Tax Tips

A few things to help you along the way.

 

Tax law can be complex. There's much to know to be sure you're doing all you can to get what you deserve. Here are some personal and business tax tips to get you started. 

Personal Tax Tips


  • Charitable Donations - You do not have to claim, on your income tax and benefit return for the current year, the eligible amount of gifts you made in the year. It may be more beneficial for you to carry them forward and claim them on your return for any of the next five years. No matter which choice you make, you can only claim them once.


  • Climate Action Incentive *NEW This Year - Residents of Ontario, Saskatchewan, Manitoba and New Brunswick may be eligible for this new incentive. It consists of a base amount plus a 10% supplement for residents of small and rural communities. This payment may reduce your amount payable or increase your refund when you file your income tax and benefit return. See here for more information.


  • Medical Expenses - Many people don't bother to add everything up because of the income-related threshold: only expenses that exceed the lesser of $2,302 or three percent of net income can be claimed. But what they don't realize is that there's a long list of expenses that qualify, so it's often not too difficult to reach that threshold. Travel expenses even qualify when people need to go more than 40 kilometers to get medical treatment that isn't available closer to home.
    Medical expenses can be claimed by either spouse or partner. See here for a list of eligible expenses.


  • Ontario Trillium Benefit 
    You are able to deduct a provincial tax credit relating to rent or property taxes paid by you or for you during the calendar year. Also if you lived in a student residence, long-term care home or if you lived on a reserve and had to pay energy costs. The OTB is the combined payment of the Ontario energy and property tax credit, the Northern Ontario energy credit, and the Ontario sales tax credit. The annual OTB entitlement is usually divided by 12 and the payments are issued on the 10th of each month. The 2019 OTB payments, which are based on your 2018 income tax and benefit return, will be issued monthly from July 2019 to June 2020 (see note for exceptions). If your 2019 OTB annual entitlement is $360 or less, it will be issued in one lump-sum payment in the first payment month (usually July).


  • Home Buyer's Plan (HBP) - The HBP is a program that allows you to withdraw funds from your registered retirement savings plan (RRSPs) to  buy  or build a qualifying home. You can withdraw up to $25,000 in a calendar year.



  • There are also a number of refundable tax credits that help reduce or eliminate the amount of tax you owe. Excess credits may be paid as a refund after your personal income tax return is assessed, even if you pay no income tax.

Be sure to take advantage of all income-splitting and pension sharing opportunities.


Those 65 and over can split several kinds of pension income, such as life annuity payments from a company pension plan, RRIF payments and payments from an RRSP or deferred profit sharing plan. Income splitting can save thousands of dollars in tax if income is shifted from someone in a higher tax bracket to someone in a lower tax bracket. 


Tax Benefits for Students
Several credits for students - such as the tuition, education and textbook credits - can be transferred to a spouse or parent once the credits are used to reduce the student's tax payable to zero. The credits can also be carried forward indefinitely so the student can use them later when he or she starts earning money.
 

Volunteer Firefighter & Search and Rescue amounts

You can claim $3,000 for the volunteer firefighters' amount (VFA) or the search and rescue volunteers' amount (SRVA), but not both, if you meet all of the following conditions:

  • You were a volunteer firefighter or a search and rescue volunteer during the year.
  • You completed at least 200 hours of eligible volunteer firefighting services or eligible search and rescue volunteer services in the year.



Business Tax Tips


  • Business Automobiles - You can claim deductions for the business-related use of an auto using either the standard mileage rate method or the actual expense method. You should use the method that will yield the largest deduction.
  • Hiring Your Children - If you have your own business, consider hiring your child to work after school or on vacations. The wages you pay your child for bona fide work are tax deductible.
  • Home office expenses - To qualify for a deduction related to an office in the home, you must have an area of your home used exclusively as your principal place of business. This includes a place of business where you meet or deal with patients, clients, or customers.
  • Profit-sharing plans - Unlike other plans, a profit-sharing plan is flexible. It can be designed so that the employer is not required to make an annual contribution.


This list is far from exhaustive. Call us today to set up a time to discuss your specific situation and needs.

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