Tax Tips for Canadians

Tax Tips for Canadians

April 30 is the income tax filing deadline. To help you prepare for it, Hall & Company has compiled a list of useful tips so you can get the most of your tax return and save money.

Top Tips to Save Money

Use RRSPs & TFSAs.

RRSPs and TFSAs both offer tax advantages. RRSP contributions are tax deductible, while earnings from qualified investments in your TFSA are not subject to Canadian tax. If you can afford it, a good strategy is to contribute as much as you can to both. It’s simple – the more you make and the more you contribute, the more you’ll save.

Take advantage of pension-sharing and income-splitting.

You can share your Canada Pension Plan retirement pension with your spouse or common-law partner. Sharing your pension may result in tax savings because the higher-income spouse can elect to attribute some of his or her CPP income to the lower-earning spouse. You must apply to share your pension.

This is different from pension income splitting, where you may jointly elect with your spouse or common-law partner to split your eligible pension income, provided you meet all the requirements.

Canada has also introduced the Family Tax Cut (FTC), which allows couples with a child under 18 years old to split up to $50,000 of taxable income for a total tax savings of $2,000. Couples where one spouse earns a lot more than the other will benefit the most from the FTC.

Transfer any unused credits.

Most credits can be transferred between spouses when one of them does not have sufficient income to claim them. Several credits for students (such as tuition, education and textbook credits) can be transferred to a spouse, common-law partner, parent and even grandparent – after they are used to reduce the student’s tax owing to $0 and up to a maximum of $5,000.

No income? You still have to file a tax return!
Many zero-income earners think there’s no need to file a return – but this can cost you thousands of dollars in missed benefits and credits like the Canada Child Benefit and GST/HST benefit. These benefits are calculated based on your last tax return filed.

For instance, those turning 19 before April 1, 2018 should file a 2016 tax return even if they had no income. This way they can collect the GST/HST credit for the quarter following their 19th birthday.

Don’t pay for tax software to use the NETFILE service.
The CRA lists several free online programs that are NETFILE-certified and enable you to enter all of your information and file your tax return directly from the software. But for those whose taxes are a bit more complicated, such as the self-employed, you may want to get help from an income tax accountant to ensure accurate filing.

Don’t Miss These on Your Tax Return

Here are some commonly overlooked items on your personal tax return – don’t forget them.

  1. Medical expenses – Keep all of your receipts for medical expenses, including alternative practitioners like acupuncturists, naturopaths and Chinese medicine. Amounts not covered by your employer health plan are also medical expenses. So if your healthcare premium is deducted from your payroll, this is considered a medical expense in addition to any deductibles or out-of-pocket expenses not covered by your plan.
  2. Employment expenses – You can deduct certain expenses you paid for your job, if your employment contract required you to pay the expenses and you have a completed T2200 Declaration of Conditions of Employment form signed by your employer. In addition you will have to keep records of your expenses.
  3. Student loan interestIf you have left school or graduated, you can claim your annual interest from government student loans as a tax credit.
  4. Public transit passesYou can claim 15% of the cost of your monthly public transit passes or passes with longer duration.
  5. Moving expensesIf you moved 40 kilometers or more from one location to another within Canada in order to be closer to work, you may be able to deduct your eligible moving expenses. This includes travelling and transportation costs, up to 15 days of meals and temporary accommodations, and the cost of selling your old home or cancelling a rental lease.

Stay Organized

Get the Help of a Tax Professional

Your personal income tax filing can be a vehicle to save you money. Hall & Company’s team of Chartered Professional Accountants are specialists in personal tax income and can assist you with income tax preparation and filing for your unique situation. Contact us now to start saving money on your taxes.

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