Top 10 Tax-Filing Tips From Ernst & Young



    TORONTO, March 13 /CNW/ - Now that the tax season is in full swing,
personal tax returns are top of mind. Allow Ernst & Young's top 10 practical
tax-filing tips to guide you through this process. Some of these tips will
save you time, some will save you stress, and most important, many will even
save you money.

    
    1.  One spouse or partner should claim all the family's charitable
        donations.

    The federal tax credit for donations is available in two stages - a
    low-rate credit is available on the first $200 of donations made in the
    year and a high-rate credit is available on the remainder. Spouses and
    common-law partners can claim donations in respect of one another,
    resulting in tax savings because the low-rate credit is only used once.
    In addition, because unused donations can be carried forward for up to
    five years for purposes of computing the credit, accumulate donations
    made over a few years and claim them all in one year.

    2.  Medical expense claims (limited by an income threshold).

    The lower your net income, the more you can claim in eligible medical
    expenses. Because one spouse or common-law partner can claim medical
    expenses on behalf of the entire family, claim all expenses in the
    lower-income spouse's return. The individual who is making the claim
    should have sufficient income to absorb the credit, as this is a
    non-refundable credit. You might be able to claim medical expenses of
    other dependent relatives (e.g., elderly parents or grandparents).

    3.  Take advantage of the new 2006 tax credits and deductions.

    These include the employment tax credit, the credit for public transit
    passes, the textbook tax credit and the deduction for tradespeople's
    tools.

    4.  Business-related expenses that business owners can claim.
    Take advantage of all available deductions, from automobile expenses to
    parking, and business association fees to home-office expenses (if you
    qualify). In most cases, you can deduct private health-care premiums as a
    business expense instead of a medical expense, and one-half of CPP paid
    in respect of self-employed earnings is deductible instead of creditable.

    5.  Older receipts may have value in the 2006 return.

    Charitable donations can be carried forward and used in any of the
    five years after the year the gift is made. For medical expense receipts,
    these can be claimed for any 12-month period that ends in that year if
    they have not been claimed previously. And for other missed expenses,
    keep in mind that the CRA has the discretion to make adjustments to
    previously filed returns (10 years back) in relation to certain errors or
    omissions, on request from a taxpayer.

    6.  Don't forget moving expenses.

    If you moved during 2006 to start a new job or a new business, or to go
    to university or college, you may be able to claim expenses relating to
    the move. In addition to the actual cost of moving personal effects,
    travel costs, including meals and lodging while en route, can be claimed.
    Lease cancellation costs, as well as various expenses associated with the
    sale of your former residence, are also deductible, including up to
    $5,000 in costs associated with maintaining a former residence that was
    not sold before the move.

    7.  Filing tax returns for children.

    In many cases, there are benefits in filing returns for children who had
    part-time jobs during the year. By filing a tax return, your child
    reports earned income and thus establishes contribution room for the
    purpose of making RRSP contributions. The contributions can be made in
    any future year. Another advantage in filing a return for teenagers is
    the availability of refundable tax credits, including the GST credit and
    certain provincial credits for low- or no-income individuals over age 18.

    8.  Business investment loss.

    It is possible to claim a loss on funds invested in a small business
    corporation if all you have to show for the investment is shares or a
    note of a worthless corporation. A "business investment loss" is like a
    capital loss in that only one-half is deductible; however, unlike a
    capital loss, it can be claimed against any income in the year, not just
    capital gains.

    9.  Capital losses can only be applied against capital gains, and carried
        back three years and/or carried forward indefinitely.

    If you realized a net capital loss in 2006 and have realized net gains in
    any of 2003-2005, file a form T1A to carry the loss back to those years
    and recover the related tax. Unused net capital losses from prior years
    can be applied against your net taxable capital gains in 2006.

    10. Using income tax software is generally quicker, easier and less
        prone to errors.

    Programs often include helpful tax-filing hints based on the information
    you enter. The processing time of electronically filed returns is
    substantially shorter than that associated with paper returns.
    

    When in doubt, see a professional tax advisor. Tax return information can
alert an advisor to a number of potential tax-saving opportunities that can
provide benefits for many years to come.

    For more helpful tips and information, see Ernst & Young's Guide to
Preparing 2006 Personal Tax Returns, available in both print and online
editions. To order a copy, contact the Canadian Institute of Chartered
Accountants at 1-800-268-3793 or visit knotia.ca/store/06t1eypr.

    About Ernst & Young

    Ernst & Young, a global leader in professional services, is committed to
restoring the public's trust in professional services firms and in the quality
of financial reporting. Its 114,000 people in 140 countries pursue the highest
levels of integrity, quality and professionalism in providing a range of
sophisticated services centred on our core competencies of auditing,
accounting, tax and transactions. Further information about Ernst & Young and
its approach to a variety of business issues can be found at
ey.com/perspectives. Ernst & Young refers to the global organization of member
firms of Ernst & Young Global Limited, each of which is a separate legal
entity. Ernst & Young Global Limited does not provide services to clients.





For further information:

For further information: Nichola Petts, Media Relations, Ernst & Young
LLP, (416) 941-1813, nichola.petts@ca.ey.com


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