Barry Choi: 10 tax credits to know


There may be thousands of dollars you can claim this year

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Did you know that over 400 tax deductions and credits are available to Canadians? Although you will never qualify for all of them, there are a few that you will be able to claim that can help reduce your overall tax burden.

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If you’re looking to maximize your tax return, make sure you know about these deductions and credits.

RRSP contributions

Contributing to your Registered Retirement Savings Plan (RRSP) is one of the easiest ways to reduce your taxable income. For every dollar you contribute, your taxable income is reduced by an equal amount. For example, let’s say you earned $50,000 the previous year and contributed $5,000. Your taxable income would drop to $45,000 and you would be taxed accordingly.

Assuming you don’t have a pension adjustment, your RRSP contribution room will still be 18% of your previous year’s income. This means you won’t have space until you file your first tax return. Don’t worry if you can’t maximize your RRSP. Any unused contribution space from previous years is added to your total contribution space for the current year. In other words, your RRSP space will continue to grow until you use it.

Charitable donations

Donating to charities entitles you to a non-refundable tax credit. However, this only applies to registered charities that provide you with a receipt. Without a receipt, you cannot claim your donation. Obtaining a receipt is not always guaranteed, as some charities may have established criteria. For example, they can only issue a receipt for donations of $100 or more.

GST/HST credit

The Goods and Services Tax/Harmonized Sales Tax (GST/HST) credit is available to low-income individuals and families. The quarterly payment is intended to offset the GST and HST you pay on goods and services. The great thing about this GST/HST credit is that you will automatically be considered for it when you file your tax returns.

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Medical fees

Medical expenses that aren’t covered by insurance can quickly add up. Fortunately, some medical expenses may qualify for tax credits, including:

  • orders
  • Amounts paid to approved public or private hospitals
  • Private medical insurance premiums
  • Dentures and dental implants
  • Glasses or contact lenses
  • Fertility treatments
  • Bathroom accessories such as grab bars and handles
  • Hearing aids
  • Laser eye surgery
  • Wheel chairs

You can claim medical expenses even if they were not paid in Canada. However, you can only claim expenses for which you or someone else were not reimbursed. Additionally, you would need receipts and possibly a detailed breakdown of expenses provided by your medical professional to make a claim.

Tuition tax credits

You can claim tuition credits if you are enrolled in an accredited educational institution in Canada at the post-secondary level. Some schools outside of Canada may also qualify if you are a full-time student.

As a non-refundable credit, your tuition amount would offset your federal and provincial tax bills. Since many students typically don’t have huge tax liabilities, tuition credits often eliminate any taxes owed. Also, if you don’t use the full amount of your credits, they can be carried forward to a future tax year. Alternatively, they can be transferred to a parent, grandparent, spouse or common-law partner.

Work from home expenses

In 2020, the Canada Revenue Agency (CRA) introduced a temporary flat rate method of claiming work from home. The initial credit was $2 per day, up to a maximum of 200 days. However, for the 2021 tax year, the total number of days allowed has been increased to 250, so you can claim up to $500.

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To qualify, you must have worked more than 50% of the time from home for at least four consecutive weeks in 2021. Note that you can claim more than this amount, including electricity, internet access, etc. However, you would have to use the detailed method, which requires documentation from your employer.

Amount for home ownership

First-time home buyers are eligible for the Home Buyers’ Amount (HBA). This non-refundable tax credit applies to individuals and couples who purchased a qualifying home in Canada during the previous year. You can claim up to $5,000.

Moving expenses

If you had to move more than 40 kilometers for full-time work or study, you can claim eligible moving expenses, including:

  • Trip costs
  • Movers
  • Storage costs
  • Costs of replacing your documents
  • Temporary living expenses
  • Lease termination fees
  • real estate committee
  • Mortgage penalties

Although you are not required to submit receipts to submit a claim, you must keep them if the CRA asks you to provide proof of your expenses.

Canada child benefit

Parents will want to familiarize themselves with the Canada Child Benefit (CCB) since it is a tax-free monthly payment. This payment is intended to help families with the costs of educating their children under the age of 18.

The maximum you can receive from CAOT is $6,833 per child, per year. That said, ACE is intended to help low-to-middle income families. High-income households may not qualify.

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Childcare costs

All fees paid to daycare centers, preschools, caregivers, and even day camps and day sports can be claimed as tax-deductible child care expenses. The parent in the lower tax bracket must claim this tax deduction.

To make a claim, you must be working, running a business, or going to school. Also, your child must live with you. Nannies and parents under 18 would not qualify as child care expenses.

You can claim $8,000 for each child under age seven at the end of the year. For each child over the age of six at the end of the year and under the age of 16 at any time during the year, you can claim up to $5,000 in child care expenses.

Do not stress

There is no need to worry about every deduction and tax credit available. If you use tax software, it will usually find or prompt you for all possible deductions. This will ensure that you get the maximum refund every time.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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