Individual tax planning involves structuring your affairs to reduce your tax obligations to the CRA. As the old saying goes, death and taxes are unavoidable. When it comes to tax planning, most people don’t think about it until it’s too late. We can help you establish comprehensive strategies that you can act on throughout the year.
There are many ways to tax plan and reduce your tax burden.
You work hard for your money. We work hard so you can keep it.
If you are an employee T4 salary income earner, we review your TD1 to determine your eligibility to reduce the amounts withheld for tax at source. We complete the T1213 form for the CRA’s approval for reduced withholdings by your employer.
We discuss with you the ways in which receiving loans from your employee can be received tax free, deferred or constitute a deduction that will offset the impact of the loan interest.
If your job involves travelling, we advise you on how to claim a reasonable deduction for employee travelling expenses such as parking, taxis and train fairs. If you use your car to carry out your work, we advise you on how to communicate with your employee to ensure you receive a T2200 at year end so as to allow these valuable tax deductions. If your job requires you to have a home office in order to carry out your work or fulfil your contractual arrangement, we seek to have your employer provide you with a T2200 form to compliment the T777 that you must complete at tax time.
Credits and Benefits
There are a number of tax credits and deductions you could claim on your income tax return based on your workplace. This include the Canada Employment Amount which helps you cover work-related expenses such as home computers, uniforms and supplies. We advise you on your eligibility to claim such employment-related credits and benefits.
We ensure your claiming other non-refundable credits which include the spouse or common-law partner amount and the amount for an eligible dependent. As well, we review your eligibility to claim a tax deduction for certain child care expenses you incurred for your or your spouse’s/partner’s child.
If you incur a significant amount of medical expenses, we review your ability to claim a medical expense tax credit exists to assist in covering the cost of eligible medical expenses and advise you of your eligibility.
Students or Former Students
If you paid tuition or your children’s tuition prior to 2017, you may be eligible for a non-refundable tax credit of 15% of the eligible fees. Students and former students are eligible for a 15% non-refundable tax credit on interest paid on their student loans. We discuss these tax credits with you and review your eligibility.
Disability Tax Credit
We ensure you take full advantage of the Disability Tax Credit if you or your child suffers from a “severe and prolonged” impairment of physical or mental function, which has been certified by a medical doctor. The DTC is a federal non-refundable tax credit of 15% of $8,113 for the 2017 tax year.
RRSP and TFSA
We ensure you take full advantage of the RRSP and TFSA.
A registered retirement savings plan (RRSP) allows savings for retirement to grow tax free in a special plan registered with the Canadian government. Contributions to RRSPs are deductible, meaning they can be used to reduce your taxes. Any income you earn in the RRSP is usually exempt from tax as long as the funds remain in the plan.
The Tax-Free Savings Account (TFSA) is an account that does not apply taxes on any contributions, interest earned, dividends, or capital gains, and can be withdrawn tax free. This savings account is available to individuals aged 18 and older in Canada and can be used for any purpose. The benefits of a TFSA derive from the exemption of taxation on any earned income from the investment.
Tax Planning Opportunities
In addition to the above, there are tax planning opportunities afforded to seniors, families and in respect of investments. There are also tax credits for charitable or political donations. Of course, taking advantage of the myriad of tax credits, benefits and deductions available to you with greatly reduce your annual tax burden.
At Kalfa Law, our tax lawyers review your circumstance and advise you on the web of tax credits, benefits and deductions that you can take advantage of so as to reduce your overall tax burden to the CRA.
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