With the 2016 tax season behind us, now is a great time to start planning how to implement some of the tax credits listed below into your next year's returns in order to minimize your tax liability. Here are some tax credits made available to you and therefore should be utilized in the forthcoming season to maximize your refund next year:
Claiming and Transferring Credits
It is important that you don’t forget to highlight on either yours or your spouse’s tax return any donations you’ve made. You can be rewarded with tax reliefs once the donation exceeds $200.
You should claim any medical expenses you incurred throughout the year once the amount you paid was over $2,237, or if it exceeds your income at 3%. A good tip is to claim medical expenses on the tax return of whichever spouse earns the least amount of income.
Anyone of the age of 65 or over is entitled to a tax credit of up to $1,068 once you earn less than $35,927. If your income is $83,427 or more you will not receive any credit amount from the CRA. A disability tax credit also falls under this age bracket, whereby if you’re deemed disabled you can claim any expenses in structuring your home to make it disabled-friendly. This credit can be as much as $10,000.
Tax credits such as pension, disability, age, family caregiver, education and tuition can be transferred to your spouse once you don't require the credit to reduce your tax liability to zero.
Principle Residence Tax
Newly introduced in 2016, you must now disclose the amount you sold your principle residence for by completing a Schedule 3 and including it with your T1 income tax return. You must also reference the year of acquisition and a description of the property. The Canadian Revenue Agency qualifies a property as a principle residence if you or your family own and occupy it. This should be carefully considered as the profits attained from the sale of a principle residence are out of reach from the CRA. Penalties of up to $8,000 could accumulate as a result of failing to report the sale of your home to the CRA.
Don’t forget to include expenses that were required to fulfill any business duties in order to earn income for your company or business. The most commonly used credit under this category is travel. If it was a necessity to use a taxi, train, plane and/or car in order to earn income for your business, then you can and should claim this as a tax deduction. Any other expenses such as meals, laundry and/or telephone costs incurred during the trip can also be claimed as a deduction.