Somewhere in between the holiday shopping, decorating, baking, kid’s school pageants, and parties you should take a moment to think about any financial issues that could be taken care of before the end of December.

Related: A Monthly Financial Planning Checklist

Spousal RRSP

If you make annual contributions to a Spousal RRSP, make your deposit now.  The holding period is three calendar years after the last contribution to be taxed in the spouse’s hands.  E.g. If you make your final spousal contribution on December 31, 2010 your spouse can make a withdrawal in January, 2013 but if you leave it for just one more day to January 1, 2011 you will have to wait until January, 2014.

Capital Loss

If you are selling shares that have incurred a capital loss be aware that, for tax purposes, the disposition of the shares is the settlement date, which is three days after the trade date.  If proper care is not taken, the transaction may not be settled until the new year and therefore not any use for your 2010 tax plan.

Related: How To Calculate Capital Gains And Adjusted Cost Base (ACB)

Income Trusts

By now you should have reviewed your income trust holdings, if any, to see if they are still a fit for your investment portfolio.  Companies have until the end of the year to convert into regular corporations.  Some have already converted to dividend stocks and most REITs are exempt from the new legislation.  Notices of “special meetings” have been sent out to unit holders regarding their intentions.

Some will cut distributions, some will keep them the same and probably most will reduce their dividends by 20-30%, or more.  Don’t just look at yields though.  Depending on your objectives, your income trusts-turned corporations may still be attractive investments for the future.

Act Now

Don’t put off important financial decisions just because it’s a busy time of year.  A few minutes of reviewing and acting on your particular situation at the end of the year can make a difference in your financial and tax gains and losses.


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