We provide a full range of taxation services and help you prepare tax returns. Our objective is to let you pay as little taxes as possible by utilizing the latest tax legislations, deductions and credits available. By following our tax tips below, you will be able to see what a big difference a small change in your tax management can make.

Please note that they are not tailored to each individual's situation. Therefore, it is wise that you let us review your plan before making any major financial decisions.

General Taxation Information

The taxation year for individuals resident in Canada is from January 1 to December 31 of each calendar year. The deadline for filing the Income Tax and Benefit Return is April 30 of the following year. For individuals with self-employment income and their spouses, the filing deadline is June 15 of the following year. Any tax due is still payable by April 30. For deceased individuals, the deadline is the later of the normal deadline and six months after their death.  

Pension Income Splitting

You are now able to split pension income with your resident spouse or common-law partner when both of you file the income tax returns for the taxation year. Taxpayers are allowed to allocate up to half of their eligible pension income (income that qualifies for the pension income tax credit) to their lower-earning spouse or common-law partner. It may result in significant tax savings for you both.

Age Credit

In your 2009 income tax return, you can claim federal age credit if your net income was less than $75,032 as well as provincial age credit if your net income was less than $59,308 in BC. If you live in a province other than BC, please consult your accountant for the eligible net income. The unused amount is transferable to your spouse or common-law partner.

Renting out part of your house

When you rent out part of your home, you have changed the use of that part from your primary residence to a rental property. Therefore, you need to claim rental property income on your tax return. When you sell your home or stop renting a portion of your home, you may be required to report a corresponding capital gain.

To avoid paying for capital gains, the rented area of your home has to be small relative to the rest of your home, no structural changes to your home have been made to create rental space and no capital cost allowances have been claimed on the rented area.

Home office Expense

If you are self employed or in some other cases, you can claim your home office to offset your business income or employment income. You can claim heat, hydro, insurance, mortgage interest, property taxes and minor repairs based on your office area in proportion to total home area. Contact us for more details on how to claim this home office expense.

RRSP Contribution

You can use your RRSP contribution against your income for tax deferral purpose. To maximize your tax advantages, it's usually best to contribute the full amount. The maximum contribution limit shows on your latest notice of assessment. But beware! Contributing over your allowed amount may result in 1% tax on those excess contributions.

Just because you contribute to an RRSP in 2009 does not mean that you need to deduct those contributions on your 2009 taxes. If your income in a tax year is low, consider carrying forward your contributions to a future year when your income may be higher.

During low-income years, it's a good practice to contribute to your RRSP even though you're not going to deduct them because any income earned from it is tax sheltered.

Of a couple, the one who earns the higher income should consider making the RRSP contributions as he or she will benefit the most from the allowable deduction. This deduction is calculated according to the taxpayer's tax rate: the higher the tax rate, the more beneficial the deduction.

It can be tax beneficial to contribute to your spouse or common-law partner's RRSP, particularly beneficial after one spouse reaches/exceeds the age of 71. If you are over 69 and have RRSP contribution room, and if your spouse is under 71, you may use your RRSP contribution room by contributing to your spouse's RRSP. The tax advantages are that you reduce your current income and increase your spouse's income on retirement.
 

Sale of Principal Residence

Capital gain on the sale of principal residence is tax free. In the same way the mortgage interest on principal residence is not tax deductible. However, it can be deductible in few cases (check with your accountant).

Entertainment Expenses

There is a restriction on the deductibility of business-related meals, beverages and entertaining expenses for tax purposes, based on a general presumption that these normally combine elements of both a personal and business nature. Only 50% of these expenses are allowed as a tax deduction, with certain exceptions. The costs of restaurant gift certificates used for promotion are also subject to this limitation.

Included in the category of entertainment expenses are the costs of tickets for theatre, concerts or athletic events, including the costs of private boxes at sporting events. Business owners should keep good records to support these expenses, including the names of those entertained, the places, dates and times.

Membership fees and annual dues for a club, the main purpose of which is to provide members with dining, recreational or sporting facilities, are not tax deductible. Nor are the costs for the use of a yacht, camp, lodge or golf course. However, the costs of meals at such facilities are deductible subject to the 50% limitation rule.
 

Carry forward or transfer tuition & education credits

If you're a student, you may carry forward unused tuition & education credits to a year when your income may be higher - or you can transfer them to a supporting person (e.g., spouse, common-law partner, parent, grandparent). NOTE: You can only transfer current-year education & tuition amounts, not balances that you carried forward from a previous year.

Make paying back those student loans a little easier

If you are repaying your student loans, you are likely paying interest. However, you can claim your interest paid on those loans. Also, you can carry forward student loan interest for up to 5 years.

2010 CPP and EI Rates

For CPP, employee contribution rate is 4.95%. The maximum pensionable earning is $47,200 and maximum contribution is $2,163.15. For EI, contribution rate is 1.73%. The maximum insurable earning is $43,200 and maximum contribution is $747.36.

2010 Automobile rates and limits

Capital cost of a vehicle remains unchanged at $30,000, maximum deductible leasing cost at $800 per month, and maximum interest deduction at $300 per month. Tax exempt allowance paid by employers to employees using their own car for business purposes is $0.52 per KM for first 5,000 KM and $0.46 for each additional KM.

Tax Free Savings Account

A new tax free savings account (TFSA) comes into effect January 1, 2009. It allows Canadians who are 18 or older to save up to $5,000 every year in a TFSA and to withdraw funds and/or investment income - including capital gains - without being taxed. You can also put back the money you've withdrawn without reducing your allowable contributions.

Although there is no tax credit for contributions to a TFSA like an RRSP, Canadians can realize significant savings in using a TFSA to earn interest without paying taxes on that interest.
 

File a tax return even you have no tax due or refund

Filing a tax return helps

• reduce the ability of the CRA to subsequently make arbitrary adjustments to your income and taxes owing for that tax year
• determine your eligibility for government programs, like the Canada Child Tax Benefit (CCTB), GST/HST credit or any new tax rebates that may be announced
• increase your future RRSP contribution room when you reports earned income