It is the taxpayer’s responsibility to scrutinize tax returns for missed deductions and credits.
Personal income tax returns are based on the following logic– the total income from all sources is subtracted from allowable credits and deductions, which calculates net income. The net income is then taxed at rates determined by a schedule put forth by the CRA every year. Along with that figure, the amount already submitted through remittances by employers (etc.) is subtracted from the amount owing. If there is a remainder owing, this needs to be paid to the CRA. If a surplus has been remitted, a refund will be issued to you.
Commonly Missed Tax Deductions and Tax Credits
Child care expenses
- Child care expense deductions apply to single-parent families or situations where both spouses are working. This deduction also applies if one spouse is in school for the entire tax year or part of it.
- Expenses may include but are not limited to: costs from after-school programs, boarding schools, PLASP fees, summer camps, hockey schools, as well as babysitter, and daycare fees.
- If you are required to use your personal car to carry out your employment duties, you can deduct expenses related to your car or vehicle. However, the following are required:
- declaration of Conditions of Employment, a completed form T2200 and as part of an employment contract be required to use a personal vehicle
- Only the business use portion of car expenses can be deducted
Contact BPtax more information on Tax Savings in Canada
- Contributions to RRSPs are deductible and income earned inside of the RRSP is also tax-free. However, RRSP withdrawals are taxable. In 2016 the maximum contribution to an RRSP was $25,370.
- Employment-related expenses are also subject to deduction. They include office rent, car expenses, union and professional dues, salaries paid out to assistants, supplies, home office expenses, and travel expenses.
First-time donor super credit
- This applies to individuals (or their spouses) that have made donations but failed to claim them in the last 5 years. The credit is available between 2013 to 2017. A 40% deduction will be applied to donations under $200 and a 54% deduction for donations over $200.
- Disability credits are available to individuals with
- prolonged and severe physical or mental infirmities
- Impairments that limit persons daily living activities including walking, speaking, dressing and feeding themselves
- To qualify, the impairment needs to be certified on a T2201 form by a Canadian medical doctor
- A caregiver tax credit is also available for taxpayers over 17 years of age that provide in-home care to infirms or dependent relatives who are at least 65 years of age
- There is also a supplement for caregivers of children under 18 years old with severe disabilities requiring full-time home care
House Hold Expenses – Credits
A single young adult from St. Catharine’s earning $22,000, paid $820/month in rent – could get $777
Ontario Trillium Benefit
The Ontario Trillium Benefit is a single payment that combines these 3 tax credits:
Ontario Sales Tax Credit
You could get up to $296 for each member of your family.
Ontario Energy and Property Tax Credit
If you pay rent or property tax, you can get up to $1,023 for non-seniors and up to $1,165 for seniors to help with the sales tax on energy costs and property taxes.
Northern Ontario Energy Credit
If you live in the north, you can get up to $148 for single people and $227 for families to help with higher home heating costs.
For Businesses – Credits
Information on the types of income you must report on a personal income tax return if you are self-employed, an unincorporated business or in a partnership.
Learn about tax credits that can help your business lower costs, hire/train workers and compete in the marketplace.
Other Tax Saving Strategies
- A tax-free savings account gives a tax deduction when deposited, but taxes must be paid later on when money is withdrawn. In a TFSA any investment income earned is not subject to income tax. Any contribution made to a TFSA is also non-deductible. Mutual funds, bonds, high-interest savings accounts, and stocks may all be held inside the TFSA.