Easy Tax Tips for Canadians
by Peggy Ireland
Smashwords Edition
Copyright 2011 - Peggy Ireland
ISBN 978-0-9868594-0-3
Toronto, Ontario, Canada
www.peggyireland.com
Electronic Edition, License Notes
All rights reserved. This book is licensed for your own personal enjoyment only. This ebook may not be resold or given to other people. No part of this book may be reproduced or transmitted by any means, including electronic mechanical, photocopying, recording, or otherwise without the prior written permission of the author.
Cautions
This book is meant to provide general tax information and translate complicated bureaucratic language into plain English. It isn't meant to be a substitute for proper, professional tax, accounting or legal advice from an accountant or lawyer. I hope that you will find it useful, and if you need to see an accountant about your taxes, that the book will help you to ask the right questions, and understand the answers. Be aware that Canada Revenue Agency regularly updates and changes their forms and guides. Although I have done my best to provide the latest links, I can pretty well guarantee that CRA will change something after this book has been published.
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Table of Contents
Chapter One - Filing Tips
Chapter Two - Declaring Your Income
Chapter Three - Confusing Words
Chapter Four - Find Your Deductions
Chapter Five - Tax Credits
Chapter Six - Benefits & Payments
Chapter Seven - Conclusion
Introduction
People hate doing taxes. They don’t understand them. They're afraid they'll miss something important. They really just want the whole tax thing to go away.
The Canadian tax system is actually fairly simple. Unlike our American neighbours, there aren't a lot of deductions, loopholes or tricks you can use to pay fewer taxes. If you are a wage earner without any specific special medical or personal circumstances, there aren't a lot of things you can deduct. Since this includes most Canadians, it makes it easy for most of us to save some money by doing our own tax returns.
I'll show you how to keep your annual tax filing as simple and easy as possible. If you can add, subtract and multiply, you can do your own taxes. If you can use a computer - you don't even need to know how to do that.
We’ll start off with some general filing tips and things to know. We'll review the different personal deductions and tax credits, and who can apply for them. Then we’ll go through the main items on the tax return, giving you tips to help you get your taxes done quickly and easily. Look for the $Tip icon throughout the book.
We aren't going to discuss things that are only for business people. Executors who have tax questions about estates for deceased people and investors with large or complicated investment portfolios should consult an accountant for advice about their specific situations.
Above all, we'll focus on keeping it simple, and as stress free as possible.
Chapter One
Filing Tips
File early - Filing early puts your tax refund at the head of the line. Canada Revenue Agency starts processing tax returns around the middle of February, so you can send yours in any time after that.
Although your employer doesn't have to give you your T4 until the last day of February, nice employers will give them to you as soon as they are ready. It doesn't hurt to ask.
Waiting until the last day on April 29th to do your taxes creates unnecessary stress. If you are going to use a tax preparer, waiting until the last minute could cost you extra, or your preparer could be too busy to help you.
Last minute filing could also delay your refund. The Canada Revenue Agency (CRA) doesn't admit it, but as the April 30th deadline approaches, their computer systems are working harder than ever, and it may take extra time to get your refund.
No Income/Low Income - Even if you have low income or no income at all there are many government benefit programs like the GST rebate and Guaranteed Income Supplement that you can only collect if you file a tax return.
Saving T-slips and Receipts - If you're not a businessperson, you don't have to save every single little receipt or scrap of paper. Under most circumstances regular people can't deduct car expenses, food, clothes, subscriptions, books, haircuts, rent, mortgage payments and other everyday living expenses, even if they are for work.
You do need to save all the T-slips you receive, which might include;
regular wages, from your job
commission income, if you are in commission sales
employment insurance, if you were laid off
workers compensation, if you were injured
social services (welfare) payments, if you were on welfare
universal child care benefits, if you received benefits for your children
pension income, if you are retired
dividend income and interest, if you have investments
You will also need to report things like child support you received and training or apprenticeship allowances, even if you don't get a T-slip for it.
Keep receipts for specific tax deductions or tax credits you want to claim like;
charitable donation receipts, for contributions you made
political contribution receipts, if you gave to a political party
medical receipts, for medical supplies, prescriptions and travel costs
union and professional dues, if you are a member of a professional group
moving expenses, if you moved nearer to your workplace
child day care receipts, to look after your child while you worked
child fitness programs, if your child participated in a sport
adoption expenses, including travel expenses
child support paid, under a court order
post secondary tuition and books, for full and part time students
interest on student loans
home purchase documents, for first time homebuyers
mechanic's tools, for full time professional mechanics
information on any investments you may have
$Tip - No receipts? No problem. If a T4 from an employer hasn't arrived yet, that's okay. CRA says that you can use your last paystub of the year as a temporary receipt. For a missing RRSP contribution receipt, use the receipt you received when you put the money in. You will need to include a letter saying why the receipt is missing, and how you are trying to get a new one.
$Extra Tip - For medical receipts, you can go to your pharmacy and they should be able to give you a print out of all the prescriptions you have received in the past year.
Direct Deposit - Once your have signed up for it, this is the fastest way to get a refund. They will also use this information to deposit any GST rebates or other funds into your account.
Notice of Assessment - This is the paper that CRA sends back to you each year, after you have filed your income tax return. Keep it. It's a recap of what you filed this year, and how much money you owe, or received as a refund. At the bottom of the page is a calculation of how much room you have to contribute to your Registered Retirement Savings Plan (RRSP) and your Tax Free Savings Account (TFSA). For more information on RRSPs and TFSAs, and which one you should choose for your situation, see my blog or the next Piggy Bank book, Easy Money Tips.
$Tip - put this year's Notice of Assessment with next year's tax receipts.
Joint Tax Returns - Canada doesn't have joint tax returns. Each person must file individually. People who don't have income should still file a tax return to claim benefits like GST rebates and eligible student tuition tax credits.