With 2010 rapidly coming to a close, here are some items you may want to knock off your personal finance to-do list:

Tax-Loss Selling & Crystallizing Capital Gains

If you realized capital gains in the current year or in any of the previous three years, you may want to offset some of those gains by triggering capital losses in your portfolio. If you received no other income this year, you may want to consider increasing the adjusted-cost base of your holdings by selling securities in which you have capital gains. The deadline for tax-loss selling and crystallizing gains for the 2010 financial year is December 24.


The last day to contribute to or withdraw from a Tax-Free Savings Account for the contribution or withdrawal to count for the current financial year is December 31. Note that any unused portion of the 2010 contribution room will be carried over into the New Year.

If you are unhappy with your current TFSA institution, now is an ideal time to execute a TFSA December Shuffle. You can avoid transfer fees by withdrawing the entire balance in your current TFSA account, opening a new account in another institution in the New Year and contributing the withdrawn balance back. You’ll also get an additional $5,000 contribution room in the New Year.

RESP, RDSP and Charitable Donations

The last day to contribute to a Registered Education Savings Plan and receive a 2010 Canada Education Savings Grant is December 31. While you can receive CESG for previous years, the maximum regular grant in a calendar year is $1,000.

December 31 is also the last date to make a contribution to the Registered Disability Savings Plan and receive disability savings grants for the current financial year. If you are considering making charitable donations, you may want to do it on or before December 31 and receive a receipt for the current financial year.

See also: 5 pointers for investors at year end by Larry MacDonald.

This article has 22 comments

  1. Pingback: Tweets that mention 2010 Year-end Financial Deadlines | Canadian Capitalist -- Topsy.com

  2. Oh! I hadn’t thought of the December shuffle! I have two TFSA savings accounts (long story!) — but one has a higher interest rate. I hadn’t wanted to move money over for fear of penalties, now I know how! Thanks 🙂

  3. Careful with the TFSA December shuffle. A lot of high-interest savings accounts have a delay between when you actually start the transfer and when the transfer happens (and therefore the date on which is it recorded as happening). So don’t leave the TFSA December Shuffle until December 31, you’ll likely want to do it before Christmas to be safe, right after Christmas if you want to squeeze those last couple of cents of interest out of your TFSA.

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  5. @Beth: Check for withdrawal fees. Typically, most accounts allow certain number of free TFSA withdrawals. Even if they do charge a withdrawal fee, it is likely to be much less than a transfer fee.

    @0xcc: The December Shuffle isn’t a transfer, it is a withdrawal. At least on online accounts, the date of the withdrawal is what counts. Still, I wouldn’t recommend leaving this until the last minute either.

  6. Charles in Vancouver

    I did the Shuffle to save myself $140 when transferring from Credential to Questrade. I withdrew the entire contents of my TFSA in-kind to non-registered, late in November, and then made the transfer. Had I kept it in TFSA, Credential would have charged 2×$140 for the transfer instead of just $140. Questrade will cover the single fee of $140.

    I did the math, and even though I will get dinged for tax on some year-end distributions as a result, it still costs me less than the $140 fee. I’ll fund the new TFSA in January.

  7. I hadn’t thought about it before you mentioned it, but there seems to be no reason to get excited about making a TFSA contribution before the end of the year. Of course, artificial deadlines help us to avoid procrastination.

  8. As far as the TFSA shuffle goes, would it not make more sense to carry out a Qualifying Transfer between TFSA accounts which I believe would allow you to transfer in total the amount in one TFSA to another. The ‘shuffle’ would not allow you to move any profits gained since it would be in excess of $5000. For example if I have no contribution room left, but my TFSA has increased in value I could not shuffle all of it to another TFSA and still have $5000 of contribution room in January.
    Am I missing something?

    • @Tom Andrasi: Yes, you are. Any withdrawal made from a TFSA account in 2010 will be added to next year’s contribution room. For example, say you have $10,300 in your TFSA account at present and no more 2010 contribution room. You can withdraw the entire amount now. You can then open a new account with another institution in the 2011. You can then contribute $10,300 (amount withdrawn from a TFSA in 2010) plus $5,000 ( new contribution room in 2011) for a total of $15,300. By doing this you would have avoided TFSA transfer fees that your current institution may charge.

  9. Thanks for the tip on “December Shuffle”. I plan on moving most of my stuff from TDWH to Questrade. But Questrade will only waive TD’s transfer fee for one account, so this helps me save about $130.

  10. What is the point of crystallizing losses? To me it doesn’t make any sense to sell a security at a loss, and deny oneself of the potential that it may appreciate to at least break even. A zero rate of return (ignoring inflation) seems so much better than a negative return. Especially if one is uses low-cost index funds, any new capital would just purchase the security at the price you would sell at, and the theory of rebalancing dictates that you would always be selling winners (or least losers, which I guess is on case where I could understand selling at a loss.)

    I guess I answered my own question, but if anyone has any other examples, I’m all ears. (well, eyes I guess. This is an online forum.)

  11. Oops. It should read …one case where I could understand selling at a loss…

  12. @CC: Thanks, I didn’t know that after a withdrawal, all the contribution space was available (ie. $10,300) and not just 5k per year. That’s good to know!

  13. @AKA. It is purely for taxation reasons. If you sold a star and also own a dog, you can also sell the dog to reduce the capital gains you would otherwise have to pay taxes on for the star that you sold.

    But the old adage also applies, where “one man’s trash is another man’s treasure”. So, around this time of year, stock pickers may be able to pick up beaten up stocks which get further beaten up by this tax-loss selling.

    That said, usually the stocks that get sold for tax losses often have very solid reasons why they’ve been underperforming – so choose carefully!

  14. @Slacker: Looks like the December shuffle isn’t all that well known. Perhaps, time to write a post on this?

    @AKA: I personally wouldn’t sell a security simply to crystallize a tax loss. This especially doesn’t make sense for index funds.

    However, there may be circumstances where triggering a tax loss makes sense. Example: Let’s say an investor wants to switch their individual stocks to an index fund. The stocks have significant unrealized capital gains. But let’s say she also owns XIU that currently has a significant capital loss.

    She could decide to sell her individual stocks, sell XIU and purchase XIC with the total proceeds. One month later, she’ll sell XIC and buy back XIU (if XIU is what the investor wants to hold over the long term). Now, she has a portfolio she wants and she has minimized or eliminated the tax consequences of turnover in the portfolio.

  15. That December shuffle is a new one for me. Thanks for link.

  16. Excellent reminders, especially the TFSA dance name.

  17. Pingback: The TFSA December Transfer Strategy | Canadian Capitalist

  18. @Phil S: I have done tax-loss selling just once. I wanted to switch to ETFs in my taxable accounts and the credit crunch offered me a very good opportunity. I sold my stocks and offset the capital gains with tax-loss selling on another ETF that I owned at that time.

    I haven’t ever done tax loss selling just to get rid of dogs. These days, I own just index funds, so tax-loss selling isn’t likely in the future either.

  19. @CC. All of my LSIFs are dogs. It’s kind of sad when I have to consider one that has gone down by less than the 30% tax break to be a “star” in that investment sector.

  20. I had realized some capitol losses back in 2000-2001 and I never offset them by gains since then, is there a time limit to do so or do you carry losses over a lifetime?

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