Maximize your Deductions: Top Tax Tips for Canadian Taxpayers Part 3

This year, with the record levels of inflation we have experienced and the continued rising costs of living, there are ways to avoid overpaying on your taxes.

Organizing your finances and preparing for your taxes in advance will give you ample opportunity to look for tax deductions, tax credits, and other rebates or benefits that will help you lower your tax bill and keep more money in your pocket.

1. Make sure your tax return is truthful, even if you use a tax accountant you are 100% responsible for the information reported in the return

• Every year CRA has more and more information electronically submitted to them and this information is already listed in your CRA account by the time you file your tax return. so don't guess information about your income. 

1. Do you own an income property? Know what you're entitled to claim.

• It may be possible to claim only a portion of the expenses on your tax return if you or a family member live there. Also, it is important to note that the federal government has implemented a no deduction guideline for AirBNB type rentals that are operating in certain markets that have local restrictions in place. If is best to discuss your rental property with your tax professional to determine if you are still eligible to claim expenses.

1. Reduce your potential capital gains 

• Unlike regular income and income taxes, capital gains have taxes paid when assets are sold. While you cannot avoid capital gains, there are ways to minimize them. Such as also disposing of assets that have decreased in value so that the loss reduces the gain, thereby reducing the capital gains taxes owing

1. Do your renovations qualify for tax deductions?

• Depending on the reason and nature for your renovations you may be eligible for rebates and tax credits for improvements you make to your home or rental property. As these are complex, I recommend speaking with your tax professional to determine the best claim for these types of expenses.

1. Maintain a file of your tax returns and tax slips

• The CRA audits tax returns at random, so you should keep a minimum of six years of tax return documents (or longer if you own business property).

Until next time,

Christine Walters