People missing opportunities: tax experts

With federal tax credits vanishing, Canadians need to be more vigilant than ever in claiming every possible deduction they can, say tax experts.

Joel Gillis, owner of The Tax Depot, says one of the things many parents and their university-aged students miss when they file their income tax returns is the remaining portion of tuition costs that can be carried forward by the student.

“We see parents take the $5,000 (tuition deduction) which is the maximum but the remainder is not put on the student’s income tax return as a carry forward,” said Gillis. “That often gets missed.”

It’s important to note that although the federal government has nixed the amount for education and textbooks that can be applied as a tax credit, many of the provinces are still allowing Canadians to claim those expenses against their provincial taxes.

When the federal government axed the $465-per-month of fulltime studies education and textbooks tax credit, the Province of New Brunswick did the same and removed its $400 tax credit for education.

But the other three Atlantic Canadian provinces kept the amounts they allow full-time students to claim for education.

At tax time, there are many things Canadians can do to help themselves.

A common mistake made by many is to simply forget to bring all the needed documents and claim everything that is allowed.

“The thing that happens most often is they don’t have all the information available,” said Marilyn Hicks, an independent tax specialist. “The ordinary taxpayer that has a T4 slip and a job doesn’t have a lot of deductions. They may have a medical claim that they haven’t thought of or a premium for a medical insurance.”

But self-employed Canadians with home offices, well, there’s a long list of things they may be able to deduct.

According to Hicks, these possible deductions include a portion of the interest on their mortgages and property taxes, part of their heating costs, phone and internet charges, a percentage of their home insurance premiums, and a percentage of their vehicle expenses and leasing costs.

Brian Himmelman, president of Halifax-based Himmelman & Associates Financial Advisors, offers a simple solution.

“If you don’t know, take in everything and let them tell you what’s not allowed,” he said. “It’s highly complicated. It’s not the easiest landscape to navigate.”

Entrepreneurs should definitely go to tax experts and avoid the headaches and costs of audits, he said.

It’s also a good idea for people living together as couples, whether married or common-law, to file together because then deductions can be applied to the person in the couple who will benefit the most from that tax break, said Gillis.