Tax-loss harvesting is a valuable strategy for investors to reduce their tax liabilities. Here’s how it works:
For Investors:
- Sell Investments at a Loss: Selling investments that are currently at a loss before year-end can offset capital gains realized during the year. This can significantly lower your tax burden.
- Avoid the Superficial Loss Rule: To ensure the loss is allowable, avoid repurchasing the same asset within 30 days. This rule is critical to follow to benefit from the tax deduction.
Why It Matters
Effective tax planning isn’t just about saving money—it’s about creating opportunities to reinvest in your business. By carefully timing expenses and income, leveraging retirement and deferred income plans, engaging in tax-efficient charitable giving, optimizing compensation strategies, maximizing RRSP contributions, or implementing tax-loss harvesting, you can position your business for success in the year ahead while staying compliant with tax regulations.
Stay informed, stay strategic, and make the most of your financial opportunities.
