With the extended tax-filing deadline of May 5 rapidly approaching, you still have time to make sure you’re taking advantage of every single tax break you can get. Besides the exemption for the basic personal amount ($11,038 for 2013), there’s a host of lesser-known, but potentially very lucrative, tax deductions and credits you may be able to use to cut your tax bill.
Note that a “tax deduction” reduces your taxable income for the year. For example, a common tax deduction for Canadians is an RRSP contribution. Small business owners, those who are self-employed, or those who have a business on the side may also deduct business expenses.
In the Credit Column
Children’s activity tax creditIf you have a child enrolled in activities such as painting classes, soccer, hockey, or music lessons, you can claim up to $500 in eligible expenses and get up to $50.00 back for each child under 16 for 2013.
You can claim a personal amount of $5,000 in respect of the purchase of a qualifying first-time home. The tax savings generated by the non-refundable tax credit will be $750 (that is, $5,000 x 15 percent).
This Ontario tax credit is designed to assist with the cost of permanent home modifications that improve accessibility or help a senior be more functional or mobile at home. The credit could be worth up to $1,500 each year. Most provinces have similar credits, so be sure to check what applies in your province of residence.
Family and Personal Deductions
There are also a few lucrative family deductions available. Here are the most popular ones:These are deductible from income where one or both parents are working or where one spouse is attending school for all or part of the tax year. Childcare expenses can include daycare fees, boarding school, hockey school, or summer camp fees. The maximum you’re allowed to claim under the childcare deduction is $7,000 for each child under 6 at the end of the year, and $4,000 for each child over 7 and under 16. The deductions cannot exceed two thirds of your earned income.
Students can claim tuition, education, and textbook amounts. If they have graduated recently, they may be eligible to claim the interest that they paid on their student loans. The beauty of this one, and it’s often overlooked, is that unused amounts can be transferred to other family members. Any tuition, education, and textbook amount a student doesn’t use can be transferred to a parent, grandparent, or spouse in the year. Amounts carried forward by the student cannot be transferred.
Employed tradesperson’s may be able to deduct the cost of eligible tools purchased in 2013 to earn employment income as a tradesperson and as an eligible apprentice mechanic. A $500 maximum applies.
Don’t wait to file your tax return! Penalties for late filing and not paying any balance owing are harsh. And good intentions don’t count. The Canada Revenue Agency must have your T1 form and payment in hand on May 5. (A May 5 postmark doesn’t count.)