Tips for Canadians to plan taxes
Tax Planning is a task which has to be initiated quite early so that adequate benefits can be enjoyed out of the same. And at the same time it helps reduce the burden of the paying taxes as well as save the money in a manner that it secures the emergencies or the even the future.
Some of the tax saving tips is mentioned below:
- Pension Income Splitting: This entails that the earnings of one spouse or common law can be distributed between both of them. This means if one of them is earning $80,000, the income can be distributed between the two of them so that the amount gets reduced to $40,000 per spouse and accordingly they will be subjected to paying the taxes, which would definitely become lesser.
In fact Federal Government allows the split of certain of pinions only. In case one of the spouses who make her earnings falls under a higher tax bracket, he or she can reduce his income by splitting the same.
- People buying home for the first time: When a Canadian buys a home for the first time and the same qualifies the norms, then the buyer can claim a personal deduction on taxes for $5,000. This benefit is given to disabled person too, who settles down for a house which meets his needs and requirements better than before.
- Child Care Expenses: Parents or partners who have children below 16 years of age or have a child with physical or mental impairment. Between the two of the spouses or the common law partners, the one with low net income can claim for a tax benefit. Any expenditure you meet on “baby sitting, nursery school and day care centres” can be considered for tax benefit. Sometimes tax benefits are given on day camps or day sports schools or even on boarding schools and overnight sports schools and campus.
Be informed that you can claim deductions up to an amount of $7,000 per child if the age of the child is below 7 years. However, for children older than this but below 16 your claim will get reduced to $4,000.
- Other expenditures on Child Care: If your child joins an “Activity Class” like Fitness centre or anything else, you can claim a deduction. But, to enjoy this benefit, one must ensure that the child is involved with an activity which is contributory to the cardio-respiratory endurance and also strengthens the muscle and makes the child flexible as well as balance.
- Medical Expenses: In order to get a claim on medical expenses one must submit a valid receipt. The cost on various areas like eye examination, glasses, contact lenses, dental work, and pharmaceutical prescription can be claimed under this category.
Claiming Tax benefits is a matter of understanding and also a matter of thorough research. It is advisable not to make expenditure and then check the same with the list of “Claims” you can make, instead it should be the other way round.