Yes, it’s that time of year again when one of life’s two certainties rears its odious head. Yup, tax season is here. At First Foundation, however, we don’t see tax season as a time to complain, but as a time to save money! So, roll up your sleeves, get out your notebook and get ready to jot down these 7 tips for saving money on your taxes.
1. Hire an accountant (if you can)
If you have substantial investments, own a business, or have any financial activities that don’t fit neatly into the box of a salaried employee, consider hiring an accountant to do all the hard work for you. They’ll find things you can write off that you may not have thought of on your own and, most importantly, ensure that your tax return is properly filled out. Most accountants are worth their fee – and sometimes much more – at tax time. If you can’t afford to hire an accountant though…
2. Get CRA-Certified Tax Preparation Software
If you are going to do your own taxes, look for a CRA-certified tax preparation program or online service. The CRA certification means that the Family Tax Cut and other credits are completely up-to-date; non-certified programs may not include important items like the Family Tax Cut. Find out if your program is certified on the CRA website.
3. Elimination of the Income Splitting Tax Credit
This year income splitting tax credit was eliminated if you are a two-parent family with one or more children who are under the age of 18. Pension income splitting is not affected.
4. Canada Child Benefit
The Canada Child Benefit is a non-taxable benefit that combines the Canada Child Tax Benefit and the Universal Child Care Benefit. The new Canada Child Benefit will provide a maximum annual benefit of $6,400 per child under the age of six and $5,400 per child aged six through 17. The benefit amount is reduced by prescribed percentages of household income over $30,000.
5. Phase out of Children’s Fitness and Arts Tax Credit
The Children’s Fitness and Tax Credit maximum amount had been reduced from $1,000 to $500. The arts portion of the tax has also been reduced from $500 to $250. The credit will be completely eliminated for 2017 and subsequent tax years.
6. GST/HST Credit
You don’t have to apply for this credit anymore; it is automatically calculated by CRA.
7. No more safety deposit box credit
You can’t claim expenses for safety deposit boxes for investments as of the 2014 tax year.
8. Make sure you are claiming medical expenses
Canadians can claim medical expenses, some of which may surprise you. Drugs, prescription eyewear, dental work, and many other out-of-pocket medical expenses can be used as write offs on your tax return. In 2014, the government allowed people to write off the cost of medical therapy animals (for patients with severe diabetes) as well as mental and physical therapy for Canadians eligible for the disability tax credit.
People diagnosed with celiac disease who have had a gluten-free diet prescribed by their doctor can claim the difference between gluten-free and non-gluten-free food; this requires careful tracking of receipts and some research into what the usual cost of the food is.
You can also claim travel expenses for medical appointments if you are traveling more than 40 kilometres and the services are not available in your immediate area. If you are travelling more than 80 kilometres for a medical appointment, you may even be able to write off meals and accommodations. If you have a number of medical expenses, it may be worth hiring an accountant to determine what you are eligible for.