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Donation optimization not finding optimal value


#1

I was just tinkering with donations that had already been optimized in a spousal file, at first only because I wanted to get both taxpayers into a refund position, but I noticed that as I did, the family refund total was rising.

I got to a point where the taxpayers had an absolute tax savings of $415 vs. the “optimized” amount.

With TaxCycle’s “optimized” transfer, the entire claim was put on one taxpayer’s return, and they no longer had any provincial taxes payable (i.e. non-refundable credits were exceeding AB tax on taxable income due to the donations). With my manual transfer, both spouses still have provincial taxes payable for the donations to grind against, resulting in the savings.

Am I expecting too much of the optimization here? I was assuming that it was considering partial transfers, but perhaps it’s only determining which spouse would be better off claiming the entire sum? If this is true, I really think it should be made more clear what the limitations of the optimizations are.

Perhaps in the short term a review message could flag this issue where a taxpayer is claiming all donations but no longer has provincial taxes payable?


#2

From another thread.

“Without a doubt Taxcycle is great software. I have always thought though that it tried a little too hard regarding optimizations. We should be experienced enough to make most decisions re optimizations on our own given the tools for easy selections/choices without overrides.”

On another note I find the software calculates strange optimal pension transfers within 5 or 20 bucks of 2000 that I find 2000 actually ends up with the largest overall refund. Not very optimal.


#3

This optimization issue still seems to be occurring.

It tends to crop up either when there is a large amount of donations, or only eligible dividend income resulting in relatively low taxation.

As described above, if I override to trigger a transfer of a portion of the donations to the other spouse, the net family tax balance gets reduced because of the overall provincial tax reduction.

I can send in a file if you’d like to take a look.


#4

I think an easy short term fix here would be to just trigger a review message whenever there are donations being claimed by a taxpayer with $nil provincial tax.