By Pierre S. Goulet, CFP, FMA, FCSI
Practice Manager - Financial Planning and Insurance Services – SISIP Financial Services, Ottawa
Now that the RRSP season is behind us, Canadians turn their attention to income tax time. The deadline for filing your 2008 tax return is April 30th 2009. Depending on your situation, non-refundable tax credits can help reduce your tax base. Here are a few simple tips you should keep in mind.
Charitable donations
Those of you who make donations to your favourite charity will get a tax credit when these are claimed on your tax return. Keep in mind that the federal credit is 15% on the first $200 and 29% on amounts above $200. In addition, there are corresponding provincial credits based on your province's tax rates.
Charitable donation receipts can be transferred to your spouse. The higher income earner should claim all donations if the province of residence has a provincial surtax and the higher income earner is subject to it. This way you will get the maximum credit against the income in the highest tax bracket. If surtaxes do not apply, either spouse can claim the donations.
Medical Expenses
Medical expenses are also transferable between spouses. Medical expenses can include amounts paid outside of Canada and they must be more than 3% of your net income or $1,962, whichever is less. Therefore, the spouse with the lowest income should claim all expenses.
You can claim the expenses of all immediate family members (child, spouse, parent, grandparent, brother, uncle, niece.) who depended upon you for support during the tax year. The total of these expenses must be more than the lesser of $1,962 or 3% of the dependent's net income for the year up to a maximum of $10,000.
You can claim medical expenses paid in any 12-month period ending in 2008 that were not claimed in the previous year.
Tuition and Education Amounts
You can claim fees paid for post-secondary courses. Each claim must be $100 or more for each educational institution and the institution should provide you with an official tax receipt or a form T2202A. A portion of the education amounts can also be transferred from spouses and children. To find out what amount is eligible, complete the calculation on the back of your T2202A or schedule 11 in your income tax forms.
Spouse or Common-Law Partner Amount
If your spouse or common-law partner earned less than $9,600 last year, follow the calculation on line 303 of your return to see what amount you can claim.
If you were single, divorced, separated, or widowed you can claim a maximum amount of $9,600 minus the income for any dependent. This amount is called the "Amount for an eligible dependent" and is found on schedule 5 of your return.
Age and Pension Credits
These amounts are based on your age and whether you are receiving a pension and can also be transferred to your spouse.
All of the above mentioned credits and further explanations are in your General Income Tax and Benefit Guide 2008. Take the time to read the portions of the guide that apply to your claims. It may save you money or prevent you from making a costly mistake.
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This article is for general information purposes only and is the opinion of
the writer.
