On that note, let me first apologize for being late with this edition of Financialmentor.ca. It�s been a ruthlessly busy holiday season both personally and professionally. The topic is on Year End Tax planning and this should have gone out a few weeks ago so you could phone up your accountant or advisor and have them take care of things expediently.

However, you might find under the time constraints that your accountant or advisor is off vacationing in the Caribbean with a voice mail that sings about unavailability.

That being said, here are 10 ideas you can use to reduce taxes for 2005.

1) Give a little!
Tis the season to be jolly, so why not make some last minute donations to your favorite charity. Not only is it good for soul, but you will receive a tax credit for your deductions. Ideally, you should donate more than $200 as it results in a higher tax credit.

2) Last Minute RESP Contributions.
For any of you with children who turn 15 in 2004 and who have not yet previously contributed to a RESP to save for university / college, you should make a last minute contribution before the end of 2004 to collect the maximum Canada Education Savings Grant (CESG). If you haven�t already discovered RESP�s, they are the best way to fly for education planning because the government throws in 20 % on every dollar for contributions up to $2000 / year. Fortunately, there is carry forward, but the best thing you can do is make your deposit by the end of year to max out the CESG.

3) Education Credits
Education and tuition credits are transferable within certain limits. If you have a son or daughter in post-secondary school, and they have no income, parents are permitted to claim a maximum of $800 in federal tax credits per child. In addition, the cost of academic and training courses, application and admission fees, athletic fees and library and laboratory privileges may also be claimed. The school will send a tax receipt for these fees on a Form T2202.

4) Don�t forget to deduct interest payments.
If you know anything about my investment style, I�ve become big on creating deductible interest charges to invest in non registered assets. Not only does this increase your present value of investments, but it creates tax deferred non registered investments that nicely fill out a retirement plan. At the same time, you can deduct the interest charges just like an RRSP. But you�ve got to remember to collect your interest charges and add them to your tax return.

5) RRSP contributions for those of you turning 69 in 2004.
Now, most of my clients are young bucks under the age of 50. But many of you have parents who are squeaking up there. If they are turning 69 this year, they have to contribute to their RRSP before December 31 as they do not have the normal 60 days into 2005 like the rest of us. `

6) Consider looking at tax shelter investments such as flow through shares.
These are not for everybody, but they are legitimate tax shelters based on resource stocks that give you deductions and tax credits usually limited to corporations. The shares provide tax on the cost of exploring for, and developing Canada�s natural resources. Best speak to an advisor about this stuff.

7) Medical Expenses
Your medical expenses and those of your spouse/partner and of your dependants may be claimed for any 12-month period ending in the taxation year and may be claimed by you or your spouse/partner. To qualify as eligible medical expenses, payments must be for approved treatments by recognized medical practitioners (such as doctors, nurses, dentists, chiropractors, naturopathic doctors, physiotherapists, psychologists or dietitians), private hospitals, attendants or private health insurance premiums. To get the most tax savings, medical expenses for the whole family should be claimed by the lower income spouse.

8) Capital Gains and Capital Losses
As the end of the year approaches, it is time to review non-registered investment portfolios and the performance of these holdings. If you have been the recipient of capital gains either from stocks, bonds, mutual funds or real estate, you will have to pay tax on those gains, assuming they were held as capital property. Capital losses can be used to offset capital gains and can be claimed for the previous three years or carried forward indefinitely. Be aware that if you are planning to sell any securities before year-end, the last trading day for settlement in the year is three business days before the year-end.

OK � we�ve got two points left and we are going to use them to talk about 2005.

9) Get off to the right start for 2005.
Start by looking at the Group RRSP that your firm has set up. Look to see that you are maximizing your investments to this program. The great thing about the Group RRSP is that your contributions are done at source, resulting in a reduction of tax at source. The bottom line is that you can contribute more to a Group RRSP than through a regular RRSP withdrawal (say from your bank account) and have the same take home pay.

As well, consider contributing to your 2005 RRSP�s on January 1st,, 2005. The contribution will accumulate all year long, resulting in a significantly larger pool of retirement funds compared to the last minute RRSP contributions. It also avoids the mad rush on February 28th for last minute contributions.

10) Find yourself one rip snorter of a financial advisor if you are in search of advice.
I�ve written several articles about finding a good advisor and it boils down to finding someone knowledgeable, designated (ie CFP) and with the right personality mix for you. Shop around till you find the right fit as this is an extremely important relationship for you to have.

Ok �that�s 10 Year End Tips.

One more thought�We�ve been bugging you about Critical Illness insurance and the pending premium increases. All of it has come true in that rates have increased by 30 percent for the coverage�s. Canada Life, one of our preferred suppliers, has increased their rates effective November 15th. However, if you purchase CI before the end of the year, you can obtain them at the pre November 15th rates. Don�t hesitate � this important product is only going to get more expensive.

, on that critical note, let me wish you and happy and safe holiday season. If we\\\\\\\\\\\\\\\\'ve made you think, or you have any questions, email us

Sincerely,

=jk=

John Klotz,BA,CFP,CLU,CH.F.C, RHU, TEP
Vice President - Financial Services
LMS Prolink Ltd.
Phone (416)-644-7700
Toll Free 1-800-663-6828 ext. 7700
Email: john@financialmentor.ca