While we all have to pay taxes, there are various deductions and tax credits available to help us maximize our tax refund – many that Canadians are unaware of!
The Canadian government is always making changes to the deductions that are available to us, therefore it is well worth the time and effort to find out the deductions and tax credits that may affect you. The boost in your tax return can help you save more money in 2016, and you could use the additional money to help improve your credit score – like putting the money towards a loan to reduce it significantly.
In order to help you find ways to maximize your tax refund this year, we have put together a list of uncommonly known deductions and tax credits that you may be eligible to claim:
1) Family Deductions
Even though the Canadian government introduced the Universal child care benefit (UCCB) in 2006, there are still many Canadians that are unaware of this tax deduction. There have recently been some changes to the UCCB, and it now includes children aged 6-17. The amount you are able to claim per child has also changed, for children 6 and under it has increased to $160 per month, and for children 6-17 years old it has increased to $60 per month.
Another recent change to Family Deductions is the increase of the Child Care Expense, the maximum deduction per child has increased by $1000.
Another family deduction that many are unaware of is the Children’s Fitness tax credit, that lets you claim up to $1000 per child for fees paid for their physical activity program. In addition to claiming these fees for your own child, you can also claim fees paid for your spouse’s or common-law partner’s child.
For more information on family deductions, click here.
2) Student Deductions
Many students don’t realize that they can claim the interest paid on their student loan! Don’t worry if you weren’t aware of this until now, because you can still claim any interest you paid in 2015 or the previous 5 years. Either you can claim this on your personal tax claim, or someone related to you can claim it – like your parents.
For more information on student deductions and credits, click here.
3) Public Transit Deductions
If you regularly take public transit, you can claim the cost of your transit passes in 2015. In order to qualify for this deduction, your pass must have allowed you to unlimited travel on public transit for a minimum of 20 consecutive days in any 28-day period – for example of a monthly or annual bus pass.
For more information on what you need to support this claim, click here.
4) Tax-Free Savings Account (TFSA)
Even though you may already be aware of the Tax-Free Savings Account program, there have recently been some changes to it. The annual contribution amount has increased to $10,000 for your 2015 claim. Although this is great news for your 2015 tax claim, there is a proposed legislative measure to decrease the annual contribution amount to $5,500 for 2016 tax claims!
For more information on the Tax-Free Savings Account (TFSA) program, click here.
5) Moving Expense Deductions
If you had to move for a new job or to take courses as a full-time student, then you may be eligible to deduct your moving expenses from your tax claim! In order to qualify for this deduction, your move must have been at least 40 kilometres closer to your new job or school. If you meet these requirement, you’ll need the receipts from your move!
For more information about moving expense deductions, click here.
6) File On Time
You may think that this is a given but it’s incredible how many people submit their tax returns late, incurring additional charges. Your return needs to be filed on or before April 30th, 2016.
The late penalty is 5% of your 2015 balance owing, plus 1% of your balance owing for each full month your return is late (maximum of 12 months).
If you were charged a late-filing penalty for your tax claim in 2012, 2013, or 2014 then your late penalty for 2015 could be 10% of your 2015 balance owing, plus 2% of your 2015 balance for each full month your return is late (maximum of 20 months).
For more information on late-filing penalties, click here.
7) File Your Taxes Online for Free!
Canada Revenue Services lists several free systems to file you taxes online. A bonus of filing online is that you will receive your refund faster!
For a list of the free systems to file your taxes, click here.
Interested in Learning More About Taxes?
Canada Revenue Services has an online course for individuals who want to learn about Canada’s tax system and how to file a simple tax return. This is a quick course, and should only take you about 60-90 minutes!
To learn more about the course, click here.
For a complete list of provincial and territorial tax and credits for individuals, click here.
Year after year, the Canadian government is coming out with new tax credits that can lower the tax you owe and allow you to receive a better tax refund. The goal of these programs is to help you recoup the costs of living and enable you to boost your refund.
It’s important to be aware of these government credits at the start of the year so you can keep any receipts required to claim expenses back when it’s time to file your taxes in the following year. By taking the initiative and educating yourself about your available credits, you can save yourself more money when filing your tax return and improve your tax refund.
As we enter the 2016 tax season, take the time to consider all the ways you can save more money before you file. Maximizing your tax refund is one way that you can boost your disposable income and get something back from what you’ve already put in. You can then take those funds and use the money for other things – such as paying off our debts or even buying a new car.