Financial To-Do's Before Dec. 31: RESPs, Charity Contributions & Tax-Loss Selling

Everyone frets about the February RRSP contribution deadline but the Dec. 31 deadline for making contributions to a Registered Education Savings Plan (RESP) often gets overlooked in the December holiday frenzy.

If you've started an RESP for your child, you have until the end of this month to make your contribution. Although you can make up the contribution in future years, you can catch up on only one year at a time.

If you haven't started one, it's worth considering. Under the Canada Education Savings Grant (CESG), the federal government will match 20 percent of your contribution. Under current rules, the CESG will add up to $100 for the first $500 that you put into your child's RESP each year, if your net family income is $40,970 or less. If you contribute $5,000, that's could mean $1,000 from Ottawa toward your child's education, folks. You can do this every year until the year your child turns 17.
Charitable Donations & Other Expenses

If you haven't already made all your charitable contributions for the year, those have a Dec. 31 deadline, too. So do medical and child-care expenses.

And if you're a small business owner in need of office furniture or equipment, you might want to consider hitting up Boxing Day sales to acquire those items, since you can declare them as 2012 business expenses.

Tax-Loss Selling

If you lost money on any of your stocks in 2012, you might want to decide before Dec. 31 whether you want to keep them another year or swallow your losses. If you decide to swallow your losses, you have to sell them before Dec. 31 to get the tax benefit of selling them at a loss. It's a good idea to consult your accountant and/or financial advisor before selling them, though, particularly if you think you might want to buy that stock again. There are complicated rules regarding tax-loss selling. If you won't want to run afoul of the superficial loss rule, for example, you have to wait 30 days before buying that stock again

You will eventually have to pay the tax: tax-loss selling is just a deferral strategy. Whether you will benefit from it depends on your circumstances. But if you made a lot of money this year and it's unlikely you will have that same level of income next year, you might want to consider it: losses can offset past gains over the last three years.

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