Tax Tips

Top 10 Ways To Reduce Your Tax Bill

Did you know . . .?

There are a number of ways to reduce the amount of tax you owe and keep more money in your pocket at tax time. The Canada Revenue Agency (CRA) can help you learn more about the various credits and deductions you may be entitled to and that can save you money when you file your 2010 Income Tax and Benefit Return.

1. Any income you earn in a registered retirement savings play (RRSP) is usually exempt from tax as long as the funds remain in the plan. RRSPs - you save for your retirement and get a break at tax time too!

2. As long as you stay within your contribution room limit you will not pay tax on any income you can earn from investments in your tax free savings account. Tax Free Savings Account - you add to your savings without being taxed!

3. Does someone in your family regularly take the bus, train, subway, or ferry to work? You may be able to get a non-refundable tax credit for the cost of the transit passes by claiming the public transit amount. Public Transit Amount - save on gas and get a tax credit from public transit!

4. Have you retired and now receive a pension? You can split up to 50% of eligible pension income with your spouse or common-law partner to reduce the overall taxes you pay.  See the link below on Pension Splitting for more details on how to save this way!

5. Do you work in the trades? Tradespeople can deduct part of the cost of eligible tools purchased throughout the year. Tradespeople save on tools!

6. Did you buy your first home in 2010? Check out the link to the home buyers' amount to see if you qualify for tax credits!

7. Are you a single parent receiving the Universal Child Care Benefit (UCCB)? The Government of Canada released new UCCB measures in the 2010 Budget that may apply to you. Make sure to check that out in the link below!

For People Who Are Self-Employed:

1. Did you purchase a computer for your business after January 27,2009 but before February 2011? If so, you may be eligible for a 100% computer capital cost allowance. Claim your new business computer on your taxes!

2. Did your business employ an apprentice? A salary paid to an employee registered in a prescribed trade in the first two years of his or her apprenticeship contract qualifies for a non-refundable tax credit for the employer. Hiring apprentices is good for both your business and your tax credits!

3. Did your business (which is not a primarily child care service) create licensed child care spaces for the children of your employees? If so, you may be eligible for the investment tax credit for child care spaces for each new child care space you created. Providing child care for your employees provides tax breaks for your business!

Important information links:

RRSPs: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/rrsps-eng.html

Tax Free Savings account: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/menu-eng.html

Public Transit Credits: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns360-390/364/menu-eng.html

Pension Splitting: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/pnsn-splt/menu-eng.html

Tradesperson Tool Credits: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/229/trds/menu-eng.html

Home Buyers Credit: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns360-390/369/menu-eng.html

Universal Child Care Benefit: http://www.cra-arc.gc.ca/gncy/bdgt/2010/uccb-eng.html

Business Computer Rebate: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/rntl/cca-dpa/clsss-eng.html#class52

Tax Credits for Child Care Spaces: http://www.cra-arc.gc.ca/E/pub/tg/t4012/t4012-09-e.html#ITCCCS