2014 has arrived and with it yet another season of taxes. AG Tax analysts have prepared a list of tax-saving tips for Canadian taxpayers. It is advisable that taxpayers should discuss these tax-saving tips with a tax professional to ensure it benefits them, since no two tax situations are completely same, and a tax advice that may work for a taxpayer may not be suitable for another. Having said that, it is ideal to start planning at the beginning of the year rather than looking for last minute tax saving opportunities when it comes time to file.
Tax-Saving Tips
Contribute into a Registered Retirement Savings Plan (RRSP) or other qualified retirement plans
Calculate, with the help of a tax practitioner, the maximum RRSP deduction that you are eligible for in 2014, and begin a systematic monthly saving into your RRSP in order to maximize your qualified retirement savings. This strategy could result in a significant tax deduction at the year’s end.
Utilize a Tax Free Savings Account (TFSA)
Consider contributing to a TFSA as the interests/gains accrued on this investment are tax-free, i.e. no tax needs to be paid on the income earned on these savings. An additional benefit to this form of saving is that there is no early withdrawal penalty so an individual can also use it as an emergency fund as well.
*Please note that if you have any U.S. ties, a TFSA may not be advantageous to invest in, and you should speak with your cross-border tax advisor before opening an account.
Make Qualified Charitable Contributions
The Canada Revenue Agency (CRA) allows a taxpayer to claim up to 75% of their net income as donations towards a qualified (CRA approved) charitable organization. Therefore, in order to utilize this tax strategy, consider donating a minimum of $200 annually to claim as a tax deduction. If married, consult a tax advisor regarding which of the spouses should claim the deduction or if it should be equally distributed; at times one spouse claiming the entire charitable donations while filing the tax return may result in the maximum tax credit.
Enroll child(ren) into certain activity program(s)
The CRA allows parents to claim up to $500 per child as ‘Fitness Tax Credit/Children’s Arts Tax Credit’ for registering their children into certain qualified physical and/or artistic activity programs. Taxpayers claiming this deduction would need proof of these expenses.It is recommended that a taxpayer consults his/her tax practitioner before selecting a program as they would be most knowledgeable about the acceptable programs and documents required for claiming this tax credit.
Employ your spouse or child(ren)
If you are a business owner you may consider hiring your wife or children as employees, since their salaries would be an expense for the business and lower the taxable income for the year. This is an effective form of income splitting executed by moving income from one family member with a higher income to one with a lower income.
Pay Off any Debts
Consider paying off debts to reduce financial stress in the long run. Although from a tax perspective it is advantageous only when the interest is ‘tax-deductible’, clearing debts helps an individual save on the additional dollars that would go towards the interest portion of the debt.. Consult with your financial and tax advisors regarding the payment options for your liabilities to receive the best possible guidance.
Tax planning can be challenging. However with the help of a tax professional an individual can save on taxes through daily activities by claiming deductions and credits which one may not be aware of. Additionally, an AG Tax Specialist can provide tax-saving advice which may be specific to your tax situation.
AG Tax LLP Can Help
If you have any tax-related queries, need assistance with tax planning or filing your tax returns please contact us. Our team comprises of highly experienced tax professionals with extensive knowledge of U.S. and Canadian tax laws as well as cross-border compliance
Furthermore, as a full service accounting firm, AG Tax assures complete assistance with even your most complex tax needs.
We can assist with:
- Canadian Personal and corporate tax returns
- Cross Border Taxation and Business Planning
- U.S. Personal and Corporate Taxation
- Disclosure of Foreign Assets and other information filings
- Retirement planning
- State Sales Tax & E-commerce Taxation
- Estate Planning, Inheritance tax advice
To obtain a quote or to arrange for a consultation to discuss your tax related queries, please contact us at:
- 416-238-5920 (Greater Toronto Area, ON)
- 604-538-8735 (Greater Vancouver Area, BC)
- 780-702-2732 (Greater Edmonton Area, AB)
Disclaimer: The information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.
