Eight years ago this Christmas we rented a rustic cabin on the Smithers ski hill through a friend of a friend.
Although we had very good instructions on how to find the cabin in the dark, we didn't anticipate arriving during a blizzard.
Around 9 o'clock at night, in a -15 degree Celsius storm we pulled up to the unloading area about a hundred metres from the cabin. Our carload of seven travel-weary children hastily burst forth from the van and bundled up for the short walk to our Christmas vacation domicile. Then things got interesting.
The unloading area was at the base of one of the main ski runs, surrounded by several cabins, some signage, and even a few light-posts. But the blustery snow made visibility very poor, and audibility even worse.
Within a moment of leaving the vehicle, we had already gotten separated from some of our children in the dark foggy snow.
Pressing forward like some sort of Grizzly Adams wannabe, I took one of the older children and headed into the storm to find the cabin, thinking I would come back for the rest of them shortly. We werequickly disoriented in the snow. Lost. We made our way back to the starting point to regroup.
By then, several of the children, including the smaller ones, were missing. We shouted out, but our cries were muffled in the wind.
I ventured out again, this time with the sole purpose of gathering the smaller children and returning to the safety of the vehicle, but could not find them anywhere in the blinding storm. We were at one of the main thoroughfares of the ski hill, but all was icy blackness to us.
Our fear for our younger children was palpable.
Fortunately, my cheerful nephew asked a complete stranger if we could borrow his snowmobile, and quickly zipped off into the darkness, returning a few minutes later with three grateful Ryan's, who were quickly in the arms of two appreciative parents.
With the aid of the snow machine and its ample headlamp, we were soon all back on track and in the shelter of the cabin.
It is always most difficult to be stoic in the midst of the storm. Regardless of whether or not we are on the right path, the temptation to panic can be almost irresistible.
The shaky markets of the past few months may have a silver lining for some non-registered portfolios.
Every fall we touch on the subject of year-end tax planning.
This year, with its bumpy markets, many of us are presented with opportunities to consider. Not a panic, but a planned, methodical approach to losses.
Tax loss selling
If you have sold some assets and realized capital gains during the year, and you are holding other securities with unrealized losses, consider selling them as well.
This "tax loss selling" strategy of selling securities at a loss to offset other capital gains realized during the year is a common year-end tax planning technique.
Review your portfolio to determine if any investments are in a loss position and no longer meet your investment objectives.
If the investment still has strong fundamentals and meets your investment objectives, consider all costs, including transaction costs before selling investments solely for the purpose of triggering the tax loss.
When disposing of a security, the sale for Canadian tax purposes will be deemed to have taken place on the "settlement date."
Assuming a three-day settlement period, in order to utilize a tax loss selling strategy for the 2015 tax year, transactions must be initiated by Dec. 24, 2015 for Canadian securities and by Dec. 28, 2015 for U.S. securities. But these dates are dangerously close to holidays. Don't wait until then.
Also, check with your advisor for mutual fund settlement dates.
Carry forward or carry back of capital losses
A capital loss must first be applied against any capital gains (including capital gain distributions from mutual funds) of the current year. After that, the balance of the loss can be either carried back three years (to capital gains realized in 2012, 2013, or 2014) or carried forward indefinitely to offset future years' capital gains.
When you apply a net capital loss back to a previous year's taxable capital gain, it will reduce your taxable income for that previous year. However, your net income, which is used to calculate certain credits and benefits, will not change. Note that this is the last year in which you can carry your losses back to 2012 and offset them against your 2012 capital gains.
Next week we will cover superficial loss rules, as well as a few other year-end considerations.
This article is not meant as individualized tax or legal advice. Readers should consult their own professionals before proceeding with a strategy.
Mark Ryan is an advisor in Prince George with RBC Wealth Management, Dominion Securities (member CIPF) and can be reached at [email protected].
