Tax Tips
KEEP RECEIPTS FOR EVERYTHING YOU SPEND
This is by far the most common problem we see. If it turns out you don’t need the receipt for taxes, they're still useful for budgeting. If you get paperless bank, credit card or utility statements, download them every 3-4 months. If not, you may face a charge to access older statements.
DON’T RELY TOO MUCH ON SOFTWARE
Tax software is a great learning tool and inexpensive, but if you’re not experienced, errors and omissions can really cost you. Beginners, self-employed, rental property owners, commission salespersons, and anyone with significant life changes or any doubts should have their work reviewed by a professional. Missed credits and deductions can be recaptured by filing adjustment requests for prior years.
PREPARE ALL FAMILY MEMBER’S TAXES TOGETHER
Your taxes are directly connected to those of your family and vice versa. Include anyone living with you or attending school. Have everyone present if possible - you’ll often remind each other of things otherwise missed.
FILE EVERY YEAR AND ON TIME
Late penalties are 5% of what you owe and 1% a month up to 12 months - these are needless costs. File on time and work out a payment plan with CRA if needed. Even if you don’t owe money, credits like GST, Trillium, Canada Child Benefits, and OAS supplements are not paid until you file.
ASSESS MEDICAL CONDITIONS AND SPENDING CAREFULLY
If you or a family member suffers from any prolonged mental or physical impairment you may be eligible for the disability tax credit and/or family caregiver amount. Medical expenses can be claimed in any 12 month period ending in the tax year - pick the period that works best.
DON’T GIVE UP ON RRSPs
If you don’t have the cash or have trouble saving, consider an RRSP bank loan. Use the extra refund towards the loan and treat monthly loan payments as a savings plan. Bank approval is usually automatic for RRSP loans.
DON’T USE INSTANT REFUND SERVICES FOR REFUNDS OVER $1,000
If your refund is over $1,000 the discount fee for an instant refund is too much to pay to have your taxes prepared. E-file and Netfile (if preparing yourself) is fast. With direct deposit, refunds are received in about 8 days.
CONSIDER STARTING A SMALL BUSINESS - EVEN PART TIME
Tax laws favour business. Any reasonable expense to generate business income is tax deductible, and operating losses in early years can be deducted from wages and other taxable income. Think of something you’re good at or want to do. Don’t start without a solid business plan that makes sense to an experienced business person.
HELP YOUR CHILDREN LEARN
Your children are not taught tax knowledge at school and often learn the hard way.
START TAX PLANNING TO SAVE IN THE FUTURE
Filing taxes accurately is important but you're only reporting on what’s already happened. Planning is the key to paying less tax.
TAXES ARE YOUR BIGGEST LIFETIME EXPENSE - DON'T PAY MORE THAN YOU HAVE TO!
Click Here to view our checklists for a comprehensive list of necessary items needed to prepare your tax return.