How to limit tax pain

It always pays to keep as much of your money as possible and not send an unnecessarily large cheque to the federal government

The government in January announced it is planning to start registering all people who prepare taxes for a living, so it’s all the more reason to be on your toes this year and make sure you file correctly. Another reason not to make a mistake — or fail to claim something — is that there is no guarantee Ottawa will catch an error and pass on the savings to you. “Even if all you have is a T4 slip, there are still a few things you might be missing that will save you money,” says Chad Saikaley, a tax specialist at Ginsberg Gluzman Fage & Levitz LLP.

Saikaley says there are certain tax credits that people simply forget about. For example, if you spend weekends running your children around to activities, this is the time of year Ottawa will give you something for your trouble. The Children’s Fitness Tax Credit is worth $500 and the Children’s Art Tax Credit is also worth $500. It’s good for 15% of the total so that amounts to $150 per child. Only one parent can claim the credit and you have to be paying taxes that a credit can be applied against. “Sometimes I have to remind clients, so people do miss this,” he says, adding a proper receipt is required

Public transit is another sizeable credit. If you pay, say, $100 a month —$ 1,200 a year — you can claim a 15% federal tax credit on it worth $180. Keep that monthly pass, you’ll need proof of purchase. The GST/HST rebate is another item that can be claimed by employees paying employment expenses. “The most common expense is a car,” Saikaley says, noting the rebate is available if you incur expenses as an employee.

Pension splitting is also something to consider, but it’s up to you to claim on your tax return. If you have a spouse in a lower tax bracket, you can allocate up to 50% of your pension income to your spouse. “It’s not automatic and can be very beneficial,” Saikaley says.

Bruce Ball, national tax partner at BDOCanada and spokesperson for CPA Canada, says medical expenses are something many people forget about as well. “Even if you have a drug plan, there could be a co-payment every time,” Ball says, noting it qualifies for a tax credit of 15% at the federal level after you reach a threshold of $2,152.

And don’t forget to claim your safety deposit box, the rental of which is fully deductible off your taxable income, with actual savings depending on your marginal tax rate. It’s the last year for that deduction, so why not claim it?

There’s no reason to deposit more money with Ottawa than you have to and forgetting to claim allowable expenses on your taxes is pretty much the same thing as cutting a cheque to the receiver-general.