I have always believed that the best tax planning strategy is to keep in your wallet as much of your hard-earned money as possible. I have come across a number of tax deductions that are often overlooked or unknown to many. I’d like to share six of the most common with you.
Let’s look at how much you actually get back for every dollar that you invest into your RSP. You immediately get a tax deduction which allows you to reduce your taxable income and optimize your savings for retirement. On top of that, you can invest the assets and let them grow on a deferred tax basis and redeem them later at a lower tax bracket. If you would like to know exactly how much you can get back, please visit FunData’s site for a quick calculation.
OSAP Interest Payment
This one is pretty straightforward. You can claim the interest you have already paid on qualified government student loans. If you have not done so, you can catch up with up to five years’ worth of interest payments. You may find all the details online at your National Student Loans Service Centre.
Working from Home Costs
Many educators have been teaching remotely due to the COVID-19 restrictions. While working remotely, some teachers will have incurred costs to buy furniture, upgrade their subscriptions to things like digital storage, and their electricity and phone bills. If you qualify, you should receive a “Form T2200, Declaration of Conditions of Employment” to be completed and signed by your employer. You can deduct the part of your costs that relates to your workspace, such as the cost of electricity, heating, maintenance, property taxes, and home insurance. However, you cannot deduct mortgage interest or capital cost allowance. CBC reporter Elizabeth Thompson (2020) breaks down more details on tax breaks for working from home during the pandemic.
School Supply Credit
Some of you may be aware of the eligible educator school supply tax credit which allows you to write off up to 15% of $1,000 of eligible teaching supplies expenses as a qualified teacher. You can find details on the Government of Canada’s page for Eligible educator school supply tax credit.
Teacher Union Dues
Most professional association fees and union fees are tax-deductible, lowering your taxable income. Government of Canada provides information on this under Annual union, professional, or like dues.
Canada Training Credit:
This is not a tax deduction, but rather a tax credit to consider. The government introduced a new refundable tax credit called the Canada Training Credit, which may be used for eligible tuition and fees paid for courses taken in 2020 and subsequent taxation years. For the purpose of calculating the Canada Training Credit, eligible educational institutions are universities, colleges, or other educational institutions in Canada providing courses at a post-secondary level; or an institution in Canada providing occupational-skills courses that is certified by the Minister of Employment and Social Development. For more, see Government of Canada’s Canada Training Credit information pages.
It is important to speak with a qualified CPA or tax preparer for specific tax advice.
Post written by: Dan Fernandez
Dan is a Wealth Advisor with DMF Private Wealth, who provides independent financial advice.
Dan is happy to answer any questions you may have about your financial picture. He can be reached at 905-512-5629 or by email at firstname.lastname@example.org.