Time the sale of your investments

If you expect your marginal tax rate will be significantly higher this year compared to next year because of your anticipated income levels, consider waiting until January 1, 2022 to sell your profitable investments to take advantage of the anticipated tax rate differences. This also helps to defer your capital gain tax. The capital gain realized from sale will be included in your 2022 income and the capital gain taxes will be deferred until 2023.

Tax-Loss Selling

Consider selling investments with accrued losses before the last trading date of December 29, 2021 to offset capital gains realized elsewhere in your portfolio. Any net capital losses that cannot be used currently may either be carried back three years or carried forward indefinitely to offset net capital gains in other years. If you plan to repurchase a security you sold at a loss, beware of the “superficial loss” rules that apply when you sell property for a loss and buy it back within 30 days before or after the sale date.

RRSP contributions

Consider making RRSP contributions to defer taxes on your income as your RRSP contribution gets deducted from your taxable income. The deadline for RRSP contribution is March 1, 2022 and the deduction is limited to 18% of income earned in 2020, to a maximum of $27,830, less any pension adjustment plus any previous unused RRSP contribution room and any pension adjustment reversal.