Spring is a beautiful season. It’s a season where the temperature slowly rises, the snow begins to melt and flowers start to bloom. Summer is fast approaching and for the majority of Canadians, we cannot wait!
Spring also signifies that Tax Season is in full swing. We hear the advertisements on the radio, television, read them in the newspapers and see them on our favorite websites. The advertisements are generated by Accountants and companies producing tax software. Most Canadians do not like paying taxes and hate filing their taxes annually. They procrastinate and put off their tax filing until the very last minute on the annual deadline of April 30.
Most Canadians are employed in a full-time job and are limited to the amount of tax deductions they can take advantage of. With proper planning and a bit of knowledge you will be able to maximize your Tax Refund.
Here is a list of some tax tips:
1. Importance of Notice of Assessment
Read and keep your notice of assessment. There may be some tax credits carried forward which are available to you such as tuition, capital losses, medical, etc… The notice of assessment also tells you how much you may contribute to your RRSP and if applicable how much you must pay back into your home buyer’s plan.
2.Filing Tax Return for Children
Produce a tax return for your children. For the 2009 tax year, if your child has income of less than $10,320 there is no tax to pay. However, by producing an income tax return for your child, he/she will reap the benefit of creating RRSP contribution room which can be used for the future. Also if your child is above the age of 18, they may be entitled to the GST/HST credit.
3. Investment Costs
If you have investments, you may be able to claim related carrying costs and investment expenses. Carrying costs include fees such as a safety deposit box rental or fees paid to an investment advisor. You can also claim interest expenses on the money that you borrow for certain investments.
4. Tax Credits
Every year the Government of Canada spends millions of dollars in advertising the latest tax credits available to you. Pay attention. Were you aware of the 2009 Home Renovation Tax credit? How long did it take you to catch on to the fact that you were able to claim the Federal Tax Credit for Public Transit?
5. Hire a Professional
Hire a professional accountant to prepare your taxes. Accountants are trained to keep up to date with the latest tax changes from the current Federal and Provincial Budgets. They have studied and understand how to interpret the Income Tax Act. They will ask you about your family situation and financial situation. They do charge fees for their work, but believe me, its money well spent. All it takes is one missed deduction and you may lose out on a major refund.
For example, when was the last time a Government official called you at home to advise you that if you had contributed an extra $1000 to your RRSP, you could have saved $400 in taxes? Your accountant certainly will.
This is a guest post by Allan, he will be providing us with a few tax related articles of the next few weeks. His second article will appear next week. Allan is a CGA residing in Montreal and works at Better Tax Services. Each year he prepares hundreds of Personal Tax files and serves individuals across Canada. To learn more, check out the website or follow Allan on Twitter.