The deadline for filing your personal tax return, April 30, is fast approaching. Taxes can be confusing and you don’t want to miss out on all of the tax credits available to you as a Canadian taxpayer. As such, if you reside in Mississauga or in its surrounding areas, I highly recommend that you consult an expert in income tax return preparation in Mississauga.
In this article, you will find out about the 6 unique tax saving strategies and tax credits:
1. Home Buyers Plan
If you are a first time home buyer, you can withdraw up to $25,000 tax-free from your RRSP to put towards the purchase of your first home.
However, you must contribute the amount withdrawn back into your RRSP over a period of 15 years. For example, if you withdrew $20,000 from your RRSP under the Home Buyers Plan, then $1,333.33 would be repayable each year for 15 years.
The CRA offers a grace period, such that no repayment is required to your RRSP in the year of withdrawal or the subsequent year. In other words, you don’t have to pay anything back to your RRSP for the first 2 years. However, after the grace period, if you do not include the repayment amount when preparing your tax return, the amount will be included in your taxable income.
As the rules regarding the Home Buyers Plan can be complex, I recommend consulting an expert of income tax return preparation in Mississauga before withdrawing money from your RRSP.
2. Children’s Fitness Amount
If you’ve enrolled your child under the age of 16 (or 18 for children with disability) in a physical activity program, you or your spouse can claim the Children’s fitness tax credit for up to a maximum of $500 per child.
Physical activity programs include, but are not limited to:
- Sports (e.g. hockey, basketball, baseball),
- Exercise classes
The receipt you received upon payment for the physical activity program should indicate whether the program qualifies for the Children’s Fitness Tax Credit.
3. Children’s Arts Amount
Similar to the Children’s Fitness Amount, if you enroll your child in a qualifying arts program (see below), you or your spouse can claim the Children’s Arts Tax Credit for up to a maximum of $500 per child.
To see which programs/activities are eligible, please see the CRA’s page on Children’s Arts Tax Credit
To maximize your tax savings, make sure to keep your receipts of both the children’s fitness and arts amount for your annual income tax return preparation.
4. Medical Expenses
Amounts paid for medical expenses qualify for the medical expense tax credit. Medical expenses include amounts paid to a doctor and for prescription drugs. For a complete list of medical expenses, please see the CRA’s website Medical Expenses
When preparing your personal tax return, make sure you tally all of your medical expenses, as this is an important part of your tax return. Since there are complicated rules around who can claim medical expenses on behalf of a spouse and/or dependents, and the time limit for claiming such expenses, seek the advice of an expert in income tax return preparation in Mississauga.
5. Tax Return Preparation Fees
Tax return preparation fees paid to an accountant for preparing your personal tax return can be deducted in the following situations:
- If you earned investment income, such as interest or dividends
- If you have a business. For more eligible deductions for business owners, please see my article on How to save taxes for self employed individuals
6. Canada Employment Tax Credit
If you were employed in 2012, you’ll be eligible for the Canada Employment Tax Credit. The amount of the credit is equal to the lesser of $1,095 and the amount of your employment income. For example, if you earned employment income of $20,000 in 2012, then the Canada Employment Tax Credit is $1,095.
Speak with your accountant who does your income tax return preparation in Mississauga for further information on the Canada Employment Tax Credit.
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.