Want to save tax? Look to Saskatchewan

I’m always on the lookout for information about how to pay less tax and save more for retirement.

Here’s a great tip I found in Derek Foster’s new book, The Worried Boomer: No Pension? Not Wealthy? Here’s Your Plan.

You can join the Saskatchewan Pension Plan (SPP), even if you don’t live in the province, and deposit up to $12,500 a year.

Foster, who left the salaried workforce at age 34 to pursue a simpler life, has written a series of six self-published books.

When I read about the SPP in his book, I asked myself: Why haven’t I heard about this before?

“Canada’s best kept secret,” says the Facebook page for the plan, which has $298 million in assets and 32,000 members.

You probably have never noticed the option of joining the SPP, Foster says.

But the deduction is shown right there on your income tax return (line 209 of the T1 general tax form). Here’s the scoop:

Started in 1986, the SPP is open to any Canadian resident between the ages of 18 to 71. Any contribution to the SPP will be tax-deductible, just as with a registered retirement savings plan.

You can make contributions by mail, through your bank or by using a credit card online at www.saskpension.com. Who knew you could get reward points while saving for retirement?

You can contribute up to $2,500 a year. You can also transfer up to $10,000 a year from your existing RRSP.

You can choose between a balanced portfolio of stocks and bonds

and a short-term fund (less volatile for older people). Administration costs are less than half of that charged by mutual funds.

Once you reach retirement, you can transfer your portfolio into a registered retirement income fund (RRIF) or convert it to an annuity to get a regular income stream for life. Stephen Thompson, author of 167 Tax Tips for Canadian Small Business, gives as his first tip: You can deduct the cost of the book as a business expense.

He writes clearly and concisely about questions that bedevil a small-business owner: Should I incorporate? Should I register for HST? Should I have a December year-end? Which expenses can I deduct and not deduct?

Deducting home expenses from a home-based business is a great saving, Thompson says. You must meet one of the following criteria:

Your home must be your principal place of business; or

You use a designated area in your home for the sole purpose of earning your business income, and you use this space on a regular and ongoing basis to meet clients. If your office is outside the home, you can designate an area in your home to be used solely for your business. Don’t use the family room as your office, unless you’re willing to kick everyone else out of that room. Here’s another way to save: Ask the Canada Revenue Agency to adjust the tax returns you filed in the previous 10 years. You can recover “tax gold” by adjusting prior returns to capitalize on lucrative provisions you may have missed, says Evelyn Jacks in her book, Essential Tax Facts. If you think you missed a claim, call your tax practitioner or do it yourself using form T1-ADJ. (available on the CRA’S website). Commonly missed claims include safety deposit box fees, caregiver amounts for infirm parents and transfers of tuition, education and textbook credits from post-secondary students to parents. Tax season doesn’t end with getting your notice of assessment after you file the annual return. You have up to 10 years after the end of the tax year to ask for adjustments, Jacks says. Ellen Roseman writes about personal finance and consumer issues. You can reach her at eroseman@thestar.ca.