Ten Tax Saving Tips

Posted on May 27, 2014 and updated May 30, 2018 in Life Insurance Canada News 5 min read

 

For many people, tax season has (finally) come to an end. No more chasing receipts or racing to meet the deadline to file. Everything has been submitted and there aren’t many people who would want to even think about next year’s taxes. But now is the best time to prepare. There are many things Canadians can do to lower their tax burden. To help save people money, we have complied some of the best tax saving tips on the web and asked tax expert Michael Storoszko, CPA, CGA, of Storoszko & Associates to help us provide you with 10 tax saving tips.

1. Always tell the truth: Whether it’s not reporting a percentage of your tips or claiming ineligible expenses, lying on your tax return could result in an audit, fines, or fraud charges depending on the severity. While it may seem like a small thing to begin with, the CRA has the power to freeze bank accounts and other assets over owed taxes.

2. Claim your kids: Paying for sports, summer camps, or childcare expenses this year? Raising a child can cost a lot and the government offers tax credits to parents to offset these costs. As MSN Money points out, there are many ways that parents can claim child-related expenses at tax time.

3. Renovate: If you are a senior looking to stay in your home or have a senior-aged parent, there are tax rebates available for eligible renovation expenses. Renovations including walk-in bathtubs and showers, non-slip flooring and wheelchair lifts are all eligible for tax credits for the BC and Ontario provincial income taxes.

4. School pays: If you, your spouse, or a child is enrolled in an eligible post-secondary school, the federal and provincial governments offer a tax credit for tuition and books. Full-time students are eligible to claim up to $400 a month for tuition and books and part-time students $120. As well, any interest paid on Canada Student Loans (government student loans, not ones offered by financial institutions, or student lines of credit et cetera) is eligible for a tax break as well.

5. Caregiver: Taking care of a relative? Make sure to claim that on your tax return, as well as any medical expenses you incurred. Back in 2011, the government waived the $10,000 limit on medical expenses paid for by a caregiver. Storoszko had this to say on caregiver expenses: “If you have a parent or grand-parent living with you aged over 65, you are eligible to claim the caregiver credit, even if they are not disabled. If you are living and caring for a disabled relative, be sure to have their family doctor fill out a Disability Tax Credit application to take advantage of this big tax break.”

6. Donate smart: When giving money to charities, by planning appropriately, both you and the charity can benefit. For example, in this article by tax expert Jamie Golombek, he points out the various tax rates for charitable donations. Amounts under $200 have a tax credit rate of 15%, whereas over $200, they have a rate of 29%. While it’s too late in the tax year to claim for 2013 taxes, setting up a monthly instalment plan with a registered charity can make giving more affordable, as it will be paid in smaller instalments over the year, and benefits the charity, as they will have regular funds coming in.

7. Adoption: Another interesting point that Jamie Golombek notes is for people who have recently adopted a child. If your child’s adoption was finalized in 2013, adoptive parents can claim up to $11,699 (or 15% federally) as a non-refundable tax credit for adoption expenses. This includes the cost for home study and adoption fees as well, making adoption more feasible for more families.

8. Self-employed? Claim it: As many small business owners know, there are many perks to owning your own business. If your business is home-based, you can write off a portion of your mortgage interest paid, utilities, maintenance, your phone and Internet bill, and even travel expenses when going to conferences or business seminars. While there are many deductions available to the self-employed, if you are just starting out, it is important to educate yourself on what is deductible and what isn’t. A great resource for new business owners is Evelyn Jack’s book Make Sure It’s Deductible. On that note…

9. The “other” row: On both the federal and provincial tax forms, there are rows titled “Other Deductions and Other Employment Deductions.” These can be used to claim other expenses that would not fit into any of the other categories. However, not everything can be claimed. As this CRA website and determine what you can and cannot claim.

10. File on time: This is by far the most important tip when it comes to filing taxes if you want to save money. If some paperwork comes in the mail after the filing deadline or you found some deductions that you can claim, you can always file an amendment afterwards. The penalties you can incur by not filing on time can drastically offset any gains, even by only a month.

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Storoszko & Associates, Tax Services
Storoszko & Associates, Tax Services

If you filed your tax return after the filing deadline, CRA charges a late-filing fee.

For 2013, this penalty is 5 percent of the balance owing plus 1 percent for every month you were late, to a maximum of 12 months.

The late filing penalty is in additional to interest on any balance due.

I hope this answers your question.

Regards,
Storoszko & Associates
http://www.storoszko.net
Tel/Fax: 647 367-3477
Twitter: @Storoszko_Assoc

Stephanie R.
Stephanie R.

Thanks for the tips. I just want to know how severe the penalties can get if I missed the final date to file my taxes?