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There are lots of breaks we omit when sending our return to Revenue Canada, and this can cost us thousands and thousands of dollars over a lifetime of erroneous tax filing, says tax expert Evelyn Jacks, author of over 50 books on the subject. "Thankfully, the Canada Revenue Agency (CRA) allows corrections to errors and omissions for a ten year period," she says. So all's not lost.
Tax breaks you should know about:
1. Charitable donations
Be sure to collect tax receipts (which registered charities are happy to send out) when forking out at the office for the United Way campaign or sending your best friend $100 for her Run for the Cure fundraising drive. "Charitable donations result in a larger tax credit once the total value donated exceeds $200," says Nancy Williams, Ottawa-based Tax Professional at H&R Block. Since charitable donations may be saved for up to five years, compiling them for a few years and claiming them all in one year will give you a larger total credit than claiming a small amount every year, she says.
2. Your first home
If you moved into your first house or condo a few years ago and think you didn't mention it on your return, it may well be worth digging up the files and reviewing them. "If you are buying your first home, there is a non-refundable tax credit of $5,000 that may be claimed in the tax year of the purchase," Williams says. Click here to see if you are eligible.
3. Moving from your home
"Moving expenses are also often missed," says Jacks, and she doesn't only mean the amount you spent on a moving truck and boxes. "That's because real estate commissions – which can run into five figures -- are part of the claim, available if you moved at least 40 kilometres [by the shortest usual public route] closer to the new work, self-employment location or school and had income there," she explains. If you assume those commissions were $20,000; at a 40 per cent marginal tax rate, that's worth $8,000 to you, she says. That might pay for your legal fees and for some of the landscaping costs of your new residence, she adds.
4. Kids' activities and lessons
The federal government wants to encourage us to get our kids active. If junior is enrolled in pricey skiing lessons in the winter and soccer camp in the summer, you'll be able to get some of those costs back in the form of a credit. "The children's fitness tax credit allows parents to claim up to $1,000 of the costs for any children under 16 years of age to participate in fitness activities such as sports teams and lessons," Williams says.
5. Disability tax credit
The disability tax credit can be a lucrative non-refundable return for those families and individuals that are eligible. This amount is worth more than $7,000 as a non-refundable credit, which will offset taxes payable, says Jacks. And while that sounds abstract, this is approximately $1,500 in real money, depending on the level of the tax brackets and rates in your province of residence. "Claiming this over a ten-year period amounts to $15,000 in tax savings. This can go a long way to help those needing extra medical or home care throughout a period of chronic illness," says Jacks, who is founder and president of the Winnipeg-based Knowledge Bureau. Note that those who wish to receive the disability tax credit must apply for it before filing a tax return. You cannot claim your credit until your application is approved.
6. Other obvious tax breaks
Don't forget about public transportation passes, says Williams. Single fares don't qualify, but weekly and monthly passes do.
Know all of the refundable tax credits, Jacks advises, "The Child Tax Benefit, The GST/HST Credit, and the Working Income Tax Benefit and all their 'clawback zones' -- that is, at what income level do you lose those credits, and how RRSP planning can help," she says.
Daycare is another break, so be sure to save receipts. "Child care expenses are deductible, and [there is] a non-refundable tax credit for an eligible dependant. One can even transfer the Universal Child Care Benefit to that child to get a better tax break, but you'll have to do the numbers to be sure," Jacks says.