The 2023 income tax return is coming soon, and you’re wondering how to pay less tax.
With inflation and the cost of living in 2024, the various strategies for reducing taxes are worth raising. Recognized by the experts, these 17 tips will help you decide on the subject and pay less tax in Canada.
Maximizing your TFSA or employer benefits and deducting home office expenses or alimony payment; these methods will be briefly explained in the following article.
Considering these different strategies, you can reduce your next tax bill. From young families to retired couples, there is something for everyone. So before you head to the Canada Revenue Agency (CRA) website to file your tax return online, check out these 17 tax tips.
When you file your tax return by the deadline, you avoid the 5% late filing penalty and 1% interest each month after that. Keep your money in your pockets!
Are you self-employed? Do you earn rental or investment income? To avoid any complications, it may be advantageous to call on the services of an accountant or a tax specialist. It will help you explore various tax savings while guiding you intelligently.
Whether you work for an employer or are self-employed, contributions to your RRSP are tax-deductible, reducing your tax liability. They grow tax-free until you withdraw your money at retirement.
Although this reduces your RRSP deduction limits for the tax year, you can contribute to your spouse’s or common-law partner’s RRSP until the year they turn 71. Depending on your income brackets, this may result in some reduction in your tax liability.
Your Tax-Free Savings Account is a tool that allows you to grow your investments without paying taxes on them. It’s essential to ensure you have enough contribution room in your TFSA to avoid paying 1% of the excess amount for every month that remains in the account.
You can receive certain tax benefits when you hire a family member as an employee. It’s essential to pay a reasonable salary and keep all the documents proving the work has been done.
As a result of the pandemic, the Canadian government has streamlined the process for claiming work-at-home expenses. Eligible expenses you can claim include rent, utilities, internet charges, supplies, long distance calls, etc.
You or your spouse can get up to $5,000 in tax credits as a first-time buyer. To qualify for the credit, the home must be registered in either of your names and be located in Canada. Note that you must occupy the property as your principal residence within one year of purchase. Contributing to a FHSA is also a good way to minimize taxes when buying your first home.
Be sure to explore all the benefits that apply to you:
Don’t wait!
Tax credits may be available for charitable donations to a registered charity or qualified donee. When claiming the eligible gift amount, CRA applies a limit of 75% of your net income.
You can reduce your taxes by claiming child care expenses for your child or your spouse’s or common-law partner’s child at any time during the tax year. Depending on your situation, you may be able to claim up to $11,000.
You can claim fees when you file your tax return:
Support payments made under a court order may be claimed following a separation or divorce when you file your income tax return. It is important that all outstanding or unpaid payments have been settled.
You could be entitled to a deduction of nearly $900,000 if you wish to sell your company. Property eligible for the capital gains deduction includes small business shares, as well as farm and fishing property. In the event of a capital loss or theft, you may also be eligible for tax deductions.
Using tax filing software is an effective way to reduce your taxes. In addition to getting faster processing, it helps you identify tax credits and deductions you can claim for the tax period.
You may be eligible for the Canada Workers’ Allowance if you earn a low income. This tax credit can be claimed as a basic amount, but also as a disability supplement.
Registering your business can help you claim more expense deductions. If your business is unincorporated, your business income will be taxed at your personal income rate.
How taxes are calculated in Canada depends on the taxpayer’s tax status. Most Canadian taxpayers are subject to federal and provincial/territorial taxes, but the tax rate and tax forms may vary depending on their situation.
Various tax calculators are available online for federal and provincial taxes. Trust the referral sites. To help you, read our article on the 3 best tax software in Canada for 2023.
The CRA provides on its website the dedicated form T3SCH11A.
Savings are here:
