Tax Tips


 

January 13: Our 2014 Newsletter & Checklist

 

It’s 2014 which means the 2013 tax season is right around the corner. We have provided you with a newsletter & tax checklist to help you prepare for this years income tax season! Click on the download link to view: 2014 Newsletter


 

December 20: Year End Tax Planning

 

It’s that time of year again! Although the holidays can be a great time to celebrate with family and friends it is also time to review your year end taxes. At First Choice Tax Services we have provided you with a year end tax planner for you convenience. Click on the download link to view: tax planner

 

September 4: Bond Switching for After Tax Returns

 

Bond switching is the process of changing the types of bonds in your portfolio in an attempt to maximize returns. One such strategy is to purchase deep discount bonds offering lower yields; this will net you a greater after tax return if you are in a high tax bracket. The reason for this is that you are receiving a larger percent of your income as a capital gain, as opposed to interest income. Since capital gains are only 50% taxable this makes a noticeable difference for those in the upper tax brackets.

 

August 1: Telefile Tax Service to be Discontinued

 

As of September 28, 2012 the CRA will be discontinuing the Telefile Tax Service and it will not be available for the 2012 tax year. This also means that the telephone tax service for seniors will be discontinued at the same date. What does this mean for you? As of September 28, 2012 you will no longer be able to file your taxes by phone.

 

July 23: Form T1213, RRSP’s and You

 

If you are one of the many people who are making a scheduled contribution into your RRSP account you may be able to decrease the tax you pay on every pay cheque. In order to make this claim you need to understand the form T1213- REQUEST TO REDUCE TAX DEDUCTIONS AT SOURCE. This allows you to reduce the amount of your taxable income based on your RRSP contributions. You may also be able to reduce your taxable income by claiming child care expenses, support payments, employment expenses and carrying charges and interest expenses on investment loans. For futher advice on how you can use form T1213 to lower the tax you pay on every pay cheque, contact us as First Choice Tax Services.

 

July 16: B.C First-Time New Home Buyers’ Bonus

 

In the B.C 2012 budget a first-time new home buyers’ bonus has been implemented. Effective from February 21, 2012, through to March 31, 2013, the bonus is a one-time refundable personal tax credit worth 5% of the purchase price of the home up to a maximum of $10,000.

 

Tax Free Savings Accounts

 

The Government of Canada has called it the single most important personal savings vehicle since the introduction of the RRSP. Have you heard about the tax free savings account (TFSA)?

The TFSA became available on January 1, 2009. It allows Canadians aged 18+ to save up to $5,000CDN every year in a TFSA and to withdraw funds and/or investment income – including capital gains – without being taxed. You can also put back the money you’ve withdrawn without reducing your allowable contributions.

Although there is no tax credit for contributions to a TFSA, Canadians can realize significant savings in using a TFSA to earn interest without paying taxes on that interest.

 

Pension Income Splitting

 

As of 2007, Canadian pensioners became able to split their pension income – whether from a corporate/other pension plan or certain annuities from an RRIF or RRSP – with their resident spouses or common law partners. If you have eligible pension income, you can use this tax opportunity to split up to one half of your pension with your partner, which may mean significant tax savings for you both.

As of 2007, Canadian pensioners became able to split their pension income – whether from a corporate/other pension plan or certain annuities from an RRIF or RRSP – with their resident spouses or common law partners. If you have eligible pension income, you can use this tax opportunity to split up to one half of your pension with your partner, which may mean significant tax savings for you both.

 

File a Tax Return even if you owe nothing

 

Even if you are certain that you have no balance owing or refund due in a given year, file a tax return for that year. Why? Because filing:

● Reduces the ability of the CRA to subsequently make arbitrary adjustments to your
income and taxes owing for that tax year

● Determines your eligibility for government programs, like the Canada Child Tax Benefit
(CCTB), GST/HST credit or any new tax rebates that may be announced

● Reports earned income, which increases your future RRSP contribution room – and we
all know the value of RRSPs as tax reduction tools

 

Claim your Charitable Donations Wisely

 

Did you know that the rate at which you’re able to claim your charitable donations nearly
doubles for amounts over $200? For that reason, you should not claim less than $200 in
charitable donations in any year.

Instead, if you want to optimize your tax situation, carry forward charitable donations (for a maximum of 5 years) and claim them all in a year where your income is higher. You can even combine your donations together with your spouse/common-law partner and claim them all on the return of the higher-income spouse, maximizing the credit.

 

Contribute to your RRSP

 

On your Notice of Assessment, you’ll find your maximum contribution limit for your RRSP. To maximize your tax advantages, it’s usually best to contribute the full amount (for yourself and/or your spouse/partner). But beware! Contributing over your allowed amount may result in actually owing taxes. If you over-contribute, you’ll likely need to complete a T1-OVP to calculate the excess contributions and to determine whether you’ll pay a 1% tax on those excess contributions.

 

Do you know when to carry forward RRSP contributions and when to claim them?
Just because you contribute to an RRSP in 2011 does not mean that you need to deduct those contributions on your 2011 taxes. If your income in a tax year is low, consider carrying forward your contributions to a future year when your income may be higher.