Top 10 Tax Tips

1. Have a Financial Plan. If you don’t already have a financial plan, NOW is the time to get one. If you do, now is the time to review it. You’d be surprised how focusing on specific goals helps you watch where your money goes. For example, transfer a set dollar amount monthly to a RRSP (or other financial planning goal) and watch your wealth grow.
2. Contribute to RRSP's. Contributing to an RRSP is a great way to defer income tax and save for your retirement. Try to contribute 10 – 15% of your annual taxable salary (adjust if you have a company plan). Before you make your contribution check your contribution limit. For more RRSP details refer to our article on RRSP's.
3. File on Time. Your tax return is due April 30, unless you or your spouse reports self-employed earnings in the year, in which case it is June 15. Penalties are charged on late filed returns; an immediate penalty of 5% of the balance owing plus additional penalties for each month the return is outstanding. Penalties increase for repeat offenders.
4. File a Tax Return for your Child. When your child has earned income, it may be advantageous to file a tax return for them even when it isn’t  necessary; this establishes RRSP contribution room which may be carried forward to future years.
5. Claim your child’s Unused Education Amount. If your dependant child attends a qualifying Canadian university, college or other post-secondary educational  institution, they may have unused tuition and education credits available for transfer. Take advantage of  this transfer (while they are taking advantage of your hospitality).
6. Claim Charitable Donations. Charitable donations should be combined with your spouse and claimed by the higher-income earner. Donations  which exceed $200 entitle the contributor to a larger tax credit so if your annual gifts don’t exceed this amount  hold onto your receipts (up to the last five years) and claim in the last tax year. For more Charitable Giving details refer to our article on Charitable Giving.
7. Claim Medical Expenses. Expenses exceeding a specified threshold (3% of your net income to a maximum of $1,885 for 2006) entitle you to a tax  credit. You may claim medical expenses for you, your spouse, and dependants you support (some limitations).  The expenses may be for any 12 month period falling within the taxation year. For a complete list of qualifying medical expenses refer to CRA / IT-519R.
8. Keep your Records. Records must be retained for tax purposes for six years from date of filing. Some documents, such as those records pertaining to capital gains must be kept until six years after the sale is reported.
9. Review tax changes. Each year the government responds to changes in the economy, public opinion, and the law by implementing tax  changes. It is important to review these changes to determine if you can reduce your tax bill. It is equally important to review your personal situation to determine if tax credits are available that weren’t before such as qualifying for the disability tax credit.
10. Make tax installments. Your past and well as your present situation will determine if tax installments are required. If you are required to  make tax installments, be sure to do so otherwise you will be paying non-deductible interest. There are limited situations where installments may not be required even when requested; be sure to seek our advise before ceasing the requested installment payments.

Top 10 Tax Mistakes

1. Mathematical errors, such as adding and subtracting incorrectly.
2. Forgetting to reduce income by identifying amounts received for workers' compensation, social assistance payments, and net federal supplements.
3. Claiming provincial tax credits incorrectly by not calculating provincial tax credit forms properly.
4. Forgetting to indicate pension adjustments. This affects unused RRSP deduction room for the next year.
5. Claiming an incorrect GST/HST credit by using incorrect spousal income amounts.
6. Entering the wrong amount for CPP, QPP and EI contributions and overpayments.
7. Claiming incorrect amounts such as RRSP contributions.
8. Forgetting to claim the basic personal amount.
9. Claiming the spousal amount incorrectly.
10. Not claiming, or incorrectly claiming, the age amount.

Weird GST(HST) Facts

1. GST on delicatessen items depends on whether they are served hot or cold. If they are served cold, there is no GST (zero-rated), if they are served hot, GST must be charged on the item.
2. GST applies to juice drinks that are less than 25% juice. But, if the drink has more than 25% juice, GST only is applicable if the drink size is less than 600ml.
3. GST is applicable on flights to Alaska, St. Pierre & Miquelon (France) but not Hawaii.
4. GST applies to doughnuts, muffins and other snack items if less than 6 are purchased at one time.
5. Chocolate covered grasshoppers are considered to be confectionery and are subject to GST.