A new year, new resolve, new goals. Each January about 40-45% of us, research shows, make new year’s resolutions. Among the more common resolutions: get better organized and take greater control of financial affairs.
If those are on your list for 2012, we’ve updated our handy month-by-month calendar of tasks, ‘to dos’ and reminders to help you get and keep on top of your financial affairs. Even if you’re already in good shape, you’re likely to find something on the list that could help you improve your overall picture — and peace of mind.
Review balance sheet for all family entities (i.e. trusts, corporations, family members) and take action to:
- Redeploy cash effectively either to reduce debt or to obtain higher returns.
- Review prior year’s investment portfolio results against appropriate benchmarks and determine strategy for the coming year.
- Review relative capital inside versus outside the business and take appropriate action.
- Restructure balance sheet to minimize non tax-deductible debt and consolidate where appropriate.
Revise pre-authorized corporate tax remittance.
Pay interest on prescribed (PS) rate loan by January 30th. If you don’t have a PS loan, consider it; rates continue to be at their lowest levels.
Establish priorities for charitable giving rather than rush giving decisions at year end. Revise preauthorization of payments for changes in giving accordingly.
Caregivers should maintain accurate records of expenses to claim the new Family Caregiver Tax Credit.
Maximize RRSP, TFSA & RESP contributions for all family members to take advantage of tax sheltered compound growth.
Consider spousal RRSP and RRSPs for kids over the age of 18.
Make contributions to TFSA accounts.
Collect receipts and other information for tax filings in March (trusts) and April (personal).
Arrange for medical in preparation for ‘health management’ plan for self and family members.
Consider paying out a taxable /capital dividend to preserve your company’s qualifying small business corporation status.
RRSP deadline for 2011 is February 29th.
Remit Q1 personal tax installment by March 15th.
File trust tax and information returns by March 31st.
File personal tax returns for all family members and pay any outstanding liabilities by April 30th (April 15th for U.S. filings).
Revise personal tax installments for the balance of the year.
Review Q1 investment portfolio results.
Review ‘health management’ plan and assess related insurance needs for all family members.
Review amount of emergency funds and arrange for line of credit or put cash into savings to ensure you have a minimum of 3 months of living expenses.
Discuss income/family expectations for university/college kids returning home to set expectations for the summer and September enrollment.
Review your notice of assessment and take appropriate action.
Remit Q2 personal tax installment by June 15th.
File personal tax return by June 15th if self-employed.
Pay out any prior year accrued bonus from company by June 30th.
If over 40, consider setting up an Individual Pension Plan (IPP) or Retirement Compensation Arrangement (RCA).
Explore opportunities to sprinkle the capital gains exemption on shares in your business to other family members.
Review Q2 investment portfolio results.
Consider mid-year reflection on longer-term plans for you and family members through family summit or family council. Reflect on personal, business, family and financial goals, philanthropic/stewardship objectives etc. and develop action plan for implementation in Q3 and Q4.
Determine most effective tuition funding strategy for upcoming school year. Also, review student living accommodation and opportunities to buy vs. rent.
Encourage and support your children in establishing their own savings and investment plans.
Remit Q3 personal tax installment by Sept 15th.
Review estate plan (e.g. will, power of attorney, life insurance).
Review shareholder’s agreement.
Consider the merits of incorporating and/or an estate freeze.
Consider transferring property to other family members to minimize current and future tax liability. If you have a child turning 18, there are additional opportunities.
Review Q3 investment portfolio results.
Review cash balances and invest surplus cash.
Review medical expenses for the past 12 months (including those of dependent parents) to determine if there are tax deduction benefits.
Begin year-end tax planning:
- Review status of unrealized capital gains and losses on investment portfolio and take appropriate action to minimize taxes for the current and prior years.
- Consider a private or community foundation to shelter large capital gains.
- Consider flow through shares or other tax sheltering opportunities.
- Ensure at least minimum RRIF and IPP (new) withdrawals are made prior to year end.
Make all charitable, political donations (in cash or publicly-traded securities), IPP contributions and unused RESP and TFSA funding by December 31st.
Determine bonus/dividend policy for your company.
Ensure amounts paid or payable from trusts to beneficiaries are properly documented.
Income splitting: ensure family members are paid for work done during year.
Any loans from the company to shareholders should be eliminated prior to year-end.
Final review of tax loss selling opportunities. Remember carryback of losses to shelter 2009 gains expire at year end.