Posted on Sunday 01 May 2016
[Updated for 2021]
It always hurts when you save money by budgeting and end up losing a chunk in taxes. As a Canadian, you should claim as many tax deductions as possible. Hopefully, this would include some credits too.
In this article, we’ll dispel common misunderstandings, combat misinformation, and explain ways to write off some off your current expenses. Please note these are just tips and you should talk to a lawyer for professional legal advice.
So are you ready to make the most of your taxes?
Though you might be filing late, Canadians who requested an extension on their taxes can still take advantage of these strategies to get more tax related benefits..
Let's look at some things you should and shouldn’t do when it comes to gaining those money saving tax advantages.
Many Canadians turn down promotions, believing that receiving a pay raise means they’ll have to pay more in taxes at the end of the year.
In reality, the opposite might be true. You could be missing out on tax benefits by not accepting promotions and raises. Be proud of your work, and accept the position you've earned.
After all, you don't want to keep getting by on instalment loans.
Minors still get a $9,800 personal exemption. This will help them get started with their possible instagram venture or college side hustle, or simply get a head start while working a a part time job during college. So if you are a teen, it's good to get in the game as early as possible. The possibilities could be really astonishing.
Countless Canadians believe that filing taxes online can lead to unnecessary costs and unexpected penalties. That is not true at all. As long as you make roughly the same amount every year and are familiar with the tax filing process, filing online can save you time and money. The earlier you can get your taxes taken care of, the better. Plus if you haven't filed yet, don't wait to get that extension approval. There are also lots of software on taxes out there to help you file them online. Like Ufile and more.
It’s a well-known fact that business luncheons and company dinners are tax deductible, but did you know that you can write off the additional cost of special foods if you have a restrictive diet ordered by a doctor?
For example, people with celiac disease can write off the extra charge on gluten-free bread. If you work from home, this might help you save further. You either need to purchase a home, or use your living space as a work-from-home space. This little tax tip can also help you save money while doing meal planning.
Lastly, we want to dispel a myth about job benefits or financial gifts. Some Canadians believe these extras are non-taxable, and therefore don't have to be claimed. While it might be OK to leave small gifts from your employer off your taxes—such as a restaurant gift card or a nice bottle of wine—larger cash bonuses must be claimed.
If you're receiving annual end of year bonuses greater than $500, you’ll have to claim those on your taxes.
Plus if you get a bonus every 3 to 5 years, it may be possible to get away without reporting it. Unfortunately, the CRA will pick up on suspicious discrepancies through audits and other regulations. It’s better to be safe than sorry. Contact your accountant to formulate a smart plan for dealing with bonuses and gifts.
There are definitely more tax myths out there that needlessly intimidate Canadian taxpayers. Understanding taxes and the CRA makes the process simpler. With further investigation, you'll learn more tips and strategies that will have you saving money at the end of each year rather than writing a fat check to the tax office!