5 Tax Tips to save you for 2014

1 February, 2015

It is that time of year – the calendar changes, the snow begins to fall, and everyone starts thinking about their tax returns. Whether a personal, business, or corporate tax return there is some key things you must remember when filing your taxes. The Canadian Revenue Agency (CRA) is there to collect the taxes that you submit and review your submission for errors or questionable items. They do not look for opportunities for you to reduce your costs, they assume that you have already done the due diligence. Here are some quick tips for you to remember when doing your taxes.

Tips from your Mississauga Tax Accountant for 2014 Taxes:

1. Take advantage of all income-splitting and pension-sharing opportunities.
Taxpayers can apply to share their Canada Pension Plan (CPP) retirement income with their partners if both are 60 or over. While pension sharing is not considered to be the same as pension income splitting, CPP pension sharing accomplishes much the same thing — putting more income into the hands of the lower-income partner. You can find out more about CPP retirement pension sharing here. The post-retirement CPP benefit, which was introduced in the 2012 tax year, is not eligible for pension sharing.
Income splitting can save thousands of dollars in tax as income is shifted from someone in a higher tax bracket to someone in a lower bracket. Pension income splitting can also allow both partners to claim the $2,000 pension income tax credit. Tax software programs can be especially useful in suggesting income splitting scenarios.
2. Don’t assume that you don’t need to bother filing a tax return because you have no income.
Some low- or zero-income earners still think there’s no need to file a return. Business expenses sometimes exceed or equal revenue, but this does not mean you should not file. This misunderstanding can cost thousands of dollars in lost benefits and credits like the GST/HST credit and the Canada Child Tax Benefit. Provinces also offer sales tax credits and property tax credits for low income earners. But again — no tax return, no credit.
3. If you’re emigrating from Canada, don’t collapse your RRSP too early.
If you leave Canada and become a non-resident for tax purposes, it could benefit you to wait until you’re a non-resident before you collapse your RRSP and move the proceeds to wherever you’re moving. That’s because Canada imposes a withholding tax of just 25 per cent on the proceeds of an RRSP for non-residents.
4. Be sure to transfer any unused credits.
A variety of tax credits — such as the Child Tax Credit — can be transferred between spouses.
Another opportunity is medical expenses. It is common for people to forget about these expenses throughout the year and they are some of the most common items overlooked when tallying possible tax credits.
5. Tax Software is great for simple returns, but know the limits.
Once you tell most of the well-known tax software programs that you’re a student, or a senior, or a parent, or have medical expenses, or have a spouse or equivalent, they’ll prompt you with relevant questions and automatically make sure you end up applying for any relevant credits. Many of these programs will also offer suggestions to transfer credits and optimize deductions between spouses and family members. However, if you have multiple income sources, business and work income, and other complexities the software will not be as helpful. They are great for simple returns but more complex tax strategies will not be easily identified.
If you are a business person with a more complicated tax situation, such as those with rental properties or self-employment income, it may be a good idea to call in a Corporate Tax Accountant.

Can NumbersPlus, your Mississauga Tax Accountant Help?

Yes, at NumbersPlus we can help you assess the impact of your tax situation and provide strategies to help minimize the impact. For details, contact us at 289.290.3322 or email at info@numbersplus.ca.

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