Justin Trudeau’s much-ballyhooed tax hikes for the wealth have encouraged many of Canada’s top earners to reconnect with their tax planning accountants in Calgary in hopes of saving some money on their return. To cover the losses that will be incurred after Trudeau’s middle-class tax cut takes affect, those earning more than $200,000 annually will be taxed a full 33% of their income.
Though these changes will not affect your 2015 return, tax planning accountants in Calgary are being inundated with calls from clients looking to transition smoothly into this new system. With this in mind, Edison Wen’s tax planning accountants in Calgary have assembled 5 tips to help anyone reduce their taxes in Canada.
Take Advantage of the First Time Donor Super-Credit
A part of a major change to the 2013 tax budget, this “super-credit” was created. Available between the years of 2013-2017, this new super credit would replace the existing non-refundable charitable donation tax credit.
A first-time donor will be eligible for a 40% deduction for donations under $200, and 54% for those between $200-1000. If neither you nor your spouse have claimed the charitable donation tax credit within the past 5 years, you may be eligible for this first-time donor bonus.
Deduct your accounting fees
If you have taken advantage of the knowledge and expertise of tax planning accountants in Calgary in the past, there may be additional money-saving opportunities for you now. Many people overlook the fact that they can deduct fees paid to their accountant to prepare their individual income tax return. These fees can only be deducted from investment income, rental income, or business income reported on your tax return.
If your wealth was generated through your salesperson-savvy, you’ll be happy to know that you can deduct any reasonable expense incurred for the purpose of earning a commission income. You’ll need to complete form T2200, known formally as the Declaration of Conditions of Employment form, to support these expense deductions. Your tax planning accountants in Calgary can advise you further on this matter.
If your job requires the use of your personal vehicle (or other independent transportation), it may be possible to deduct these expenses. If your employment contract states that you must use your personal automobile (and you have completed form T2200), you may be able to deduct the following:
- Vehicular insurance fees
- All repair and maintenance costs
- Leasing fees (up to a maximum $800, plus taxes)
- Capital cost allowance, including your tax depreciation at a rate of 30% annually
- 407 charges
- Parking fees
It’s true that the Liberal government’s tax structure modifications have diminished the value of Tax Free Savings Accounts (TFSAs), but they’re still a viable option for savings. In 2015, the annual limit for TFSA contributions was set to $10,000, though this is slated to be reverted back to $5,500 once the Liberal structure is set in motion. Despite these changes, TFSAs still present wealthy Canadians with an excellent opportunity for tax-free investment income. Additionally, withdrawals from your TFSA are not taxable.
Want more advice from our tax planning accountants in Calgary? Visit http://edisonwencpa.ca/services/tax-planning-and-compliance/ today and book your free consultation with our experts!