For most people tax planning takes place sometime between receiving a T4 and the April 30th deadline. Tax planning should be a year round activity and year-end is an important date to keep in mind. There are a number of tax strategies that can save you money provided you attend to them at the right time.

If you plan to access RSP monies in the next few years, consider making Spousal RSP contributions prior to year-end. Money must remain in the Spousal RSP for a full two calendar years after the year of your last contribution to ensure the tax is not attributed back to the contributor. By making the last contribution in December rather than January you can effectively reduce the waiting period by one year.

Charitable contributions must be made before year-end to claim them on your 2002 return. You might want to consider saving the receipts for up to five years. Although it varies between provinces, the average tax credit on the first $200 of charitable contributions is approximately 25 per cent, on amounts exceeding $200 it jumps to 45 per cent. By saving contribution receipts in order to accumulate an amount in excess of $200 you can take advantage of the higher tax credit.

If you can't reduce tax the next best thing is to defer it. In some cases, it makes sense to wait until the new year. If you need money from your RSP consider taking it out in January instead of December. By waiting a few days it becomes taxable income for 2003 instead of 2002. Likewise if you trigger a capital gain in January rather then December you will defer paying the tax on that gain for another year.

If you want to invest money it may be advisable to wait until next year. Many mutual funds pay taxable distributions in December. By waiting until after the distributions are paid you can avoid paying tax on earnings you haven't received. You are responsible for accrued interest on interest bearing investments with maturities of one year or more. By waiting until the new year to purchase your GIC you can defer that maturity date and the tax until 2003.

These strategies may or may not be in your best interest given your particular financial situation. This article is no substitute for professional financial advice specific to your personal financial situation.