By Gord Hawley
The Big Bang. That was the door slamming shut on 2014. Did you have a successful year? A profitable year? Did you reduce your debts? Did you increase your assets and net worth?
This is the time of year to review last years results and make plans for 2015. Yes, I know most people make some kind of a plan for their future. Usually, its a budget of some kind. Often its just a wild guess to be reviewed at the end of next year. And by then, its a little late to make critical adjustments to reach some of your forecasted goals.
If you do not operate a business and only get T-slips from your job and investments then your tax return may seem easy to complete. But are you aware of changes to the tax rules that could affect you and your family? If you own a business or farm, is your accounting of all income and expenses organized so that you or your accountant or tax professional can help you maximize the use of allowable business expenses? Being organized goes a long way to not over paying your taxes, as well as getting your fair share of federal and provincial credits.
More importantly you need to ask your tax professional what you can do in 2015 to improve your business results.
If you are retired and living on your pensions and investments you too have special tax considerations. Income splitting of pensions for retirees can save you substantial taxes. Using this rule, a couple who are clients of mine, last year reduced their tax bill by over $12,000.
How many forget to claim their safety deposit box fees? If you have investments outside of an RRSP or RIFF, do you know what fees you paid on those investments? Those fees, like investment counselling fees, management fees, and commissions, are tax deductible.
But investors often do not know their fees or cannot find where those fees are in their documents. Sometimes customers pay more in fees than they get in an annual return from their investments. Management fees can be two per cent or even higher. Some advisors will offer free advice or charge a one-time fee of about $1,600 to review your investments and offer advice.
Trying to save yourself money by doing your own taxes will save you a fee for service from a tax pro in the short run. But one of my clients from south of Barrie, a very successful farm operator, said to me a few years ago that the smartest thing he had done with his business was to seek out the best qualified people in his area to look after his accounting, tax preparation and investments. He is a very profitable corporate farmer who has been able to grow his business that is now supporting his two sons and their families as well as a couple of full-time employees. When you look around the area his farm looks the most successful.
My opinion is that good advice and tax prep service by your professional bookkeeper is really free. These professionals will not only save you their fees, they will help you grow your net worth.
Gord Hawley is an Ottawa-based independent farm tax planner and can be reached at 613-716-2280 or at firstname.lastname@example.org.