Tax Saving Tips for Canadians
For any average Canadian the biggest expense in Life is paying the “Income Tax”. Canadians look for ways to save taxes from some corner or the other.
These tips have been quite successful. One can even claim the tax back up to 3 years.
Jason Round, Head, Financial Planning Support, RBC Financial Planning in Toronto says, “Tax planning should not be left until the annual tax filing deadline arrives.”
Cleo Hamel, senior tax analyst advises not to wait for the last minute to plan the taxes. She has experienced a sense of urgency in people only during Easter break. She also suggests keeping the records properly.
Tips to Save
- Tax can be saved in areas like medical expenses, dependent(child or anyone else), Child’s education, Children’s fitness, Home loans, charitable donations, interest paid on student loans.
- The entire above mentioned can give tax benefits only when there is a written document/Receipt to support. Hence maintenance of records is very important.
- Avoid paying penalties.
- A minimum of $2,500 is invested upon education savings plan to get a straight 20% deduction.
- RESP limit is $42,000 to $50,000 per child.
- The basic personal amount has been increased to $10,320 for the year 20120. One can delay receiving any income after this limit.
- Purchase of mutual funds in non-registered accounts can be avoided in the later part of the year. This will add to the taxes.
- Sell the profitable stocks or mutual funds which are outside registered retirement savings plans till the New Year comes. This will save one from paying the taxes on capital gains.
- Stocks showing profit can be donated to any charity organisation before the year comes to an end.
- Somebody who I about to turn 71 must convert RRSP into a registered retirement income fund or a life annuity. This has to be done by December 31.
- Purchases of equipment or supplies should be made before the year end; this is applied for both sole proprietor and partnership as well.
- Investment expenses are deductible and must be paid by December 31.
- Alimony or maintenance payments or any union dues should be paid by year end.
- If there are any excess tax deductions or non-refundable tax credits then form T1213 has to be filled up early in the year. This will help one to have more of cash throughout the year rather than waiting for a refund at the end.
Software to calculate taxes are available in the market but for exact calculations it is always better to have it done by an expert accountant.
We would welcome any other suggestions from our readers to help save fellow Canadians Income Tax. Please share your Views in Comments below