When doing your taxes be sure to consider some of the most frequently incurred personal expenses which can be claimed on your tax return. In addition, you should be aware of mandatory reporting requirements which might apply to you.
Here we discuss some quick last-minute tips on expenses you can claim, a well as Canada revenue agency’s mandatory reporting requirements you might have to adhere to.
Non-refundable tax credits
Medical expense
There are many medical expenses that can be claimed on your tax return. Checkout the CRA’s eligible medical expenses to find out if your medical expenses qualify.
Note: medical expenses can be claimed over any 12-month period (does not necessarily has to be a calendar year). If the chosen 12-month period overlaps two tax years be sure not to claim the same expenses in both the years.
Charitable donation
CRA provides tax relief for any charitable donations you make. However, for your donation to be eligible for this tax credit it should have been made to a registered charity or a public organization. Search the CRA’s database of qualified donees to find out if your donation qualifies.
Note: you can carry forward your donations up to five years if it is not tax efficient to use the tax credit in the current year.
Make optimal use of tax deductions and credits
Optimal use of tax deductions and credits is made by transferring certain allowable expenses from the lower income spouse to the higher income spouse. Doing so can result in a lower overall tax liability for the couple. This strategy should only be applied if claiming the expenses would not further reduce the lower income’s spouse’s tax liability.
These are the expenses which can be transferred:
- Moving expenses
- Qualifying retirement plans
- Adoption expenses
- Student amounts (can also be transferred from a student child)
- Medical expenses
Investment expenses
Investment management fees and interest paid on a loan to earn investment income are deductible.
Mandatory reporting
- Capital gain realized on the sale of your principal residence is not subject to tax. Nonetheless, the sale needs to be reported on form T2091IND.
- If you held foreign investment property during the year with a total cost amount (adjusted cost base) in excess of $100,000 Canadian, report this on form T1135. Failure to file this form can result in severe penalties!
For professional advice contact Alpha Accountzy, Accounting & Tax Solutions.