How to Pay Less Tax in Canada - Tips from a CPA

hey everyone Joe here with our definitive list of practical tips to help you pay less tax we've curated the best ways for Canadians to save and you're about to get the complete rundown so let's get right into it to keep this from being a 60-minute video I'll be providing General awareness for each tax saving method then if you want to dive deeper we've also created a comprehensive tax saving checklist that includes further details on each Topic in this video want to reduce your taxes this year then just use the link in the description below to get a copy of our free tax saving checklist all right we're going to start off with the simplest tax saving tips before we move up the ladder of complexity the first couple of tips might be simple but unfortunately not many Canadians actually follow them our first tip is to get informed about taxes congratulations you're already doing it without understanding the basics and getting some general awareness of how taxes work you might as well just have a hole in your wallet ignorance might be Bliss but it also means that you're wasting a bunch of money so nice work you're already taking the time to learn and are on the path to tax savings our second simple tip is one that's often overlooked according to a 2019 H&R Block survey up to 40% of Canadians aren't filing their taxes on time so that's a lot of potential interest and penalties paid unnecessarily so file and pay your taxes on time to avoid costly penalties and interest tax return for self-employed individuals must be filed by June 15th each year or the next business day if June 15th is on a weekend however any taxes owing for self-employed individuals must be paid by April 30th or the next business day if April 30th falls on a weekend for those of us who are not self-employed tax filing and payment are both due on April 30th or the next business day if April 30th falls on a weekend check the description for the link to our video where we break down the most common tax deadlines all right moving on from our general tax management tips let's focus on something that can be directly impactful to many of our Lives family and home benefits the government offers several incentives designed to help Canadians manage the costs associated with their homes and everyday living one of the most straightforward benefits for families is the GST HST credit this credit is designed to help offset the GST or HST you pay throughout the year it's particularly benef icial for families with children offering a quarterly payment that can help with everyday expenses single people can receive up to $496 and married or common law couples can receive up to $650 to be eligible for this credit you need to be at least 19 years old be Canadian resident and most importantly file your taxes on time the amount you'll receive is based on your adjusted family net income which just means that the more you earn the less GST HST credit that you'll receive next next up for those living in Ontario there's the Ontario trillion benefit this combines several credits into one to assist with energy costs sales tax and property taxes eligibility is based on your family's net income so it pays to know where you stand and for those who've recently stepped into the world of home ownership the firsttime home buyer tax credit is something you shouldn't Overlook if you bought your house this year you might be eligible for a credit that can help offset some of the costs associated with purchasing a new home it's a great way to get some money back after making such a significant investment next up if you've spent money making your home more accessible for seniors or those with disabilities the home accessibility tax credit or hatc is something you should look into this credit can be apply to a wide range of Renovations from installing grab bars in the bathroom to ramps for wheelchair access if you've taken efforts to make your home safer and more accessible you may be able to get some Financial relief for doing so the multigeneration home renovation tax credit or a bunch of letters acknowledges the growing trend of multigenerational living it offers a financial incentive to those adapting their homes to this lifestyle if you're creating a self-contained living space for an elderly parent or family member with a disability this credit can significantly offset the costs you can claim eligible renovation expenses for a tax savings of up to $7,500 not bad us Canadians need to stick together and support each other and we're looking to help as many Canadians as possible with taxes wealth creation and growing a successful business and the more subscribers we have the more Canadians we can help so with that in mind before moving on to our next category I wanted to quickly take a moment to ask you to subscribe to our Channel thanks for considering it now back to the tax tips next in our tax savings Journey let's zero in on the benefits and deduction specifically tailored to support families and children these tips can make a significant ific difference to your bank balance especially if you're managing the costs of raising a family health care costs can add up especially those not covered by MSP that's where deducting medical expenses comes into play from dental work to prescriptions not covered by your health plan these expenses can be claimed to reduce your taxes payable deducting medical expenses can lead to significant savings particularly for families managing chronic conditions or unexpected health care costs for many amilies Child Care is a significant expense fortunately the CRA allows you to deduct child care expenses such as daycare or Nan Services enabling you to work run a business or attend school this deduction can include a variety of care options from after school programs to Summer Camps provided are primarily for child care the key is that the expenses must be necessary for you to earn income and there are limits based on the child's age and the type of care claiming this deduction can sign significantly reduce your taxes owing making it easier