Missing any tax credits or deductions?

DA Marketing - Mar 26, 2020
We’ve got some information that will hopefully save you some tax dollars – whether you’re filing a personal tax return or you’re a business owner or incorporated professional.

When filing a personal tax return, you want to take advantage of every break available, so we’re alerting you to tax deductions and credits that are commonly missed.

Medical expenses. The medical expense tax credit is designed to benefit individuals, couples and families with significant medical expenses. Either spouse can claim the couple’s or family’s combined expenses incurred in any 12-month period that ends during the tax year being reported. Keep track of all health-related expenses because many eligible expenses are often overlooked – from orthopedic inserts to laser eye surgery. You can find eligible expenses in the RC4065 Medical Expenses guide on the canada.ca website. Also note, if you have group health and dental coverage from your employer, you can claim the portion of expenses you pay out of pocket – so save those receipts. You can also claim any portion of group plan premiums that you pay personally for health, vision and dental coverage.

Childcare expenses. Parents who claim a tax deduction for childcare expenses are well aware of including daycare fees or payments to in-home care providers. But you can also claim expenses for camps and childcare during the summer months, March break, winter holidays and the school’s professional days.

Professional dues. Annual professional or union dues can be overlooked if they’re paid online or by automatic withdrawal. Be sure to have a record of your payment at tax time.

Principal residence exemption. Claiming the principal residence exemption on the sale of a home isn’t a deduction or credit, but this exemption from tax on capital gains is one of the largest tax breaks available. It’s easy to overlook because no reporting was required until just a few years ago. Now the property sale must be reported on your tax return in the year of the sale.

Important tax news for business owners

Canadian-controlled private corporations (CCPC) and incorporated professionals are now subject to the new passive income rules. The maximum small business deduction is reduced when passive investment income exceeds $50,000 in one tax year, resulting in a higher tax rate on active business income.

No single solution can apply to every business owner affected by the rules. An owner who has designated corporate investments as retirement savings might open an Individual Pension Plan (IPP) or begin drawing a salary and contribute to a Registered Retirement Savings Plan (RRSP). Another owner might use passive corporate investments to fund a permanent life insurance policy and pay off corporate debt. A professional might reduce passive income through moderate changes to the portfolio’s asset allocation and the use of corporate class investments. If you may be affected now or in the future, we’ll work with you to develop a customized strategy.