Canadians often associate tax season with filing returns in March or April, but now is a critical time to plan your taxes, says one expert.

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“Year-end is really the critical time to do your tax planning,” Jamie Golombek, managing director of tax and estate planning at CIBC Private Wealth and a Financial Post columnist, said in a recent interview with FP’s Larysa Harapyn. “There are very specific things that you need to do before the end of the year to reap those benefits come next filing season.”

Tax-loss selling is one place to start, but perhaps not for those looking to offset capital gains in foreign currency investments.

Golombek said investors who purchased U.S. stocks 10 or 11 years ago, when the U.S. dollar was on par with the Canadian dollar, should consider recalculating their foreign-exchange losses because a loss on paper might be a gain when converted to Canadian dollars.

“Tax-loss selling will actually backfire on you, so keep in mind the foreign exchange when doing those gain and loss calculations,” he said.

First-time homebuyers can also take advantage by opening a first home savings account (FHSA) before the end of the year. The account allows first-time homebuyers to contribute up to $8,000 per year and receive a tax deduction for their contributions.

Golombek said the benefit of opening an account in 2023, even if you only contribute $100, is that you can carry forward the unused room (an additional $7,900 in this case) and contribute more the following year.

“There’s no risk … so people should get on that if they’re a first-time homebuyer,” he said.

Golombek also advised homeowners to examine the new credits available for 2023, such as the multi-generational home renovation tax credit. For example, Canadians who have renovated to create a secondary dwelling for a senior (65 or older) or a person with a disability can get a 15 per cent federal credit on up to $50,000 in expenses.

He also offered some advice for the top one per cent of income earners ($173,000 and above) regarding new alternative minimum tax (AMT) legislation.

“Starting Jan. 1, 2024, AMT could have a much more significant impact for certain taxpayers,” he said.

So far, capital gains have been 15 per cent taxable, but in the new year, they will be 100 per cent taxable. Still, there are ways to avoid the AMT, Golombek said, including realizing a significant gain, selling a property or making large charitable donations before year-end.

• Email: novid@postmedia.com

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