In April of each and every year the majority of Canadians collectively experience angst and stress as they complete the ritual of filing their income tax returns. Some, I have been told, get violently ill while others get violently angry. Some go into the ritual well prepared, some so well prepared they do their returns themselves. Others agonize while they try and locate every tax form, receipts for eligible expenses, and, even when finding all of these, they rely on the services of trained professionals to assist them in this necessary but unpleasant task.
Generally, there are two ways to reduce the taxes that we pay in Canada. First of all, practice good financial planning to ensure that all legitimate means of reducing income are used for the income tax year in question. Secondly, make sure you properly complete and file your income tax return and that all your eligible deductions are used on your T1 form.
REDUCING YOUR TAXABLE INCOME
The following is a list of some of the more common methods and vehicles used in reducing your taxable income:
While the above is not an exhaustive list of all the income reducing strategies, these are the most common.
MAKE SURE YOU GET ALL YOUR ELIGIBLE DEDUCTIONS
After practicing good financial planning and utilizing the information above, it would be a real shame if you missed some of the deductions for which you are eligible when you file your return. Again, this is not an exhaustive list but itemize those that you should be aware of:
Of course, there may be other deductions for which you are eligible for. The important thing is to fully acquaint yourself for the rules regarding each of those that you are entitled to. The website of the Canada Revenue Agency is a great resource and, where available, I have provided links as shown. I would also recommend you use a qualified professional to assist you in completing your return. If you use tax preparation computer software ensure you are using the most current edition.
In completing your return it is important to include ALL your income. The penalties you can incur if the CRA discovers you have missed a T4 or two, or concludes that you are purposely hiding income can be quite severe. Good luck with your return and if I can be of any assistance please call me.