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Go to: Income Tax Credits Deductible Expenses

General Information

 

The Guaranteed Income Supplement

The Guaranteed Income Supplement provides extra money to Old Age Security pensioners with a low income. Because the Supplement is based on marital status and income, you may qualify now, even if you did not qualify in a previous year. The Allowance and the Allowance for the Survivor also provide extra money to eligible low income individuals aged 60 to 64. Call 1-800-257-4786 for more information.

Get the most from your Canada Pension Plan

If you had low or zero earnings during the time that you were raising children who were under the age of seven and born after December 31, 1958, the Child Rearing Provision could help you qualify for a benefit or have your monthly benefit amount increased. Contact Service Canada at 1-800-277-9914 to see how you qualify.

Penalties for Repeated Failures

If a person fails to report an amount to be included in income and has failed to report an amount required to be reported in any of three preceding years, a penalty may be assessed of 10% of gross income not reported. This is most often applied when additional slips are found by CRA during their matching process.

Keep Your Receipts If You E-file Your Tax Return

CRA may need to see your slips to verify or support income and claims so keep your tax records on hand to be submitted if requested. During such a review, CRA may ask for medical expenses, charitable donations, childcare expenses, moving expenses, spousal or child support payments.

Universal Child Care Benefit (UCCB)

Since July 1, 2006, you may have been receiving the UCCB, that is $100 a month for each dependent under the age of 6 years. Remember the UCCB is taxable to the spouse with the lower net income, but this amount will not be included in calculating your eligibility for GST or CCTB payments.

Cheque for Your Child

If your child is under 18, working part or full time, earning under the basic personal exemption of $8,012, they may be entitled to a refund of taxes withheld. Even if no tax was withheld, filing a return will increase your child's RRSP contribution limit for future years.

RRSP Contributions

If you don’t have enough cash to top up your RRSP, consider making a contribution in lieu of cash. However, beware of the tax consequences when transferring investments to your RRSP. Contact us if you require more information.

No Penalties

If you have neglected to file prior years'  tax returns and you owe tax, make a complete voluntary disclosure and you will only have to pay taxes owing plus interest. You will not be charged any penalties as long as you come forward before CRA has begun any investigation.

File on Time

Even if you are missing slips or receipts, file your tax return on time. Use pay stubs, bank statements, or other records to estimate your income and deductions. If you eventually receive your slips and they are different from your estimates, file an adjustment and send the slips at that time. For self employed individuals and their spouses, the tax filing deadline is June 15th. but any tax owing must be paid by April 30th.

CPP Retirement Pension Sharing

If your spouse has a limited work history and has limited contributions to CPP, you may split your CPP Retirement Pension with your spouse. This pension sharing may result in income tax savings to the spouse with the higher income.

Foreign Income

Many local residents have lived in other countries and may receive some form of income from that country. Canada has tax treaties with many other countries that ensure that Canadian taxpayers are not required to pay tax twice on this foreign income. Each tax treaty details how to properly report foreign income (from pensions, wages, salaries or interest) on your Canadian return. For a list of the countries that have tax treaties with Canada, call International Tax Services Office at 1-800-267-5177 or visit their website www.fin.gc.ca.

New Passport Policy

Please note the new passport guarantor policy that came into effect on October 1, 2007.


Income Tax Credits

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Charities

You can reduce your income by donating to registered charities. You can claim donations made this year or carry forward any unclaimed donations up to five years. Married or common-law couples can pool their donations and claim them on one return. Please be aware of certain charitable donation schemes being promoted about which CRA has issued warnings. For more information, visit the CRA website.

Working Income Tax Benefit

Low-income and individuals can now claim the Working Income Tax Benefit (WITB). The annual maximum amount for a single individual with no dependents is $500 and for families (including couples with or without children, and single parents) is $1,000. In addition, starting in January 2008, eligible individuals and families can apply for the WITB advance payment. To see if you qualify, see the CRA website.

Amount for Children Born 1990 or Later

You can claim $2,000 for each child who is under 18 years of age at the end of the year. You may be able to transfer this amount to your spouse or common-law partner or to claim his or her amount. For details, see the CRA website.

Pension Income Splitting

Eligible individuals may be able to allocate up to half of their pension income that qualifies for the pension income tax credit to their lower income spouse or common-law partner. To make this election, you and your spouse or common-law partner must each complete Form T1032, Joint Election to split pension income. For more information, go to the CRA website.

Public Transit Passes

You may be able to claim the cost of monthly public transit passes or passes of longer duration, such as annual passes. Public transit includes local bus, streetcar, subway, commuter train or bus or local ferry, if applicable. You must keep all such receipts that you claim in case CRA requests to see them for verification.

Textbook Amount

If you are a student, you are now eligible to claim an amount for textbooks if you claim the education amount. The amount is $65 for each month you qualify as a full time student or $20 for each month you qualify as part time student. Even if someone else pays these fees, the student must claim the tuition/education/textbook amount first on their own return. Any unused portion can be carried forward or transferred.

It Pays to Get Fit

Starting in 2007 you may be able to claim the fees paid for physical fitness programs for your children under the age of 16. The newly proposed children’s fitness tax credit provides parents with an annual credit of up to $500 per child to help cover the cost of physical fitness or sporting activities. For details to see if the receipt for your child’s program is eligible, see: www.cra-arc.gc.ca/fitness.

Medical & Dental Expenses

Save your family medical  and dental receipts for the calendar year. You may have a medical expense credit. Don't forget you may include premiums paid for private health insurance and for out-of-country insurance. Call us for more information!

Student Loan Interest Tax Credit

A 15.25% federal tax credit and a 6.05% Ontario provincial tax credit is available on the repayment of interest on federally or provincially approved student loans. Students can apply the credit to the current taxation year or up to 5 subsequent taxation years. The credit is non-transferable.


Deductible Expenses

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50% Entertainment Rule

If through your business, you give out promotional meals and/or entertainment tickets, vouchers or gift certificates – please note that a recent CRA Tax Court ruling has deemed these expenses to be only 50% deductible for tax purposes, not 100%. However, if you provide clients with tangible gifts (books, flowers, gift certificates to electronic retailers, etc.) these remain 100% deductible. For more information on how this may affect you, please contact us.

Tool Expense

A portion of the cost of eligible tools acquired by you as an employed tradesperson may be deductible. If, as a condition of your employment as a tradesperson you spent in excess of $1,000 on tools purchased after May 1, 2006, have your employer complete and sign a T2200. Attach a list of tools and your receipts to the completed T2200 to keep in case CRA requests to see them for verification.

Child-Care Claims

Claim payments for child-care expenses if your child is at home, in a nursery school, day-care, camps, boarding schools, and sports schools. These expenses may be claimed by you or your spouse if incurred in order to work, carry on a business or attend school. Claims vary depending on the age of the child. Ask us if you are unsure.

Do you have Deductions?

You can claim Safety Deposit Box fees, carrying charges, investment loan interest, investment counsel fees. You can claim dues paid to a trade union, an association of public servants, certain professional boards and other recognized associations.

Interest Expense Deductibility

If you need to finance your business, consider establishing a line of credit with your financial institution. The interest incurred on a line of credit used exclusively to finance business purchases is tax deductible.

T2200 - Declaration of Employment Expenses

If you are a salaried or commissioned employee, you may be eligible to claim certain employment expenses on your tax return. You require a T2200 completed and signed by your employer in order to claim these expenses. For eligible expenses, refer to CRA Guide T4044-Employment Expenses.

 

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