Tax Topics with Fin: Year End Tax Planning Part Two

By Fin Macdonald, Fin Tax Service

Fin MacDonald has over 20 years’ experience providing retirement and Income tax planning advise. Readers are however cautioned that responsibility falls on the taxpayer to ensure that all information is adequate and correct.


Eligible medical expenses are those performed by a practitioner, who is licensed in the jurisdiction in which the treatment is provided, that are not of a ‘cosmetic’ nature. The most common are medical, dental, physiotherapy, massage therapy, acupuncture, and counselling. Eligible devices range from glasses and contact lenses to mobility aids, dentures and hearing aids. For some devices a practitioner’s note is required. Non Medical Services Plan Premiums are also deductible.

Medical expenses are a Non-Refundable Tax Credit. This means that they can be used to reduce your tax payable to zero, but do not create a refund unless you have had Income Tax withheld (or made Installment Payments). Medical expenses may be claimed on a calendar basis, or by taking any day in the year and going back 365 days. Expenses are claimed on a family basis and are subject to a 3% of net income deductible. In a family, usually the medical expenses will be claimed by the lower income spouse; if that person is taxable.

From a year end tax planning perspective, take the following steps:

  • review your (family) eligible expenses and income so far to determine if you already have a medical claim

  • what allowable medical expenses are you contemplating before year end?

  • What is the availability of practitioners, e.g. Dentist open to do your teen’s braces?


Like Medical Expenses, Charitable Donations attract a Non-Refundable Tax Credit. There are some differences though: there is no deductible, unused donations may be carried forward up to five years, and, there is a two-level rate of tax credit.

Charitable Basics for tax planning:

  • First $200 in eligible donations attracts a 20.06% credit (15% Federal, 5.06% BC)

  • Donations in excess of $200 attract a 43.7% credit (29% Federal and 14.7% BC)

  • Saving donations to get the 43.7% credit makes sense

  • Only Registered Charities may issue official receipts – many of the telemarketing “charities” are not registered – be wary!


If you turned 71 in 2018, you need to wind up your Registered Retirement Savings Plan. The three options are:

1. Take in cash
2. Covert to an Annuity, or
3. Transfer to a Retirement Income Fund (RIF).

Unless there is very little in the RRSP, taking it in cash is usually not a tax-smart move. Purchasing an annuity, given the historically low interest rates, is not much of an option. Transferring to a RIF, where your money continues to accumulate in a tax-deferred plan is what most people chose. The year after transferring to a RIF, mandated minimum withdrawals are required, @ age 72 it is 5.4% of the previous year-end balance; @ 80 it is 6.82%, @ 90 it is 11.92%; and from 95 and older it is 20%.

If you participated in the Life Long Learning Plan (LLP) or Home Buyers’ Plan (HBP), make sure to make the required repayment to your RRSP before year end, or the amount will be added to your income. If you are an older person who is contemplating withdrawing money for the LLP or HBP, a word of caution. If you have a balance in your LLP or HBP when you turn 72, it will be added to your income each year until it is paid off.

As always, dear readers, I look at taxes through my Lens of Helping You to Keep More of YOUR Money. Next time, tax changes and preparing for the 2018 tax returns.

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