Tax tips for Individuals and Young Families

Click on the list below for more information:

Adoption expenses
Amending your prior years’ tax returns
Buying a home
GST/HST Tax Credit
Charitable donations
2014 combined Marginal tax rates (Federal and Ontario)
Moving expenses
Political Contributions
Public Transit Passes credit
RRSPs
Tax Free Savings Account
Who should file
Tax Brackets

Some of the adoption, travel, translation fees, and living expenses incurred will receive a tax credit up to $ 15000 Federally and $ 11,797 in Ontario.

If you or your tax preparer identify further tax deductions or credits you may amend your prior years’ tax returns for up to 3 years by filing a T1-ADJ form. We offer a free review of your prior years taxes. Fees apply only if we are able to obtain an additional refund.

Home buyers and first-time home buyers are eligible for certain tax credits and other benefits. You are considered a first-time home buyer if you or your spouse did not own and occupy another dwelling during the year or the preceding four years in which you purchased a home. In such a case you are entitled to 15% credit of the first $5000 of your costs ($750).

If certain conditions are met, you may withdraw up to $ 25,000 from your RRSPs in order to purchase a home without triggering any tax consequences. The $ 25,000 limit is per person so married couples may withdraw $ 25,000 each. In order to avoid penalties, the withdrawn amount must be repaid within 15 years of the year in which the withdrawal was made.

Individuals who are over the age of 19 are entitled to receive a federal GST/HST Tax Credit. The maximum amount for married or common-law adults is $ 286 from July 2014 and June 2015 and $ 141 for every child for the same period. Single individuals and single parents receive a $ 141 supplement for this period. The maximum amounts and supplements are reduced incrementally once the household income exceeds $34,872 (for married or common-law partners), $8,685 for single persons or single parents.

Since 2014, the CRA automatically assesses eligibility for GST/HST Tax Credit and issues payment on a quarterly basis for those eligible to receive the credit unless the taxpayer makes an election to receive a lump sum payment at the end of the period.

Taxpayers may claim tax credits (non-refundable) for charitable donations made during a tax year. The annual limit is 75% of net income and the credits may be carried forward for 5 years. If your and your spouses combined donations for a year exceed $200, it may be beneficial to use the carry forward feature and claim several years’ tax credits in one year since a higher rate credit (29% vs. 15% federally) applies to donations in excess of $200. Also donations made by one spouse can be claimed by the other.

Individuals who move in order to take on a new job can deduct their moving expenses if their new resident is at least 40 km closer to the new workplace. You can only claim expenses up to your annual income from the new job; however you may carry forward any overages.  Deductible expenses include moving expenses, meals and lodging for you and your family, maintenance costs of your former resident if left unoccupied (includes mortgage interest, insurance premiums, taxes, and utilities up to $5000). There are special and simplified rules that apply to these costs. Consult a tax professional to take full advantage of these deductions. 

Political contributions receive tax credits both federally and provincially; however you will receive a provincial credit only if you contribute to a provincial political party. Federally contribution of $400 or less will receive a 75% credit; the credit percentages decreases as the contributions exceed $400. Unlike the case with charitable donations in which it may be beneficial or carry forward and claim a bigger amount in one year rather than claiming them in the year they were paid, it may be beneficial to spread your political contributions over two or more years since you receive a lower credit for contributions over $400.

You are entitled to a 15% credit on the monthly public transit passes you purchased for yourself, your spouse, or children under 19.

A Registered Retirement Savings plan is an excellent way to:

- Reduce your current taxes as the contributions are a deductible expense and reduce your taxable income in any given taxation year
- Invest for retirement as the funds and income generated in your portfolio is not subject to tax until they are withdrawn

The amount of contribution is 18% of your earned income for the proceeding taxation year and is capped at $24,720 for 2014. If you do not contribute or contribute less than your RRSP contribution room in a given year, your unused contribution room will be carried forward to the following year.
Tip: If your income fluctuates from one year to another and have sufficient disposable income, you can use the carry forward feature strategically by contributing in a low/moderate income year but claiming the deduction in a higher income year which is subject to a higher marginal tax rate.  
RRSPs can also be used as an income-splitting tool as spouses can contribute to each other’s RRSPs. The higher income spouse or the spouse who will have a higher expected retirement income and who has an unused contribution room can contribute to his or her spouse’s RRSPs and receive the deduction effectively lowering the family unit’s tax bill. There are special rules in place to deter taxpayers from making spousal contributions and subsequently withdrawing them. In order to avoid penalties the spouse whose RRSP the funds were transferred to should not make any withdrawals for 3 Dec 31st’s following the year in which the contribution was made.
You may over-contribute to your RRSP by $ 2000 without incurring penalties; however a 1% per month penalty is applied to over-contributions in excess of $ 2000.
You may borrow funds from your RRSPs to finance full-time studies for yourself or your spouse. The Lifelong Learning Plan allows for withdrawals up to $ 10,000 a year to a maximum of $ 20,000 for four calendar years.

This program, initiated in 2009, allows individuals 18 years and older to contribute up to $ 5,500 ($ 5000 for years 2009-2013) annually to a Tax Free Savings account. Unlike RRSPs TSFA contributions are not deductible for tax purposes; however withdrawals of the capital and accumulated income are tax-free. 

You must file a tax return if:

• Income tax is payable or a refund is claimed
• You have been asked by the tax authorities to file a return
• You and your spouse elected to split pension income
• You realized a taxable capital gain or disposal of a capital property
• You incurred a capital loss and are able to carry it forward
• You deducted a capital gains reserve in the preceding year
• You have to repay a portion of EI or OAS benefits;
• You have taken advantage of HBP or the Lifelong Learning Plan and have not repaid the withdrawals from an RRSP
• You are claiming a refund or intend to transfer the unused portion of your non-refundable tax credits to your spouse
• You have children and want to receive the CCTB
• You cannot use all of your education amounts and want to carry forward the unused portion of tuition fees and education amounts to a subsequent year
• You have earned RRSP income and want to find out your maximum deductible for RRSP purposes as well as update your contribution room 
• You have to make CPP contributions on employment income or self-employment income
• You have to make EI contributions on employment income or self-employment income

* based on mean salaries