Do you want to know how to increase your personal return tax savings? This article discusses how to save taxes on your 2012 Canadian personal tax return. I am now going to take you through the top 5 ways to save taxes on your 2012 T1, so let’s get started.
Contribute to your RRSP
RRSP contributions are tax-deductible and any income earned inside your RRSP is tax-free. The 2012 maximum RRSP contribution limit is $22,970. To find out your specific 2012 RRSP limit, either call the CRA at 1800 959 8281 or check your 2011 notice of assessment. Remember, the deadline to make your RRSP contributions to count towards the 2012 year is March 1st, 2013. If you miss this deadline you are going to miss out on a big tax deduction.
Take Advantage of Tax Credits for the Kids
The 2nd amongst the top 5 ways to save taxes on your 2012 T1 is to take advantage of tax credits for kids:
- The children’s fitness tax credit is a maximum of $500 per child for physical activity programs.
- The children’s arts credit is a maximum of $500 per child for fees paid for cultural and art programs.
- Finally, take a deduction for childcare cost for fees paid for a baby sitter, daycare or camp.
The maximum deduction for 2012 is $7000 for children born in 2006 or later, and is $4000 for children born between 1996 and 2005.
File your 2012 Tax Return on Time
The filing deadline for the 2012 tax year is April 30th, 2013. If you miss this deadline you will be paying a penalty of 5% on the balance owing plus 1% of the balance owing for each month that the tax return is past due.
Deduct Carrying Charges
In learning how to save taxes on your 2012 Canadian personal tax return bear in mind that this is one of the most missed tax deductions.
Carrying charges include:
- Fees paid for an investment adviser or an accountant
- Interest on an investment loan that you took out to purchase investments (e.g. mutual funds, stocks, bonds)
- Safety deposit box fees
Write-off Employment Expenses
Common examples of employment expenses are:
- Money spent on your car (related to work)
- Money spent on your home office
- Expenses for cell phone charges and internet.
To qualify for an employment expense deduction you must have your employer complete form T2200 declaration of conditions of employment. Also, it must specify in your contract that you are required to pay for certain costs to carry out your duties of employment.
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.