If you owe the Canada Revenue Agency (CRA) for the 2018 tax year, brace yourself for daily compound interest on the balance starting May 2019. The government has to do this to sustain the country and its citizens. The federal government has its positive side too. It offers tax deductions and credits to taxpayers.
Refundable tax credits come as periodical payouts through the year. You can receive them either from the federal government or the provincial government if you are eligible. On the other hand, the CRA allows you to claim up to 15 percent of your non-refundable tax credits. However, some people lose thousands of dollars every year in unclaimed credits, especially when they don’t work with a tax professional.
Many tax deduction opportunities are not understood, and people miss them for this reason. If you qualify for the following tax deductions, don’t forget to claim them in your next return. Want to learn more? Then keep reading!
Money spent on healthcare can accumulate to unimaginable levels by the end of the year. Most Canadians claim medical expenses for prescriptions and dental bills but forget some of the following possible deductions:
- Extended health and dental premiums
- Tutoring for children with disabilities
- Eyeglasses or contact lenses
- Full-time attendant care for people with severe or prolonged disabilities
- Cost of air-conditioning (under specific situations)
- Home renovations to increase access or mobility
- Travel expenses if you must move more than 40 km to receive medical treatment
You can maximize your tax deductions by having one spouse make claims for all the costs for the immediate family. Include any private medical insurance premiums paid throughout the year. Another thing to remember is that the said 40 km journey to find healthcare is one way. So… remember to add the KM’s going AND coming from the doctor’s office. For longer trips, you can claim expenses on meals and accommodation.
Visit the CRA website to view a detailed list of medical conditions that the CRA recognizes.
Some jobs involve certain expenses that you have to settle to work smoothly. Whether you work from home or you incur costs that your employer does not reimburse, you could claim the overheads. If employed, confirm which expenses you are eligible to claim. Also, get a T2200 form from your employer to support your claims.
For those working from home, you could get a deduction for the section of your home that serves as your office. Homeowners can claim part of their property taxes, utility costs, mortgage interests, and so on. Tenants are eligible to claim part of their monthly rent as well as utilities.
When you move for work, business, or studies, you may qualify for several tax deductions depending on your situation. You can claim the moving costs associated with relocating to a home that’s at least 40 km closer to your new workplace, business, or school. Apart from the cost of moving, there are several other expenses that people overlook. The CRA accepts claims for the family’s travel costs including accommodation, meals, and vehicle expenses.
You could also get a tax credit for the cost of changing your address and legal documents like a driver’s license or vehicle registration. Another tax deduction that you could get is the cost of selling your old house and purchasing a new one. You can also claim the money spent on the connection and disconnection of utilities in the two homes. Your claims depend on the income you earn at your new job. If you relocate in December, for example, there isn’t sufficient time to assess your deduction. You may have to wait for the following year to claim for any unclaimed tax deductions.
Tax Credits in Respect of Other Family Members
When talking of dependents, most people consider their immediate family members only. By disregarding other members of the family who rely on you, you miss out on some available credits. Below are examples of tax credits to seek if you support other family members apart from your spouse and minor children.
Home Accessibility Tax Credit (HATC)
A qualifying individual is anyone eligible to claim a disability tax credit or a person aged at least 65 years at the end of the tax year. HATC is a non-refundable credit for goods bought or renovations done in respect of a qualifying individual.
Canada Caregiver Credit (CCC)
When your parents get old, it’s your time to thank them by looking after them. The Canada Caregiver Credit rewards you for doing that. It enables the taxpayer to save by taking care of someone else outside the national healthcare system. You qualify for the CCC if you look after a family member or an eligible relative who depends on you due to a mental or physical infirmity. You don’t have to live with the individual for eligibility. However, the doctor must provide documentation to ascertain the condition. You can also gain tax credits for medical expenses for the extra relatives relying on you. Confirm also if you qualify for the Caregiver Amount, Family Caregiver Amount, and the Amount for Infirm Dependents.
Disability Tax Credits
People who suffer from severe and prolonged physical or mental impairment can claim the disability tax credit. The credit is available to individuals with a wide range of conditions typically ignored. Depending on a person’s situation, disability credit can extend to conditions like epilepsy and diabetes. Qualifying individuals can benefit from a refund of about $2,000. The CRA can reassess the tax returns for people who have had a disability for an extended period without claiming their credits. The review can go back to as far as ten years.
A CTV News article cites a woman who didn’t know that her son’s condition qualified for the disability tax credit for years. After realizing and contacting the CRA, she had her disability credits backdated to ten years and received $20,000 in refunds. Qualifying for the disability tax credit is also a doorway to other national and provincial programs that support disabled people. Examples include the child disability benefit, the working income tax benefit, and the registered disability savings plan.
People who have children and need to work, run a business, or attend school often resort to paying for childcare. The costs involved include daycare fees and wages for in-home providers. Most people know that these expenses are tax-deductible, and they make claims. What many parents don’t know is that there are other costs intertwined with childcare that they can include. For instance, many day and overnight camps are legitimate tax credit claims. They include camping costs over summer, spring break, Christmas holidays, and some national holidays.
Interest on Student Loan
Another overlooked tax credit is interest paid on a student loan. It comes as a non-refundable credit which applies to eligible loans (not student loan). For instance, if you funded your studies through a credit union or student line of credit, the interest accrued is not deductible. You can carry forward the interest on your loan for up to five years. Do this for the years you don’t need a tax deduction.
Note that most national and provincial student loan agencies no longer mail loan statements. So, it’s essential that you open the associated portal and download your tax statement.
Charitable Donations Tax Credit
The CRA can give Charitable Donations Tax Credit (CDTC) of up to 29 percent of the amount donated. At the provincial level, you can get an additional amount of up to 24 percent. Report your donation on the annual tax return to claim your credit.
Union Dues and Licensing Fees
For most professionals, union dues get deducted directly from the paycheck, and the transaction reflects on the T4. The receipts you get after paying any amounts to a professional organization or union are useful in claiming tax deductions. The payments may extend to insurance premiums that relate to your profession. For instance, doctors can keep track of their malpractice insurance and claim tax deductions. Nurses can claim credit for the cost of annual licensing fees.
If your profession requires you to pass a certification examination, claim a deduction using the receipts for the tuition fees. However, you cannot do this if your employer reimburses the amount.
Tax Deductions – Wrapping Up
The CRA offers tax deductions to reduce the amount of taxable income so that you owe the federal government less tax. Tax credits, on the other hand, decrease the amount of tax. Even though these incentives exist, most taxpayers are not keen to exploit every opportunity that cuts their tax bill.
The deductions highlighted here are a few of what people miss because they didn’t know about them. Find out what matches your circumstances and save that extra coin in the next tax season. We love being able to introduce you to new tax savings, like the Climate Action Incentive!
Contact us today to discover more avenues of shrinking your tax lawfully. Enjoyed this article? Did you find a useful tip? Then share on Social Media! Let someone else get the same benefit by clicking on the button below. And leave a comment to let us know that you enjoyed it.
Until the next time,