Did you know? There are a number of ways to reduce the amount of tax you owe, and keep more money in your pocket at tax time. The Canada Revenue Agency (CRA) can help you learn more about the various credits and deductions you may be entitled to and that can save you money when you file your Income Tax and Benefit Return.
1. Any income you earn in a registered retirement savings plan (RRSP) is usually exempt from tax as long as the funds remain in the plan. RRSPs, you save for your retirement and get a break at tax time too.
2. As long as you stay within your contribution room limit, you will not pay tax on any income you earn from investments in your tax-free savings account.
3. Does someone in your family regularly take the bus, train, subway, or ferry to work? You may be able to get a non-refundable tax credit for the cost of the transit passes by claiming the public transit amount.
4. Have you retired and now receive a pension? You can split up to 50% of eligible pension income with your spouse or common-law partner to reduce the overall taxes you pay. See pension income splitting for more information.
5. Do you work in the trades? Tradespeople can deduct part of the cost of eligible tools purchased throughout the year.
6. Did you buy your first home in 2012? Check out the home buyers’ amount to see if you qualify.
7. Are you a single parent receiving the Universal Child Care Benefit (UCCB)? The Government of Canada released new UCCB measures in the 2010 Budget that may apply to you.
8. NEW FAMILY TAX CUT
Under Canada’s tax system, federal personal income tax rates increase with the level of taxable income of the individual. As a result, a couple in which one individual has a higher taxable income than the other often pays more federal income tax than a couple where both individuals have equal taxable income.
The October 30, 2014 announcement included a proposal to introduce the Family Tax Cut, a new non-refundable tax credit of up to $2,000 for eligible couples with minor children based on the net reduction of federal tax that would be realized if up to $50,000 of an individual’s taxable income was transferred to the individual’s eligible spouse or common-law partner. This would take advantage of a spouse’s lower income tax bracket.
FOR PEOPLE WHO ARE SELF-EMPLOYED:
8. Did you purchase a computer for your business after January 27, 2009, and before February 2011? If so, you may be eligible for a 100% computer capital cost allowance.
9. Did your business employ an apprentice? A salary paid to an employee registered in a prescribed trade in the first two years of his or her apprenticeship contract qualifies for a non-refundable tax credit for the employer.
10. Did your business (which is not a primarily child care services business) create licensed child care spaces for the children of your employees? If so, you may be eligible for the investment tax credit for child care spaces for each new child care space you created.