Tips to Gear up for Income Tax Return Preparation in Canada

preparing your tax returns

New developments in tax laws and the changing life events often make it difficult for businesses and individuals to file income tax returns in a proper way. The common mistakes that we make during the process sometimes get unnoticed by CRA but later it fines heavily for such minor errors.

These types of errors include repetition of mistakes from last year’s return, not reporting tips and gratuities, etc. Now, CRA has become strict about scrutinizing filings of sectors like retail, hotels, construction, and restaurants making it imperative for you to be able to give clarification for all your income and deductions mentioned in it.

In order to relieve yourself from such hassle, you are recommended to rely on an expert who will handle the complexities of filing tax returns for you. In this blog, AccountingMississauga has shared some tricks to save your tax and tax credits.

1. Plan for home buyers

The CRA (Canada revenue agency) provides a grace period so that you do not need to make any payment to your RRSP (registered retirement saving plan) in the year of withdrawal or the subsequent year.

Here, it is to be noted that in case you fail to mention the repayment amount while making your tax return, after two years of the extended period, the amount will be added to your taxable revenue.

It is evident that the rules are complex but seeking advice from an expert in professional tax preparation service in Mississauga & Etobicoke or a nearby city before withdrawing money from your RRSP, can surely help you out in this.

2. The amount for children’s fitness

If your child or children are under the age of 16 or 18 (in case of children with physical disabilities) and you have registered their names in a physical activity program, you or your husband or wife can claim the children’s fitness tax credit for up to $500 per child.

The physical activity program covers a vast area of activities and some of them are

  1. Swimming
  2. Exercising
  3. Skating
  4. Sports (hockey, basketball, baseball), etc

You need to make sure that the receipt you received against the payment for the above-mentioned program, should clearly states that the program qualifies for the children’s fitness tax credit.

3. Medical expenditure

The amount you spend on your medical bills goes into the medical expense tax credit. This covers the payment to your doctor and the payment for prescribed drugs. At the time of preparing your tax returns, it is crucial for you to thoroughly count all your medical expenses, as it is an important part of your tax return.

4. Tax return preparation fees

Tax return preparation fees that you have paid to an accountant for arranging your personal tax return can be deducted in the situations mentioned below

  1. In case you have earned investment income, like interest or dividends
  2. In case you are an entrepreneur

5. Children’s art amount

Just like the children’s fitness amount, if you have enrolled your child’s name in a qualifying arts program, you or your spouse can easily claim the Children’s Arts Tax Credit for up to $500 per child.

In order to increase your tax-saving as much as possible, you are advised to keep the receipts of both the children’s fitness and arts amount for the preparation of your annual income tax return.

6. Canada employment tax credit

Your eligibility for the Canada Employment Tax Credit depends on the year of your employment. Only those who were employed in 2012 are suitable for them. For detailed information on this, contact your accountant who will assist you in your income tax return preparation.

Paying tax in Canada is our duty as responsible Canadian citizens and we all know that a substantial amount of our earnings goes to pay tax. We must aim to minimize the taxes payable as much as possible. That is why seeking professional help in this regard is the best way to deal with a complex task.