Plan to reduce tax
Tax planning shouldn’t just happen in April; by being forward thinking you can reduce your tax bill by identifying credits and deductions all year long.
Here are some tax saving tips;
- Pay your personal income tax instalments on time; instalments are due March, June, September and December; those self-employed individuals whose estimated income tax for the year exceeds $3000 should be ready to pay their next instalment on the mentioned months by the 15th, this will avoid late fees and interest charges.
- Individuals who are turning 71 years of age must convert their RRSPs to RRIFs before the end of the calendar year. If this is you, consider maxing out your final RSP contribution before December 31st.
- Seniors and/or retirees should also take note and educate themselves on the important tax changes of recent years; including income splitting opportunities, changes to OAS and CCP, and the benefits of TFSAs.
- Equivalent-to-Spouse Credit: If you are single, divorced or separated you may be able to claim your son or daughter (under age 18), or another family member who lives with you and who is dependant; as an ‘equivalent-to-spouse’ for tax purposes.
- Disability Credit: Those with a severe or prolonged mental or physical disability that significantly impedes their ability to perform the routine tasks of daily life can apply for this credit.
- Caregiver Tax Credit: Canadian families that provide in-home care for a dependant adult relative may be eligible for a caregiver tax credit provided the dependant’s net income is below a certain amount.
- Child fitness and Child art tax credit; you may be able to claim up to $500, per child, of the cost of these activities for a non-refundable tax credit of up to $75 for each child.
- Goods and services tax/harmonized sales tax credit – The GST/HST credit is a tax-free quarterly payment that helps individuals and families with low and modest incomes offset all or part of the GST or HST they pay.
- Public transit amount – Did you use public transit in 2012? You may be able to claim the cost of certain public transit passes or electronic payment cards under this non-refundable tax credit.
- Homebuyer’s amount – Did you purchase a home in 2012? You may be able to claim a non-refundable tax credit of up to $750 for the purchase of a qualifying home.
- Working income tax benefit (WITB) – Working individuals and families with low income may be able to claim this refundable tax credit. The WITB includes a supplement for individuals who qualify for the disability amount. Eligible individuals and families may also apply for advance payment
Tax Deductions to Consider
- Childcare expenses: Daycare fees, summer camp or boarding school expenses for children under age 16 can be deductable providing the parents are either working or attending school full time.
- Medical Expenses: You can reduce your tax bill by claiming a tax credit for all or part of an expense related to a medical condition. This includes things like guide dogs for the blind, bathroom aids, attendant care, even a portion of the cost of an air conditioner to help ease a severe respiratory ailment, accessible housing and tutoring services for those with a certified learning disability.
- Moving Expenses: The cost of renting a truck, hiring movers, storing furniture, legal fees, real estate commissions, the cost of breaking a lease, and food or hotels can be claimed if your move brings you a minimum of 40km closer to your new job.
A lot of out of pocket expenses can be used to reduce your overall tax bill. By doing a little research now; you can save yourself a lot of time and stress come April. If you have any questions, or need help give me a call.
Products or services related to investments, investment recommendations, financial planning, retirement planning, and investment reviews are provided through our mutual fund dealer Security Financial Services and Investment Corp.
4665 Yonge Street, Suite 309, Toronto, ON M2N 0B4 t 416.964.0440