Managing your personal finances home page

November 2009 Issue



Welcome to newsletter designed to help you with your personal finances. So grab that coffee or favorite beverage and enjoy this month's issue on personal taxes.

Personal Taxes

Taxes in November?

Wait just a minute. This newsletter is dated November, yet we are talking about taxes. There must be some mistake here, since taxes are something that we should be concerned about in April, a couple of days before we fill out our tax forms.


By the time April comes around there really isn't much tax planning that you can do. You will be spending time filling out the forms in April, but the numbers that you place in those boxes are all determined by the decisions you made months, or even years ago.

It might sound scary, but taxes are something you should be thinking about year-round. And year-round tax palling is a cornerstone of managing your personal finances.

Here is an example.

If you have investments that you have bought in the past few years (stocks, mutual funds, investment real estate, etc.), the chances are that these investments are worth a bit less than what you originally paid for them. If they have gone up in value – great! But if they have gone down in value, here is how your government will help share the loss that you have taken on these investments.

If you sell an investment for less than you paid for it, you have what is known as a "capital loss". This loss can be applied to reduce any capital gain you have on any other stocks, funds or investments, either now or in the future. Say your mutual fund has decreased in value by $2,000. This loss of $2,000 can be applied against another mutual fund that you have, a stock that you might have, or even stocks that you might buy either now or in the future that will give you a capital gain when you sell (how far these can be transferred to in the future depends on where you live...the rules are slightly different in the United States and Canada and other countries...but the same principal applies).

But to get that capital loss, you have to sell your money losing investment to claim on your next year's tax return, you have to sell it this year.

Different tax authorities have slightly different rules on when they consider the last day is for selling an investment for capital losses. It is not always December 31st of that particular varies depending on day of the week, and when a stock or mutual fund actually clears for sale. But rather than waiting until the holiday season when you are going to be more preoccupied in the "spending" portion of managing your personal finances, and holding out for the very last day to make a sale (and trying to determine the actual cutoff date), here is another idea.

Take a look at your investments today...right now, this month! If you have an investment that no longer meets your criteria, consider selling it now for the capital loss.

Of course no investment decision should be made because of the tax consequences alone, but if you have an investment that you were thinking of selling, consider doing it now. There will be less of a worry, and you can then enjoy your holidays without thinking about taxes.

See you next month!

Jim Helik, Editor

Bonus Info!

Kids and College

So you packed your kids off to school with boxes of books, a new computer and, hopefully, some sort of budget to get them through the semester. Well, this might be the month when you get that dreaded phonecall that "I need more money". Think in advance how you are going to handle this, and what personal finance lessons can be taught here by you. Needing more money because a computer broke, might be ok with you (after all, budgets are supposed to be flexible). Needing more cash because your child "just spent it", might not. Before you send another cheque, stop and think about how you can give your child a clear idea that managing their personal finances is serious business.

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