by Meiz Majdoub
We are already inching into 2018 and will deviate from our on going discussion on the Topic of insurance and devote my first article of the year on preparation for your tax return.
As you know, taxes for the year ending December 31, 2017, need to be filed by April 30, 2018 and if any tax is owed, it must be paid by April 30, 2018. Except for self-employed professionals who must file their taxes by June 15, 2018, although all taxes owed must be paid by the April 30, 2018 deadline.
As you get ready to file your taxes, please remember the following.
- RRSP contributions made up to the first 60 days of the year can be used for the previous year. As such you have till March 1, 2018 to ensure your contributions count.
If you borrowed from your RRSP under the first time home buyers plan, be sure to contribute the repayment amount otherwise the amount deemed to be repaid, will be added to your earned income and tax paid on it.
- Tax Free Savings Account (TFSA). If you withdrew from your TFSA in 2017, that amount is re-instated in addition to your current year contribution.
- Investment Expenses: Interest on money borrowed to invest and paid in 2017 can be claimed on your 2017 taxes.
- Loans to split incomes: A common tax practice is to lend funds to a spouse or family member, so as to have investment income taxed in the hands of a family member in a lower tax bracket than yours. Interest rate must be at least a prescribed rate, and the interest is paid by the year end for that family member to claim that interest as a deduction, and for the lender to include it in their taxes as investment income.
- Convert RRSP to RRIF by age 71- If you turned 71 in 2017 you would have turned your RRSP to RRIF and started receiving income. If you received any income in 2017, this must be claimed.
- Registered Education Savings Plan (RESP)- For beneficiaries of an RESP, if you have unused carry-forward room, you can receive up to $1,000 of CESG annually with a $7,200 lifetime limit up to and including the year the beneficiary turned 17. If you have less than 7 years before the beneficiary turn 17 and haven’t maximized your RESP, consider making a contribution before the calendar year in which they turn 18.
- Interest on Student Loans: Remember to claim the tax credits in 2017 for the amount of interest paid by December 31, 2017. Also the education credit for tuition , etc, can be claimed by the student and up to $5,000 can be transferred to the spouse or parent.
- Medical Expenses: A tax credit for medical expenses can be claimed when your total expenses are in excess of 3% of your net income which in 2017 is $2,268. If you have unclaimed expenses prior to 2017, you should look into it, as eligible expenses are those paid during a 12 month period ending in 2017.
- Charitable Donations: There are donation credits for both levels of government and this can be a significant savings of up to 50% of your contribution. This is the last year to claim the 1st time Donor’s Super Credit. So, if 2017 was your first year of contributing, make sure you claim it. Donations less than $200 attract 15% credit while anything over $200 up to $1,000 gets you 29% and there’s provision to claim prior years that were not claimed.
- Moving Expenses: If you have moved and established a new home to be employed or start a business, you can claim eligible expense from your employment or self employment from income earned at your new location. There are some details you need to know and which expense to claim, please contact your advisor.
- Transit Pass: As of July 1, 2017, the public transit pass ended. You can however claim the cost of the monthly public transit passes from January 1, 2017 to June 30, 2017.
- Adoption Expenses: As a parent, you can claim eligible adoption expenses related to the adoption for a child under the age of 18 to a maximum of $15,670, certain conditions apply.
- Declaration of Condition of Employment: Form T2200 which is issued by your employer when some or all of your income is commissions. Be very careful on the expenses that you claim as CRA will only allow those expenses that your employer deem you have to expensed and you’re not reimbursed. Furthermore, ensure your expenses are backed by invoices and receipts. Should you claim automobile use and expenses, ensure you keep a travel log book.
- Claiming the principal residence exemption: If you sold your principle resident and bought another one, be sure to advise your tax preparer as there are new requirements to follow to be eligible for the tax free capital gain.
We certainly hope although not exhaustive, but we have provided you with some guidelines to file your personal tax return. No attempt has been made here to look into Sole Proprietor, partnerships or incorporated businesses.
Please see your tax practitioners if in doubt.
About the writer
Meiz Majdoub, B.Comm, is a financial professional with over 30 years of experience and is accredited with a CLU, CH.F.C. He is also a member of the Conference for Advance Underwriters (CALU). and the Estate Planning Council Of Ottawa. He has helped individuals, organizations and corporations attain their goals in the areas of Financial & Estate Planning, Insurance, Living Benefits and Employee/ Group Benefits. He can be reached at: 613-749-4007, or firstname.lastname@example.org.