for your family budget to breathe the Canada child benefit or CCB is a tax-free monthly payment made to eligible families aimed at helping with the cost of raising children the amount you receive depends on your family income and the number of children that you have applying for and maximizing the CCB can provide needed financial support throughout the year it's adjusted annually to keep Pace with inflation so it's crucial to file your taxes annually to continue receiving the bank benefit without interruption for families caring for a child under 18 with a severe and prolonged impairment the child disability benefit offers additional support this tax-free benefit is paid monthly along with the CCB and aims to help cover some of the extra costs raising a child with a disability eligibility hinges on the child being approved for the disability tax credit emphasizing the importance of applying for and maintaining this certification the amount you can receive will be determined by family income so again we find that ontime tax filing is a critical component for maximizing these tax benefits for those caring for a dependent with a physical or mental impairment the Canada caregiver credit offers a way to reduce your tax bill this credit is designed to help alleviate the financial burden that caregivers often face it's important to understand the eligibility criteria and you may be required to obtain documentation of the impairment this could come in the form of assigned document from a healthcare professional explore this credit to find out how it can provide Financial respite for the support that you offer next let's shift our Focus to where investing and savings meets tax efficiency we're talking about investment and savings accounts that you can use whether you're saving for retirement your first home or your child's education understanding these accounts is key to maximizing your money's potential the registered retirement savings plan or RSP is a Cornerstone of retirement planning in Canada contributions to your RSP are tax deductible lowering your taxable income for the year that you contribute then the Investments held in your RSP grow tax deferred until you withdraw them in retirement when you're potentially tax at a lower tax rate it's a powerful tool for building your retirement Nest Egg while reducing your tax bill today check the description for a link to our full rundown on how to maximize your tax savings with rsps the tax-free savings account better known as tfsa offer a flexible way to save and invest with a unique tax advantage unlike RP's contributions to a tfsa aren't tax deductible but the growth and withdrawals are tax-free this makes tfsas an excellent option for saving for short-term and long-term goals they can be used from anything from emergency funds to retirement savings without worrying about tax implications of your investment gains for more information on how tfsa is compared to to rsps check out the video link below introduced as a way to support first-time home buyers the first home savings account or fhsa combines the benefits of rsps and tfsas contributions are tax deductible just like an RSP while withdrawals made to purchase your first home are tax-free like a tfsa it's an Innovative account designed to make home ownership more accessible for Canadians using an fhsa can provide a tax efficient way to save for that significant first home purchase we again have a full video on this topic that is linked in the description below now from experience saving for your child's education is a long-term commitment and the registered education savings plan or RP is designed to help you with this goal contributions to an RP aren't tax deductible but the investment growth and government grants it can receive are tax deferred until withdrawal when the funds are used for your child's post secondary education their tax in the students hands typically at a much lower rate plus the Canada education savings Grant will match up to 20% of the first $2,500 of annual contributions this lets you maximize the growth potential of your savings moving on to tax saving tips specifically related to Education and Training investing in yourself or your family's education is a pathway to personal growth and better job prospects and thanks to some handy government incentives it can also offer significant tax advantages let's explore how you can make education more affordable through smart tax planning the Canada training credit is a relatively new addition to the tax code aimed at helping Canadians offset the cost of professional development if you've taken courses or professional development programs this year you might be eligible for this tax credit it's designed to encourage continuous learning and skills development allowing you to claim a portion of your tuition fees against your taxes payable this credit also accumulates over time giving you a larger potential deduction as you continue to invest in your education for students or those supporting students the tuition tax credit is another helpful tool for managing Education costs this non-refundable credit allows you to deduct tuition fees paid for postsecondary Education reducing the amount of tax that you owe you can claim amounts paid on behalf of yourself your spouse or your children this credit covers a wide range of educational institutions and programs making it a flexible option for students pursuing diverse paths now if you can't use this Credit in the year that the tuition was paid unused amounts can be carried forward to be applied against income in future years Super handy the cost of Education often extends beyond graduation in the form of student loans fortunately the interest you pay on government approved student loans is eligible for a tax deduction this deduction can be claimed for the interest paid during the tax year and any interest paid over the past 5 years that hasn't already been claimed it's a commonly missed tax deduction that can reduce your taxable income and help manage the financial burden of student loans as we get further into our tax saving strategies