Tax Saving Tips

 

 

Tax Prep Checklist

Use this checklist to get your records together for your tax accountant.

Business Records:

  • Revenue and business expenses for the year
  • Business use of auto
  • Auto operating expenses
  • Vehicle driving log with business kilometers driven
  • Asset additions
  • Business use-of-home details

Tax records such as:

  • Last year’s Notice of Assessment
  • Amounts paid by installments
  • A copy of your income tax return filed last year (if you’re a new client)

Other records will depend on whether you need to prepare a T2 (corporate) or T1 (personal) income tax return. If the latter, your tax accountant will need all the relevant information slips and tax-related documents. Here are some of the most common:

  • T4 slips (if you have employment as well as business income)
  • T4A commissions & self-employed
  • T5013 Partnership Income
  • T3 Income from Trusts
  • T5 Investment Income
  • RRSP contribution slips
  • Charitable donations
  • Medical and dental receipts
  • Child care information

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Save Money on Your Tax Accountant’s Fee

Accountants get paid by the hour, so the harder you make their job, the more it will cost you.

Summarize and tally records wherever possible. Cheques, invoices, business expenses - all should be categorized and totaled. Sort all your information slips by type. Having your tax accountant do the organizing and tallying is the expensive way to go.

If you have several businesses, remember that you will have to have separate revenue and business expenses figures for each business, as business income has to be listed by individual business on the T1 form.

Be as organized as you possibly can. For example, clip groups of receipts together by type and put a post-it-note stating what the category is on the top. The less your accountant has to figure out, the less time she’ll be spending on your file.

And a tax professional prepare your income tax return(s) isn’t costing you as much as you think when you see the bill – it’s a legitimate business expense!

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Tax Tips for Your Kids

Summer Camps

Don’t forget to save your receipts if your children attended camp this summer. The Canada Revenue Agency (CRA) allows parents to claim summer camp as a child care expense if:

1. The day camp or day sports school's primary goal is to care for children.

2. The boarding school, overnight sports school or camp involves lodging.

a. This is limited to a set amount per week that your child was in camp.

  • $175/week for children who are 6 years old and younger
  • $250/week for children for whom the disability amount can be claimed
  • $100/week for children who are between the ages of seven and sixteen

Child fitness tax credits

Keeping kids physically fit is important, but it can also be a big financial investment.

The CRA offers a great incentive to parents & guardians with the child fitness tax credit. If you have children under the age of 16 who registered for a physical activity program last year, you might be entitled to up to $500 in tax credit per child. If any of your children are disabled, this credit increases to $1,000. Programs that qualify for this credit must be a minimum of eight weeks long or be camps that ran for five consecutive days.

Tuition

University and college can be a big investment. Now you can see a return even before graduation!

If your children earned a bit of money this year through work study or other jobs, they might be able to transfer some of their tax credits to you. In fact students can transfer up to $5000 in tuition credits to a parent or guardian as long as they lower their own tax payable to zero first. Ask your children about their T2202/A slips – the slips they receive with eligible tuition costs. T2202/A slips need to be included in students’ tax returns.

Textbooks

No textbook receipts required! That’s because the textbook tax credit is based on the number of months attended in part-time and full-time courses — and not based on the amount spent on textbooks. The information needed to calculate the textbook tax credit comes from your post-secondary institution — it's the T2202 form. It confirms the eligible tuition fees and the number of months your child attended school

Public transit

Taking the bus to school? Save bus passes and the receipts! The CRA allows you to claim the cost of monthly public transit passes within Canada. This includes both longer and shorter duration passes. If purchasing shorter duration passes, you can claim their cost if they entitle you to unlimited travel for an uninterrupted period of at least 5 days. And you purchase 20 days’ worth of these passes in any 28 day period.

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Get $1000 From Government

The HST is now in effect in Ontario. And government is sending $1000 to all households in the province that earn less than $160,000 a year. Three cheques, totalling $1000, will be sent out to eligible households. But to qualify, you need to file your 2009 income tax return. If you are filing late, make sure you send your 2009 income tax return by April 30, 2011.

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Computers Are a 100% Tax Deduction

You can write off the full cost of computer equipment and systems software purchased for business use between January 27, 2009 and up to midnight on January 31, 2011.

For that limited time period, the Capital Cost Allowance rate is 100% (Class 52) and because the standard half-year rule does not apply, you can fully write off eligible computer equipment and systems software in the same year you purchase it.

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