Q4 check-in: How was your 2021 so far?

We are in the last stretch of 2021! At this point, you might have asked yourself: Where did the past 8 months go? With the ongoing pandemic issues all over the world, vaccination protocols and even political events that happened in the past months, we understand that it has been a lot to take in.

How’s your 2021 so far?

With the rising cost of almost all of consumer products whether it’s grocery items or school supplies, families often seek for alternative solutions to meet with their everyday needs without sacrificing the quality. Your family could have spent all summer going to the different parks or playgrounds, going out for walks, enjoying camping by the lake or doing a hiking trail instead of spending money on overseas summer getaways. This can be considered a step towards saving some money – thanks to the travel restrictions.

On the other hand, for families who have school-aged children, you may have spent some of your savings in buying electronic gadgets for your child’s online learning. In a study by Fraser Institute¹, it is found that nine out of 10 provinces showed an increase in official home-school enrollments. If you found yourself worrying how your child will learn at home versus in school, you are not alone.

The last stretch

We cannot emphasize enough that a year will not pass by without one more festive gathering – Christmas. As we all know, Christmas is the time of the year where most of our budgets are stretched. There are a lot of expenditures that revolve around the season – including Christmas Charity giving, buying presents, hosting lunch/dinner even for a small family gathering. For some business owners, giving your staff a Christmas bonus can also be part of your list.

However, there are options that you can consider before making those expenses: Here are some:

1. Instead of splurging on branded items, buy personalized gift items from artisans/small businesses. This hits 2 birds with one stone: you have a nice present to give out and you have helped that small business who needs our support during this pandemic.
2. Opt for potlucks instead of hosting a full lunch/dinner celebration. If you are having meal celebration with close family and friends and you are comfortable sharing meals, then this is a good way to not break the bank for meal celebrations.
3. Be creative on Christmas decorations – put on your artsy hat and transform something old into something new. There are a lot of tutorials for DIY Christmas decorations. If you don’t have the artistic hand, or don’t have the tools to do it, mix and match what you currently have – sometimes a good old white throw can be used as a Christmas-y accent.
    

Early planning for 2022

Taxes are a bane for almost everyone as they are one thing that can’t be avoided. Although unavoidable, Canadian tax law allows for several ways to reduce your tax owed if you take advantage of them. Here are some listed below - speak to your financial advisor or tax professional about these further:

1. A good rule of thumb is to maximize your RRSP². If you are employed and your employer offers RRSP matching, utilize that opportunity and make a maximum contribution monthly. Just make sure to check on your contribution room.
2. For couples, income splitting with your spouse or common-law by contributing to his/her retirement account also helps to reduce your tax bill, especially if there is a huge gap in both incomes.³ Make sure to speak to your financial advisor as this option requires professional assistance to structure contributions.
3. Starting up a business can also help with tax write-offs. This allows you to deduct reasonable business expense⁴ from your tax obligations.
4. Make a charitable donation. Charitable giving with certain institutions would provide you with a charitable donation receipt that you can then use to claim for federal and provincial or territorial non-refundable tax credits.⁵

The end of the year is right around the corner. If you haven’t done so, now is the time to book an appointment with your advisor to end 2021 on the right note.
 

Sources:

¹ https://www.fraserinstitute.org/article/home-schooling-rise-canada

² https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/contributing-a-rrsp-prpp/contributions-affect-your-rrsp-prpp-deduction-limit.html#whtcntrbtnscnyddct

³ What are the rules of setting up a spousal RRSP? (canadalife.com)

⁴ https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/business-expenses.html

⁵ https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-34900-donations-gifts.html

Disclaimers:

The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. This information is general in nature, and is intended for informational purposes only. For specific situations you should consult the appropriate legal, accounting or tax advisor.

Insurance products, including segregated fund policies are offered through Soterra Financial Group Ltd., and Investment Representatives Wendy Cooper, Tammy Richmond and Tammy Law offer mutual funds and referral arrangements through Quadrus Investment Services Ltd.

Quadrus, Quadrus and design, and Quadrus Investment Services Ltd. and design, are trademarks of Quadrus Investment Services Ltd, used under license.