’Tis the season for tax-loss selling in Canada + MORE Dec 11th

With 2023’s year-end fast approaching, late December is a critical period for Canadian investors and their money managers. Now that we’re in the fourth quarter, this is the time to take inventory of your investments—and specifically taxable non-registered investment accounts—with an eye to minimizing tax before it’s too late.

For Canadian investors who have achieved significant taxable capital gains, now is the time to implement a tax-loss selling strategy—the most effective way to find tax savings.

What is tax-loss selling in Canada?

Tax-loss selling is an investing strategy designed to offset taxable capital gains and reduce your tax bill. It involves selling investments to trigger a capital loss and claiming them against capital gains.

Definition of tax-loss harvesting
Tax-loss harvesting, or tax-loss selling, is a strategy for reducing tax in non-registered accounts. Investors sell money-losing investments, triggering capital losses they can use to offset capital gains incurred the same year…

Taxes are an inescapable fact of life in Canada. Despite this, many of us don’t think too hard about the specific federal and provincial tax brackets that govern our taxable income. Nonetheless, understanding what bracket we fall into is key to accurately estimating the amount of tax we owe on our 2023 earnings. This knowledge is particularly valuable if you are self-employed or engaged in a side gig where you’re responsible for figuring out your own tax payments. (You wouldn’t want to accidentally get on the wrong side of the Canada Revenue Agency, would you?)

An understanding of the provincial and federal tax brackets can also help you decide if you should increase your registered retirement savings plan (RRSP) contributions. Doing so could help you reduce any outstanding balance on your notice of assessment (NOA) to zero or, if you’re lucky, get a refund.

How do tax brackets work in Canada?

Tax brackets outline the proportion of income tax that we need to pay based on annual earnings…