Find money-saving opportunities this tax season

Every year, inevitably, April 30 rolls around. In the weeks leading up to the personal income tax return filing deadline, many across Canada brace themselves for the ordeal of getting their financial paperwork in order. Few enjoy the process of preparing to file their taxes. But what may seem like a chore is also an excellent prompt to discover tax-saving strategies that can help you this year and in years to come.

As we all head into tax season, make sure you’re taking advantage of three important opportunities to minimize your tax bill.

1. Maximize tax deductions and credits

A wide range of federal tax deductions and credits are available to eligible taxpayers. It’s well worth the time to scan the list for any that apply to your situation. For example:

• Employees may be able to deduct union and professional dues, certain employment expenses and moving expenses
• People in retirement may be able to deduct the pension income amount and split pension income with a spouse
• Families may be able to deduct adoption expenses, child care expenses, support payments and eligible medical expenses
• Students may be able to deduct tuition, education, textbook amounts, moving expenses and the Canada training credit
• People with disabilities may be able to deduct disability supports, home accessibility expenses and the disability tax credit

Check to see what’s available at a provincial/territorial level as well.

2. Take advantage of registered plans

Money grows on a tax-deferred basis within registered plans such as Registered Retirement Savings Plans (RRSPs)/Registered Retirement Income Plans (RRIFs), Tax-Free Savings Accounts (TFSAs), Registered Disability Savings Plans (RDSPs), Registered Education Savings Plans (RESPs) and First Home Savings Accounts (FHSAs). RRSP and FHSA contributions also result in a tax deduction. Spousal RRSP contributions can be part of a long-term strategy to split income with a spouse or common-law partner. Work with your financial advisor to create a plan that takes full advantage of all the registered plans that make sense for your situation.

3. Pool donation receipts over several years

When you deduct charitable donations, the first $200 gets a federal tax credit of 15%, but amounts over $200 generally get a federal tax credit of 29%. Provincial/territorial tax credits are structured similarly, with a higher tax credit after the first $200. This means it’s usually better to pool donation receipts and deduct multiple years’ donations all at once so a higher tax credit applies to more of the donated amounts. You can wait up to five years to deduct a charitable donation.

Remember that good record-keeping throughout the year makes tax season a lot simpler. So, while taxes are top of mind, set systems in place to make it easier to find everything you need in the lead-up to next April 30. You’ll thank yourself next spring!