TORONTO, April 27 /CNW/ - With just a few days to go before the April 30
deadline for filing your personal tax return, you can still be rewarded with a
lower tax bill if you pay careful attention to all the available deductions
and credits and how you claim them.
Paul Woolford, partner with KPMG's Enterprise practice in Toronto, offers
practical tips to help you reduce your 2008 tax bill. For more tax filing tips
and tax planning ideas to help you save next April, pick up KPMG's Tax
Planning for You and Your Family 2009, available in bookstores across Canada.
2008 Tax Filing Tips
Are you an investor?
You may be able to claim deductions for:
Interest - If you've borrowed money that you're using to earn income from
a business or property, such as common shares bought on the stock market, the
interest you pay is generally deductible.
Carrying charges - You may also be able to deduct carrying charges you
pay to earn investment income, such as charges for the management and
safekeeping of your investments; safety deposit box fees; accounting fees for
recording investment income; and fees for investment counselling.
RRSP contributions - If you made an RRSP contribution by March 1, 2009
and you have enough RRSP deduction room, you can claim the deduction on your
2008 income tax return or carry it forward, if doing this will benefit you
Small business investment losses - If you or your company invested money
in an unsuccessful "small business corporation" and you now have a capital
loss on shares of the corporation or debt it owes you, the losses may qualify
as "allowable business investment losses". Unlike other capital losses, this
type of loss can be used to reduce income other than just simply capital
gains, such as employment or investment income.
Are you a commuter?
Commuters' tax credit - If you kept your monthly or certain eligible
weekly transit passes for travel on local or commuter buses, subways and
trains, remember to claim the new transit pass tax credit on your 2008
personal tax return. You may be able to claim the credit for monthly passes
used by your spouse or child under 19.
Are you a business owner?
Self-employment expenses - If you're self-employed, make sure you take
advantage of all the business-related expenses that you can claim to reduce
your taxes. These include automobile expenses, parking fees, business
association fees, entertainment costs, cell phone bills, depreciation on your
computer and salaries paid to assistants, including family members. Remember
that in most cases, you can deduct private health care premiums as a business
expense instead of as a medical expense.
Are you an employee?
Employment tax credit - If you are employed, remember to claim the
employment tax credit on up to $1,019 on your 2008 tax return to help cover
your work-related expenses.
Do you have a family?
Child care expenses - If you have qualifying child care expenses, you may
be able to deduct $7,000 for each child under seven and $4,000 for each child
aged seven to 16. The expenses have to be made to allow you or your spouse to
work, carry on business, attend school or carry on grant-funded research.
Usually, the lower-income spouse must claim the deduction. If the lower-income
spouse is a full-time student, however, the higher-income spouse may be
entitled to deduct part of the child care expenses.
Children's fitness tax credit - If you have a child under 16 enrolled in
an eligible fitness program, you may be able to claim a credit on up to $500
of related expenses paid in 2008.
Charitable donations - If you're married, don't claim charitable
donations separately - combine them and claim them on the higher-income
spouse's return. The receipts can be in either spouse's name.
Pay your spouse's tax bill - If you earn income in a higher tax bracket
than your spouse, consider paying your spouse's tax bill with funds from your
own separate bank account. This will leave your spouse with more funds of his
or her own for investments, on which he or she will pay a lower rate of tax
than you would.
Transfer your credits - If claiming certain non-refundable credits has
reduced your federal tax owing to zero without using up all the credits, you
may be able to transfer the unused amount to your spouse. Credits for tuition
fees, education amounts, the age amount (for people over 65) pension income
credits or disability credits can be transferred to your spouse's return, as
long as you've used as much of them as you could.
Are you a student?
Transfer unused credits - If you're a post-secondary student and you are
not able to use your tuition, education and textbook credits in 2008 (because
you have no tax to pay) you can normally transfer up to $5,000 in combined
federal credit amounts to your spouse or to a parent or grandparent. You can
carry forward any unused and untransferred tuition, education and textbook
amounts and claim them against your taxable income in any later year.
Did you move during 2008?
Moving expenses - Moving expenses are often overlooked as a deduction. If
you started working at a new location of employment or started a new business
in 2008 and you moved to a home that is 40 km closer to your new work location
than your old home was, you may be able to deduct many of your moving
expenses, providing that the expenses were not reimbursed by your employer.
Do you have medical expenses?
Medical expenses - If your family has medical expenses totalling more
than 3% of your net income (or more than $1,962 if your net income is over
$65,400), you may be able to claim a federal tax credit for all qualifying
expenses above the threshold. Keep in mind that you can claim your expenses
for any 12-month period ending in 2008 on your 2008 return. The list of
qualifying expenses is long - check the CRA web site for more information.
Can't afford to pay your tax bill?
Reduce late filing penalties - File your return on time even if you can't
pay the balance owing. Doing this will eliminate the 5% late-filing penalty,
though you will still have to pay interest on your balance. If you can't file
your return on time but you know you owe taxes, making a payment by April 30,
2008 will help reduce late-filing penalties.
If you are self-employed and have June 15 filing deadline, you should
still pay your estimated tax owing by April 30 to avoid late payment interest
Are you getting a refund?
Put your refund to work - If you get a tax refund this year, you can use
it right away to help you save tax in 2009. For example, you can use it to pay
non-deductible debt such as mortgage or credit card balances or contribute it
to a tax-assisted savings plan such as an RRSP, Tax-Free Savings Account
(TFSA) or RESP.
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