Right now, Canadians are rushing to file their personal income tax returns on time. At Mew and Company, we are gearing up to process all of the documentation needed to file complete and accurate returns by April 30, 2015.
Although we have been preparing personal tax returns for many years, it feels like every year, there are more documents to request and process than the previous year. A significant reason for this is perhaps that my clients’ lives have become more complicated from a tax perspective.
There are many receipts that a taxpayer needs to accumulate to compile their tax return, but not all deductions are created equal.
Common deductions that materially reduce your tax bill include the following:
- RRSP contributions.
- Child care expenses.
- Fees paid to earn investment income and capital gains.
- Support payments to an ex-spouse.
- Pension splitting with a current spouse.
On the flip side, common deductions and credits that are more fuss than they are worth include:
- Children’s arts and fitness expenses.
- Public transit passes.
This is not to say that these deductions still don’t have value – every dollar of your hard-earned money back from CRA still counts!
There are common errors or omissions that may seem irrelevant at first, but are potentially costly down the road. They include:
- Forgetting to report capital losses from the sale of investments and real estate. Although this omission does not have any tax consequences for the current year, when capital gains occur in the future, you will want to offset these gains with losses carried forward.
- Forgetting to include a tax slip for the second time in three years. See my blog Canadian Income Tax Penalties: Repeated Failure to Report Income.
- Forgetting to file the T1135 (Foreign Asset Reporting Information Return). See my blog Canadian Holding Corporations and Individuals: Avoid Costly Foreign Asset Reporting Pitfalls.
You can avoid tax heartaches by ensuring that you have located and submitted all of your income slips. Also make sure your big deductions are accounted for. Finally, understand the holdings in your investment accounts to ensure a T1135 is filed if needed.
You are in good hands.
Mew and Company Vancouver Chartered Accountants
If you have any questions, we are Mew and Company, your Vancouver Chartered Accountant and we are here to help.
- Related info: Moving Abroad & Cutting Ties to Canada for Taxes