Originally published to BNN.ca on Nov. 2, 2017

CIBC is letting investors know how they can brace for the Liberals’ proposed tax changes.

Canadian small business owners should capitalize on favorable small business tax treatment – such as dividend sprinkling – before Ottawa closes the so-called loopholes in promised tax reform,  CIBC’s managing director of tax and estate planning Jamie Golombek told BNN in an interview.

“Our planning advice for business owners is that if you have a spouse or children that are shareholders, either directly or indirectly of your private corporation, now’s the time you may want to max out those dividends before the end of the year, if they’re in lower tax brackets than you,” Golombek said.

“That’s something that Mr. Morneau has focused on and is supposed to come into effect Jan. 1, 2018… This would be your final year to pay dividends to those people because otherwise, starting next year, it would be taxable at the highest rate.”

Small business owners got special attention in a Golombek letter to investors handing out year-end tips to families with students and charitable donors. Small business owners need to assess how the liberal reforms will impact them and act appropriately, he said.

As for passive investments, Golombek suggests withdrawing funds from the private corporation to max out RRSP and TFSA contributions for the year.

“RRSPs and TFSAs may offer benefits beyond those available with corporate investments,” Golombek wrote in the letter. “Receiving salary of at least $145,723 by December 31, 2017 will allow the maximum RRSP contribution of $26,230 in 2018.”

As far as tax-loss selling goes, Golombek cited changes to the settlement period that would allow investors extra time to unload some losers at the last minute.

“We have until Dec. 27,” he told BNN. “It used to be Dec. 24 to settle before the three-day settlement date, now we have a two-day date. So, we basically have an extra few days to do be able to do that selling in that last week of the year.”

“There may still be a few losers in the portfolio,” he added. “So if you have actually realized gains, maybe it’s time to look at the portfolio and say well, there’s a loser of two, maybe I’ll sell that and offset to reduce my tax bill next April.”

Golombek said planning ahead is key to being ready for the changes.

“Tax planning should be a year-round affair,” he wrote in the letter. “But as year-end approaches, now is a particularly good time to review your personal finances and take advantage of any tax planning opportunities that may be available to you before the Dec. 31 deadline.”