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Tax Season Checklist: Take a Look at Your Portfolio

This image of a clock next to letter blocks that spell out tax time represents the upcoming 2022 deadline to file your 2021 income tax return in Canada.
Learn how to check in with your investment portfolio and why it’s important during tax season in Canada.

Tax filing season is in full swing.

As we prepare to file our 2021 income tax returns, it’s also time to check our investment portfolios because income earned on investments can be taxable. So you’ll need to find out if you have any taxable investment income to report when filing your taxes.

This article will go through the basics of reviewing your portfolio, and some key information to know when reporting your investment income.

2022 Tax-filing Deadline in Canada

The deadline to file your individual 2021 income tax return is April 30, 2022. Since April 30 falls on a Saturday, your individual return will be considered filed on time in the following situations:

  • Canada Revenue Agency (CRA) receives it on or before May 2, 2022
  • It is postmarked on or before May 2, 2022

The deadline to file your return if you, your spouse, or common-law partner are self-employed is June 15, 2022.

Visit the Government of Canada website to learn more about what’s new this tax-filing season.

How to Check Your Portfolio

Regular account statements from investment firms, and from the companies you’re investing in, will provide you with information on how your investments are doing.

Request Investment Account Statements

You can get information on how your portfolio is performing by checking your investment account statements. If you’re working with a registered investment advisor, their firm must provide you with account statements at least every three months (or every month if you request them). The firm must also provide you with an annual investment performance report. Click here to see a sample report.

You can also watch this video to learn more about the details of your investment performance report.

Determine the Value of Your Investments

This short video explains what you can expect to see on your investment account statements. Knowing the value of your investments on a regular basis can help you determine if your portfolio is still working for you and is meeting your financial goals.

Check in with Your Registered Advisor

Monitoring your portfolio on a regular basis can also make it easier to talk to your registered investment advisor about your investments. Together you can determine if your mix of assets is working for you.

There are some considerations to go over with your advisor when deciding on changes to your portfolio. Here are some key questions you should ask before buying or selling an investment.

It’s important to remember the client-advisor relationship is a two-way street, and you as the client also have responsibilities. Learn more about how you can play a more active role by watching the video below.

COVID-19-related restrictions continue to ease across Canada, but you may not feel comfortable meeting with your registered advisor in person just yet. Ask your advisor what options are available to meet virtually.

Tips on Working Remotely with Your Advisor

  1. Use videoconferencing services. You could connect with your registered advisor using popular services like Skype, Zoom, and FaceTime. Try to familiarize yourself with your preferred service before using it to call your advisor. This will help reduce the number of technological hiccups that could occur during your appointment.
  2. Find a quiet place. Set up your meeting away from others so that your privacy and other personal information remains protected.
  3. Send information securely. If you need to send private, sensitive, and/or confidential information to your advisor, do not send it using unsecured websites or email services. Private information like your SIN is best communicated directly over the phone, or via other secure methods.

The Importance of Monitoring Your Investments

As mentioned earlier, it’s important to check your portfolio during tax season in order to determine whether you have taxable investment income to report. Outside of tax season, monitoring your portfolio regularly is a good investing habit to build. Let’s explore three additional reasons why monitoring your portfolio matters.

1. You Can Determine Whether Your Investments Are Still Right for You

Investment account statements generally set out the cost and market value of each investment.  Checking these account statements regularly can help you determine if your investments are still aligned with your financial goals. You may find that your goals or your financial situation changed over time, and your investment plan may need to be updated.

2. You Can Take Steps to Stay on Track

If you think your portfolio is off track or no longer suits your short- or long-term goals, work with your registered investment advisor to figure out what’s happening. This can help determine whether you need to take action. Diversifying so that you hold a mix of investments is one tactic you can use to refresh your portfolio.

3. You Can Better Understand Investment Fees & Charges

If you’re monitoring your investments statements regularly, you will become better informed about the investment fees and charges you’re paying. Understanding the fees you pay helps to evaluate the true cost of your investments, as well as the services you receive from your registered investment advisor. Learn more about fees and charges.

If you feel like you’re paying too much in fees, it may be a good time to talk to your registered advisor about other investment options that may be more cost-effective, but still fit with your goals. Exploring your investment management options could also include considering a robo-advisory service, or going the self-directed route. Learn more about these options.

Reporting Income Earned Through Investments

The income you earn through investments makes up a component of your taxable income. It is calculated in with the income you earn from employment and other sources. There are a couple of points to be aware of when reporting your investment income.

1. Not all Investment Income is Taxed at the Same Rate

When it comes to investing, the income you earn can come in various ways, and the Canada Revenue Agency (CRA) taxes income types differently.

For example, income earned from interest may be taxed differently than income earned from dividends. In some cases, investment income isn’t taxed at all. For instance, if you hold investments in a Tax-Free Savings Account (TFSA), the amount contributed as well as the income gained from investments in the account is tax-free, even on withdrawal.

Talk to your registered advisor and/or a tax expert to understand how your investments will be taxed.

2. Some Investment Fees & Charges May Be Tax-deductible

Many BC investors want to know if their broker or investment advisor fees, mutual fund management fees, and any trailing commissions they incur are tax-deductible in Canada.

The rules vary widely, but it’s helpful to know that some types of investment fees and charges are tax-deductible. For more information, it’s best to speak with an accountant or another tax expert, or contact the CRA.

Report a Concern

If you have any concerns about a person or company offering an investment opportunity, please contact BCSC Inquiries at  604-899-6854 or 1-800-373-6393, or through e-mail at [email protected]. You can also file a complaint or submit a tip anonymously using BCSC’s online complaint form.

InvestRight.org is the British Columbia Securities Commission’s investor education website. Subscribe to receive email updates from BCSC InvestRight.

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