The year is coming to an end; time to check that you have taken advantage of these eight strategies to lower your personal-tax obligations for 2011.

1. Set up a TFSA. A Tax-Free Savings Account allows you to earn tax-sheltered investment income and capital gains. The contributions are not tax-deductible. You can also give funds to your spouse or common-law partner to establish a TFSA and the attribution rules will not apply. Your available 2011 contribution room consists of three parts:

• Your annual contribution limit of $5,000,
• Your unused TFSA contribution room from 2010, and
• The total amount of TFSA withdrawals made in 2010.

Thus, if you contributed only $2,000 in 2010, you can contribute $8,000 this year -- the $3,000 unused contribution room plus the $5,000 limit for 2011.

Or, if you contributed the full $5,000 in both 2009 and 2010 and then withdrew $10,000 in 2010, your contribution room this year would total $15,000 – the $5,000 limit plus the space opened up by the $10,000 withdrawal.

Time withdrawals carefully. The money you take out of a TFSA is not added to contribution room until the year after the drawdown. Money you take out this year won't be available as contribution room until 2012.

Keep in mind that you can open more than one TFSA, but the total you add to the accounts cannot exceed your available contribution room.

2. Split pension income. You can allocate to your spouse or common-law partner as much as half of your pension income that qualifies for the pension tax credit. If you are younger than 65 years of age, eligible pension income generally includes only lifetime annuity payments under a registered pension plan. If you are 65 or older, you can split lifetime annuity payments from a:

• Registered pension plan;
• Registered Retirement Savings Plan (RRSP);
• Deferred profit-sharing plan; or
• Registered Retirement Income Fund (RRIF).

If your spouse or partner is older than 65, you each qualify for the tax credit.

The pension income splitting strategy carries some risk as it could reduce your Old Age Security (OAS) payments. If your net income this year exceeds $67,668, you must pay back 15 per cent of payments exceeding that threshold. You may want to consult with your accountant about this strategy, particularly if you receive hefty dividends.

3. Fill up your RRSPs. The 2011 contribution deadline is March 1, 2012. However, it's not a good idea to delay contributions. The sooner you make them, the longer you have more tax-deferred money working for you. And of course you get a tax deduction for those contributions.

Aim for the maximum 2011 contribution of $22,450. If you have unused room from previous years, use it now to add even more money this year if you can afford it. And a non-deductible overcontribution of less than $2,000 will bump the amount you add to your plan without penalty.

If you turn 71 this year, you must wind up your RRSP at the end of December and convert it to an RRIF or another annuity. Before you close the plan you can make a contribution if you earned income this year that opened room. You may have a small overcontribution penalty for the month of December, but you get the tax deduction. Your adviser can help ensure you get the most from this planning opportunity and don't contribute too much.

You can continue contributing to a spousal RRSP until the end of the year in which your spouse turns 71, as long as you have earned income in the previous year or have carried forward unused RRSP contribution room.

4. Sell non-qualifying assets. If your RRSP is self-directed and you purchased a non-qualifying asset this year, consider selling it by the end of the year. When you buy a non-qualifying asset, its cost is included in your income for the year of the purchase. When you sell the asset, you get a tax deduction for as much as the original inclusion amount that could offset some or all of the proceeds from the sale.

5. Lend investment funds to your lower-income spouse. Create a promissory note bearing the current federal prescribed interest rate to be used to finance an investment. The prescribed rate for the fourth quarter this year is one per cent.

Your spouse or common-law partner gets a tax deduction for the interest, as long as it is paid by January 30 each year. You pay tax on the interest income, your lower-bracket spouse pays tax on earnings or capital gains from the investment.

6. Transfer investments. Income generally is not attributed back to you when you transfer investments to adult family members. There also is generally no attribution of capital gains in the year for transfers to a child age 17 or younger. The transfers count as investment dispositions for tax purposes, so don't make the switch until you calculate the tax cost.

You can also transfer other low-value assets. For example, you gain a tax advantage by transferring assets whose fair market value has dropped. The low values, combined with the ability to offset gains on the transfer with capital losses incurred this year or in earlier years, may make financial sense.

7. Review family-trust income. If you set up a family trust, determine how much it earned this year and ask your accountant to decide whether it makes more sense for the trust or the beneficiaries to pay the tax. If you are able to make the income payable to the beneficiaries before the end of the year, they will likely pay less tax than the trust, which may be hit with the highest marginal rate.

8. Pay what you owe the babysitter. You can claim qualifying childcare expenses that you pay by the end of the year. Hire any of your children over the age of 18 to take care of siblings 16 years old or younger while you are at work. You get a deduction and the adult child pays little or no tax depending on the amount earned.

Consult with your accountant about the benefits of these eight strategies in your situation. But hurry. You must act before December 31.