Below is a list of tax planning considerations. Please see us for further details or to discuss whether these may apply to your tax situation.
Carefully Review your Expenses
Certain expenditures made by individuals on or before December 31, 2017 will be eligible for 2017 tax deductions or credits. These expenditures include moving expenses, child care expenses, charitable donations, political contributions, medical expenses, alimony, eligible employment expenses, union, professional, or like dues, carrying charges and interest expense. Ensure you keep all receipts that may relate to these expenses in case the CRA requests them.
Consider Family Involvement in Business
If you own a business or rental property, consider paying a reasonable salary to family members for services rendered. Examples of services include website maintenance, administrative support, and janitorial services. Salary payments require source deductions (such as CPP, EI and payroll taxes) to be remitted to CRA on a timely basis, in addition to T4 filings.
Income Timing for Seniors
Old Age Security
A senior whose 2017 net income exceeds $74,788 will lose all, or part, of their Old Age Security. Senior citizens will also begin to lose their age credit if their net income exceeds $36,430. Consider limiting income in excess of these amounts if possible. Another option would be to defer receiving Old Age Security (for up to 60 months) if it would otherwise be eroded due to high income levels.
Delaying OAS will also increase the monthly amounts received once you are ready to take it. The increase is 0.6% for every month that you delay, up to a maximum of 36%.
More information on deferring your OAS can be found here
Canada Pension Plan
The usual age to begin receiving CPP payments is 65, but pensioners are allowed to begin receiving reduced payments as early as age 60. The reduction is 0.6% for every month taken early, up to a reduction of 36% at age 60.
Pensioners may also choose to delay receiving their CPP payments up to age 70, resulting in increased monthly payments when you are ready to take them. The increase is 0.7% for each month you delay, up to a maximum of 42% at age 70.
For more information on delaying your CPP see here.
Don’t Forget your RRSP Contributions!
You have until Monday, March 1, 2018 to make tax deductible Registered Retirement Savings Plan (RRSP) contributions for the 2017 year. If your income is higher than your spouse’s, consider contributing to their RRSP via a “spousal RRSP” for greater tax savings.
… Or your TFSA Deposits
Individuals 18 years of age and older may deposit up to $5,500 into a Tax-Free Savings Account in 2017. Consider a catch-up contribution if you have not contributed the maximum amounts in prior years.
Take Advantage of Planning for Your Child’s Education
A Canada Education Savings Grant is available for Registered Education Savings Plan (RESP) contributions equal to 20% of annual contributions for children (maximum $500 per child per year). In addition, lower income families may be eligible to receive a Canada Learning Bond.
Split Your CPP
Canada Pension Plan (CPP) receipts may be split between spouses aged 65 or over (application to the CRA is required). Also, it may be advantageous to apply to receive CPP early (age 60-65) or late (age 65-70).
Note that this is not always the optimal choice, especially where one spouse has deferred their CPP or taken it early. Speak to your accountant to ensure your personalised plan is right for you.
More information on splitting the CPP and the application form can be found here.
Beware of Phishing Scams
Each year during tax season there are a number of telephone and email phishing scams that aim to take advantage of concerned taxpayers. You should be vigilant any time you receive telephone, mail, text message or email communication that claims to be from the Canada Revenue Agency (CRA) and requests personal information such as your social insurance number, credit card, bank account or passport number.
Note that the people perpetrating these scams may use threatening or coercive language in an attempt to scare you into paying a fictitious debt, or may claim that you must provide personal information in order to receive your refund.
If are contacted by someone saying you owe money to the CRA, you can call our offices, or verify the amount online through the use of My Account (link below).
The CRA will never send you an email or text message with a link asking you to divulge personal or financial information.
Did you know?
- The CRA has a program called MyAccount, which allows you to track your refund, view your return, check on important balances, the expected timing and amounts of benefit payments, and your TFSA and RRSP contribution limits.
- The CRA has now also released MyCRA and MyBenefits CRA, which are mobile phone applications allowing you access this important information on the go!
Thinking about claiming medical expenses?
- Before collecting all your medical receipts, keep in mind that you can only claim amounts in excess of the lower of 3% of your net income or $2,208.
- You can choose any 12 month period ending in the current tax year to maximize your deduction. (e.g. September 2016 to August 2017).
- Travel expenses required for medical purposes can be claimed, but documentation is required.
You can find a list of allowed medical expenses here.
Lost track of your pharmacy or medical practitioner receipts?
- No problem! Simply ask your pharmacist to print a list of your purchases during the year. Your accountant will also thank you, as this list prevents them having to add up all those slips!
- Most Chiropractors, dentists, registered massage therapists, and other medical practitioners will also do this upon request.
Forgot to claim a donation receipt last year?
- If you’ve found an extra donation slip that you didn’t include in your prior year’s donation claim, don’t worry, these are eligible to be claimed for up to five years. Simply include it in the current year with a note to your accountant.
Applying for the Trillium Benefit?
- The Trillium Benefit is designed to help lower income individuals to cover essential living costs. Don’t forget to keep your rent or property tax receipts if you’re applying! CRA frequently reviews these amounts, especially for students who are renting while attending post-secondary school.
Bringing in Your Tax Return Early?
- Remember that many banks and investment companies are not required to release T3 slips until the end of March, so let your accountant know if you may be expecting additional slips.
Important Deadlines to Remember:
- The deadline for personal tax returns is April 30th.
- If you are the owner of an unincorporated business or member of a partnership, you return is not due until June 15th, but if your owe any tax, it will still be due by the regular deadline of April 30th.
- If you are an unincorporated business that is registered for HST, you are not required to file until June 15th. If you have taxes owing, they are due by the regular deadline of April 30th.
- If your business has payroll, or pays dividends, your T4 and T5 summaries and slips must be filed by February 28th.
- If you are a member of a partnership, your T5013 must be filed by March 31st.