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Creasser Sadowy & Associates
Accounting - Tax Planning
"Experience Saves Time And Money"
20 Canadian Tax Tips
Tax Tips 11 - 20 First 1 - 10 tax tips20 smart tax tips for Canadians. How to trim your family's tax bill -- and put extra cash in your pocket.
By Cheryl Embrett
11. Find back-to-school savings
When it comes to paying for Junior's skyrocketing tuition fees, every little bit helps. The new textbook tax credit, for example, will put up to $65 per month right back into your pocket.
TIP: Remember, too, that any tuition fee and education credits your post-secondary scholar doesn't need to reduce his own tax can be transferred to you, up to a maximum of $5,000.
12. Take advantage of the Canada Child Tax Benefit
If you had a new addition to the family in the past year and your household income is less than $35,595, make sure you've applied for the Canada Child Tax Benefit. You'll receive $1,228 annually for each child, plus an additional $86 for the third and subsequent children.
TIP: You may also qualify for the new Canada Learning Bond, which is basically a gift from Ottawa of $500 for each child born after Jan. 1, 2004, and an additional $100 per year in grant money for up to 15 years. View Service Canada's website for more information.
13. Don't overlook the Universal Child Care Benefit
The Universal Child Care Benefit (UCCB) payment of $100 a month is available to any child under the age of six regardless of the family's income (keep in mind that amounts received under the UCCB will be taxable in the hands of the lower-income spouse).
TIP: If you're already receiving the Canada Child Tax Benefit, you'll receive UCCB payments automatically; otherwise, you have to register (www.universalchildcare.ca).
14. Pool your charitable donations
If you and your spouse both make charitable donations, combine the receipts and claim them on one return (you only get a 15.5 per cent tax credit for your first $200 of donations but 29 per cent for everything over that).
TIP: Donations you made in 2006 can be claimed any year up to 2011.
15. Get credit for caring
If you're the caregiver for an ill or aging parent, grandparent or other disabled dependent who is over 18 years old, you may be able to claim the Caregiver's Tax Credit.
TIP: Your dependent's net claim must be less than $12,509 to qualify, and your maximum claim is $3,663.
16. Travel the tax-friendly way
If you or a family member uses public transit, make sure you save those pass receipts. They could add up to $100 in tax savings per family member per year, thanks to a new nonrefundable tax credit that kicked in July 1, 2006.
TIP: The passes have to be for a period of at least one month to qualify.
17. Make maximum use of your investment losses
You can use any 2006 capital loss to decrease your taxes as long as you've realized at least an equal amount in capital gains. Let's say you bought a stock for $100 last year and it was only worth $90 when you sold it at the end of the year. That's a capital loss of $10.
TIP: "Quite often people don't keep track of their losses," says Wallis. "Declare them on your tax return each year and you can carry them forward indefinitely until you need them."
18. Sign the kids up for fitness
The Children's Fitness Tax Credit kicks in for the 2007 tax season for children under the age of 16, so save any receipts for your child's ballet, swimming or other physical activity programs.
TIP: The $500 tax credit will help compensate for those early morning hockey practices.
19. Invest wisely to avoid taxes
If you've invested both inside and outside an RRSP, you can arrange your portfolio to be tax-smart, says Heather Evans, a tax partner at Deloitte and Touche in Toronto. Capital gains enjoy tax breaks -- they're subject to tax at only half the rate of ordinary income -- while interest payments from bonds and GICs don't..
TIP: "As a rough rule of thumb, it makes sense to keep bonds and GICs sheltered in an RRSP," says Evans.
20. You can appoint the lower-income-earning spouse the investor
If you and your spouse are both earning income, but one is in a much higher tax bracket, it's a smart move for the higher-income spouse to pay all or most of the family expenses while the lower-income spouse invests all or most of his or her savings.
TIP: You'll significantly improve your investment returns since the income generated will be taxed at a lower rate. "I've found in my experience that most families do exactly the opposite," says Evans.
Tax Tips 11 - 20 First 1 - 10 tax tips