Income tax season is slowly approaching. Like every year, you’ve got to get all your documentation together and file those taxes! For some people this will be a simple process of entering numbers on a form and off it goes to the government. As for others, it will seem like a mountain to conquer and the mere thought of doing it alone could be paralyzing. If you consider yourself like the second to be like the There are some income tax opportunities which you don’t want to miss out on.
Whichever type of tax filer you are, you may want to make sure to read this. You could be missing out on some income tax opportunities you didn’t even know existed.
As a Canadian, our income is taxed by the government in order to pay for public services. In addition to the federal
taxes, each province has its own rules and rates of taxation that will also benefit that province’s public services.
Opportunity and income taxes are not necessarily concepts you might have thought go together. I would argue that
they do. It’s a fact of life, we need to pay income taxes, the opportunities lies within the deductions, credits and
refunds. It won’t prevent you from having to pay taxes but will reduce the amount or even allow for a little cash
back at times! So time to pay attention and do your homework!
Opportunity #1: Income Tax Credits
A tax credit will reduce the amount of income taxes you owe.
Opportunity #2: Income Tax Deductions
A tax deduction will reduce the taxable amount. For example, if 5000$ is contributed in an RRSP which is tax deductible, a 5000$ credit is given less to pay taxes on, your taxable income will be reduced by 5000$.
Opportunity #3: Refunds
Income tax refunds will be mostly granted when taxes are overpaid through the year say, through your payroll deductions. At times, there are special refunds you can take advantage of, like the climate action incentive.
At the end of the day, what you need to remember is that tax filing may not be as simple as entering numbers on a form or a pay-check tax software. Some software will have the advantage of cuing you into some benefits, deductions, credits and refunds. For a complete analysis you might want to consult a professional. If not, consult the revenue Canada website that has all the details you need.
Happy tax season!