we encounter a variety of miscellaneous credits and deductions that can benefit Canadians in different ways these are often overlooked opportunities that can provide relief in areas you might not have considered and to avoid saying it over and over here's a quick reminder that the details for all these can be found in the checklist link below our first miscellaneous tip is pretty common so might be more of a reminder for you and it's a win-win opportunity we're talking about here donating to charity not only supports good causes but also offers tax benefits the charitable donation tax credit allows you to claim a significant portion of your donations when you file your taxes this can be an effective way to reduce your taxable income while contributing to your community the more you give the more you can claim but always Ensure you're Dona to registered Charities to qualify for the tax credit keep your charitable donation slips organized so that you can refer back to them when filing your taxes I just tag my receipt emails in my inbox so they're all in one place and easy to find next up we have a less commonly known tax credit the digital News subscription tax credit in an era where staying informed is more important than ever this tax credit serves as an incentive for Canadians to subscribe to digital news it allows you to claim a portion of the cost for subscribing to eligible Canadian digital news media you'll be supporting Canadian journalism and reducing your tax payable at the same time pretty nice if you've subscribed to any qualifying digital news outlets this year make sure to claim this credit all right moving on speaking of moving if you've moved more than 40 kilometers closer to a new job business location or educational institution you may be eligible to deduct your moving expenses this can include Transportation storage cost and even temporary lodging this deduction can be particularly beneficial for those who find themselves frequently relocating for work or school keeping detailed receipts of your moving expenses is helpful when making this claim on your tax return the shift towards remote work has made the work from home expenses deduction more relevant than ever if you've worked from home this year and incurred expenses that weren't reimbursed by your employer you can claim a portion of these costs this may include Internet fees office supplies and a portion of your home utilities the CRA has also provided simplified methods for claiming these expenses making it easier for eligible Canadians to take advantage of this deduction and lastly in our miscellaneous section let's talk about investment losses for The Savvy investor recognizing and claiming investment losses can be a strategic move to offset capital gains if you've sold Investments at a loss you can use these losses to reduce any capital gains that you've realized in the same year in addition unused losses can be carried back 3 years or carried forward indefinitely providing a potential tax advantage in future years if you sell an investment at a loss take note and consult the tax checklist for details on how to use these losses to reduce your tax bill diving into our last category will be touching on Civic engagement and special situations this includes unique tax saving strategies that cater to specific situations or actions you've taken throughout the year residents of certain provinces can save tax by claiming the climate action incentive a credit designed to offset the cost of the federal pollution pricing if you live in Alberta Manitoba New Brunswick New Finland Nova Scotia Ontario Pei or Saskatchewan you may be eligible for this benefit to receive this benefit residents in eligible provinces just need to file their income tax return on time the climate action incentive is then automatically paid out quarterly as long as your tax returns are up to to date supporting your political party not only contributes your civic duty but also offers a tax advantage there are both Federal and provincial political contribution tax credits that allow you to claim a portion of your donations to registered political parties it's an incentive for individuals to participate more actively in Canada's political landscape while enjoying some Financial benefits the disability tax credit or DTC is a valuable credit for those with severe and prolonged impairments it reduces the amount of income tax that they need to pay if you or a dependent qualify it's crucial to apply for and claim this credit it can lead to substantial tax savings and is a Cornerstone for accessing other disability related benefits and programs if you were eligible for the disability tax credit in the past but didn't claim it you still have an opportunity you can request to adjust your tax returns and claim the DTC for up to 10 years retroactively and lastly let's look at claiming employment expenses some some employees who are required to incur expenses for their job may be able to claim them as deductions against their income for example this could include home office supplies or travel costs not reimbursed by their employer to claim employment expenses you'll need proper documentation and potentially assigned t2200 form from your employer it's not for all employees but it's still a useful deduction for those who spend out of pocket to perform their job duties all right that does it for our practical tips on paying less ta tax don't forget there's a checklist linked Below in the description that will help you make the most of this information I hope this video will help you keep some more money in your pocket we love making these videos and appreciate your support so thanks for watching and we'll see you in the next video cheers

Channel: Avalon Accounting

Views: 10,263

Keywords: Small Business Accounting, Small Business Bookkeeping, Small Business, Canadian Small Businesses, Online Accountant, Online Bookkeeper, Business Advice, Accounting Advice, Corporate Tax, Business Taxation, Tax Tips, Canadian Tax Tips, Build a Business

Id: wg6UdBImDDA

Length: 17min 50sec (1070 seconds)

Published: Fri Mar 01 2024