Last updated: October 22 2008

Tips For Year End Planning

Short of Cash? Flip Investments Into RRSPs to Create More

Cash strapped, but RRSP-eligible investors can use the tax system in a variety of ways to generate new money, and with tax season just around the corner it will pay to review RRSP contribution opportunities now for those reasons.

Taxpayers can generate a tax deduction via an RRSP contribution without coming up with new capital simply by "flipping" assets held in interest-bearing vehicles from their maturing Canada Savings Bonds or other non-registered accounts into their RRSP. Be aware that a tax reporting event occurs before accumulations from non-registered accounts are transferred into registered accounts. That is, interest income earned up to the date of the transfer must be reported on the tax return.

The same rule holds true whenever investments in non-registered accounts are transferred into any of the tax deferred vehicles mentioned above.

Note that losses generated by such a flip cannot be claimed as they are considered to be superficial losses.

Subscribe to EverGreen Explanatory Notes for more information.

Or attend The Knowledge Bureau's November Year End Tax Planning Workshop coming to a city near you November 14 to 21.

Next Time: Avoid Your December 15 Instalment to Generate Cash