Canadian Peronsal
Tax

Personal Tax Return

One of your biggest annual expenses could be your personal income tax. Effective tax management is the cornerstone of wealth management, so a well-thought-out strategy becomes even more important as most of your financial decisions affect your taxes.

As a tax account in Mississauga, we help you define your tax strategy and consider tax-saving opportunities. Based on our versatile expertise, we provide tailored advice to ensure that your tax strategy complements your lifestyle and financial framework. We offer a holistic approach to help preserve more of your hard-earned wealth by assessing the tax implications of your personal and business decisions. provide guidance. 

 

Deductions

Some deductions you can avail when it comes to Canadian personal taxes are:

In Canada, post-secondary students or their parents can take advantage of the tuition credit, a type of education tax credit, to reduce their tax burden. This is a non-refundable credit that can be claimed up to $5,000.

Benefits include a labour component and a base component with a total benefit of up to $5,120. Depending on the number of children, the largest base component ranges from $1,330 to $3,325. You might be eligible for $1,330 for the primarily qualified subordinate.

The Federal Government of Canada allows you to claim a non-refundable charity tax credit when donating to a registered charity. Reductions in tax liability to Canadian federal and provincial governments are known as tax credits. 

Due to the primary inhabitant tax exemption, if you sell your home, or are deemed to have sold your home, you generally do not have to pay tax on the sale proceeds. This is true if the property was your primary residence each year you owned it and that your accountant makes the correct election when filing your taxes.

 

This exemption gets quite complicated and costly if you have rented out your residence in part e.g renting out your basement or renting it out as you work abroad.

If you sell a capital asset and the proceeds from the sale exceed your purchase price plus renovations, you are deemed to have made a capital gain. According to the CRA, buildings, land, stocks, bonds, and real estate investment trust units are capital assets subject to this tax Capital Gains is calculated as Sales proceeds less Cost to purchase and renovate the property. Sale proceeds is the price received for a fixed asset less selling cost. Cost is the cost of purchasing the property and all other costs associate with purchase plus costs on any renovations. Capital gains must be declared as income on your tax return.

Payments received for the use of property are considered rental income. Other amounts may be rental income and must be reported on your tax return in addition to your regular rental payments. If you are the sole owner of a rental property, all rental income is taxed at the same personal marginal tax rate. If you share ownership of the property with others, the income is split between everyone, and each person pays taxes on that income at their rate.

While, you must report all rental income from your property, there are numerous deductions that you can take against this income.

After a divorce or separation, contributions made to the Canada Pension Plan (CPP) while you and your spouse or domestic partner lived together may be split equally. Credit splits are the technical term for this. Even if only one spouse or partner contributed to her CPP, the credits can be split.

Expenses such as daycare, summer camps, childcare, and nannies are deductible expenses but the parent with the lower tax rate must claim the deduction. However, the amount of deduction may vary per child. 

If you moved 40km closer to your workplace, the CRA lets you deduct moving expenses from your taxable income. This is only in the case that your employer did not reimburse you for these.

The following types of dues may be claimed by a taxpayer on a tax return.

  • Union or civil service association dues.
  • Professional Membership dues such as CPA dues

This is only in the case that your employer did not reimburse you for these.

Deductions

Some deductions you can avail when it comes to Canadian personal taxes are:

Tuition Credits

In Canada, post-secondary students or their parents can take advantage of the tuition credit, a type of education tax credit, to reduce their tax burden. This is a non-refundable credit that can be claimed up to $5,000.

Child Benefits

Benefits include a labour component and a base component with a total benefit of up to $5,120. Depending on the number of children, the largest base component ranges from $1,330 to $3,325. You might be eligible for $1,330 for the primarily qualified subordinate.

Charitable Donations Tax Credit

The Federal Government of Canada allows you to claim a non-refundable charity tax credit when donating to a registered charity. Reductions in tax liability to Canadian federal and provincial governments are known as tax credits.

Sale Of Principal Residence

Due to the primary inhabitant tax exemption, if you sell your home, or are deemed to have sold your home, you generally do not have to pay tax on the sale proceeds. This is true if the property was your primary residence each year you owned it and that your accountant makes the correct election when filing your taxes.

This exemption gets quite complicated and costly if you have rented out your residence in part e.g renting out your basement or renting it out as you work abroad.

Capital Gains On Sale Of Property

If you sell a capital asset and the proceeds from the sale exceed your purchase price plus renovations, you are deemed to have made a capital gain. According to the CRA, buildings, land, stocks, bonds, and real estate investment trust units are capital assets subject to this tax.

Capital Gains is calculated as Sales proceeds less Cost to purchase and renovate the property. Sale proceeds is the price received for a fixed asset less selling cost. Cost is the cost of purchasing the property and all other costs associate with purchase plus costs on any renovations. In Canada, 50% of your capital gains must be declared as income on your tax return. (real estate taxes)

Separation Allowance

After a divorce or separation, contributions made to the Canada Pension Plan (CPP) while you and your spouse or domestic partner lived together may be split equally. Credit splits are the technical term for this. Even if only one spouse or partner contributed to her CPP, the credits can be split.

Daycare Expense

Expenses such as daycare, summer camps, childcare, and nannies are deductible expenses but the parent with the lower tax rate must claim the deduction. However, the amount of deduction may vary per child.

Moving Expenses

If you moved 40km closer to your workplace, the CRA lets you deduct moving expenses from your taxable income. This is only in the case that your employer did not reimburse you for these.

Membership Dues

The following types of dues may be claimed by a taxpayer on a tax return.

1. Union or civil service as sociation dues.

2. Professional Membership dues such as CPA dues

This is only in the case that your employer did not reimburse you for these.

Rental Income Tax

Payments received for the use of property are considered rental income. Other amounts may be rental income and must be reported on your tax return in addition to your regular rental payments.

If you are the sole owner of a rental property, all rental income is taxed at the same personal marginal tax rate. If you share ownership of the property with others, the income is split between everyone, and each person pays taxes on that income at their rate.

While, you must report all rental income from your property, there are numerous deductions that you can take against this income. Reach out to our Chartered Professional Accountant to find out more!

Reach out to your professional now!

Whether you want to fully comply with your increasingly complex tax obligations or plan for the future of yourself and your family’s finances, seek professional and reliable help managing your financial affairs.