in order to receive a tax receipt for 2012.

Dec. 31 is also the final payment date for a 2012 tax deduction or credit for expenses such as childcare, medical, tuition and the recently-introduced children's fitness and arts tax credits.

TFSA Withdrawals — deadline is Dec. 31

If you are planning a withdrawal from your tax-free savings account (TFSA), consider making this withdrawal in December instead of waiting until the New Year; a withdrawal would result in additional TFSA contribution room for the following year.

RRSP contributions for those turning 71 — deadline is Dec. 31

Individuals who turned 71 years of age in 2012 must collapse their RRSP by the end of the year. Such individuals should consider a final RRSP contribution, assuming any unused contribution room exists. Seniors and/or retirees should also take note of some of the important tax changes in recent years (such as pension income splitting, the amendments to the Canada Pension Plan and the introduction of the TFSA) that may impact their tax planning.

The results cited in this release are from an online Pollara survey with a random sample of 1,000 Canadians 18 years of age and older, conducted between Nov. 29 and Dec. 4.