Yes, tax season is here. So now’s the time to collect all your tax slips, receipts and supporting documents and schedule an appointment with your accountant to review your tax situation.
The CRA has not issued particularly big changes for tax year 2011, but here are few tax saving opportunities of note:
Pension Income Splitting — Pensioners can jointly elect with their spouses or common law partners to split eligible income if they meet certain requirements. Only one joint election can be made per tax year, so if you both have eligible pension income, you will have to decide which pension income you will split for tax purposes.
Public Transit Tax Credit —You can deduct the cost of monthly public transit passes for unlimited travel on local buses, streetcars, subways, commuter trains or local ferries.
Children’s Arts Credit — You can deduct up to $500 per child for the fees you paid in 2011 to enroll your child in a prescribed program of artistic, cultural, recreational or developmental activity. Children must have been under 16 years of age at the beginning of 2011 in order to qualify for the credit. Eligible activities include a range of programs, from art, chess, drama, music and languages, to scouting, sewing, photography and painting.
Tradesperson’s Tools Deduction — You may be able to deduct the cost of eligible tools you bought to earn income as a tradesperson. Eligible items include tools and associated equipment that was certified as necessary for you to provide and use in your job, but does not include electronic communications devices (like cell phones).
Of course, the CRA requires documentation for all of these credits, so be sure to find and save your receipts. Also, consider some other transactions or events of 2011 that might impact your tax situation:
• Marital status change
• Births or adoptions
• Sales of stock
• Medical expenses
• Purchase of a new home
In addition, go through your receipts for the year and organize them to save time. One easy way to do this is to look at the CRA line numbers on your last tax return and gather receipts by line number. Also, keep all of your slips — your T-4s, T5008s, T5s, T3s, T4RSPs — and year-end statements in one place so you can deliver them to your accountant in a timely manner.
Finally, remember that it’s never too early to discuss tax planning for 2012. For example, since you can only carry investment losses back three years, is there something you could sell at a loss this year to offset gains from prior years? Also, if you’re planning a major purchase, planning to get married or divorced or expecting a large medical expense in 2012, now is the time to discuss these events with your accountant.
Remember, the tax-filing deadline is April 30 for individuals, so please contact us soon to schedule a time to meet. If you have self-employment income, note that the deadline to file without penalty is June 15, but your taxes are still due by April 30.
We encourage you to keep good records throughout the year. Having your income and expenses well documented makes tax preparation easier and faster.