Stacey Cooper has a theory about why people might be interested in tax. If you guessed resentment at having to pay it, you’d be close but wrong. Instead, the JR Shaw School of Business instructor attributes the intrigue to basic obligation.

“We have no choice but to pay tax,” says Cooper, “so we have no choice but to realize that it affects us.”

But that doesn’t mean there’s nothing to be done about it. By investing a bit of time in reviewing your sources of income over the past year, you can legitimately slim down Canada Revenue Agency’s piece of your pie.

As we approach the end of 2011, now is the time to make some adjustments to your finances – and pick up tips you can apply year after year.

“Tax impacts you from the point where you start working until the day you die,” Cooper points out. “So why not do something about it?” Here’s how.

Reap your losses

When it comes to the stock market, you win some, you lose some. What you win, your capital gains, are taxable. If you sell stock at a loss, however, those losses are deductible. Should you have a feeling those stocks aren’t about to become hot commodities any time soon, “Why not trigger these losses right now so that you offset the tax that you’ll have to pay on those gains?” says Cooper. Just aim to break even.

That said, beware of creating what’s called a superficial loss, she warns. Basically, if you purchase, sell and continue to hold the same stock within a 60 day window the losses may not be deductible.

Delay your gains

Once Dec. 31 is in sight, hold off billing, invoicing or selling stock at a gain until the new year. At this point, you’ll likely have a good sense of your year’s total income and be able to use that number for working out other tax-saving strategies below. No need to complicate that now.

Cooper also points to the time value of money. Whatever you retain you can invest. The longer you invest, the more that money earns. So keep it and use it. Overall, “A good strategy is to trigger gains early in the year and losses late in the year, if possible.”

Give it away

Christmas is the time for giving, so get donating. Besides it just being the right thing to do, “This is one of the easiest ways to reduce the tax you’re going to pay,” says Cooper. But here’s another instance where it pays to be smart. Donations of less than $200 are taxable at 15 per cent. Anything greater, however, goes at 29 per cent.

Keep in mind that you can put off claiming a donation for up to five years, saving them up to claim as much as possible at the higher rate. “That’s an extra 14 cents on every dollar simply by delaying when you put it on your tax return.”

Keep it in the family

If you’re working but your spouse isn’t, the household income – according to Canada Revenue Agency – is technically yours, even if you’ve got a joint bank account. That means if your spouse were to invest any money, the earnings are taxed according to your (higher) income bracket – unless you set up a spousal loan.

Basically, this is an agreement that includes a reasonable term for repayment and an interest rate. Write it down, sign it and you’re done – your spouse can now claim earnings at his or her own income tax bracket, which is likely much lower. Use a prescribed interest rate from Canada Revenue Agency, currently a measly one per cent.

“At the end of every year there’s always the chance those rates are going to come up, so it’s nice to lock it,” Cooper advises.

Roll back your earnings

Knowing your personal (federal) tax bracket is an essential part of your tax-saving strategy. This is how they work:

• the first $0 – $41,544 is taxed at 15 percent
• the next $41,545 – $83,088 is taxed at 22 per cent
• the next $83,089 – 128,800 is taxed at 26 per cent
• and anything at $128,801 or more is taxed at 29 per cent

If you know you’ve earned $50,000 by the end of the year, a combination of donations, delaying other earnings or planning for a lump sum RRSP contribution before the February deadline could bring you down to that 15-per cent bracket, lowering your tax bill.

Whatever you choose to do before year’s end, an investment adviser or an experienced accountant is a valuable ally in your money-management strategy. And don’t delay: some transactions take a few days to settle. Either way, a simple rule of thumb goes a long way when it comes to taxes: Invest the time in exploring your options, says Cooper, and above all, “Be smart about it.”