- Reduce taxable income with a Registered Retirement Savings Plan (RRSP). RRSPs can be eligible for a tax deduction in the amount of the annual contribution. Up to 18% of earned income to a maximum of $23,820 can be added in 2013. The deadline for contributions that can be claimed as a 2013 RRSP deduction is Saturday, March 1, 2014. As March 1 falls on a Saturday, this deadline will automatically be extended until Monday, March 3.
- Build wealth with a Tax-Free Savings Account (TFSA). TFSAs allow you to make up to a $5,500 annual contribution. Income earned in the TFSA is non-taxable, so maximize the amount of tax free growth.
- Contribute to a Registered Education Savings Plan (RESP). Help your child or grandchild save for post-secondary education. Contributions are not tax deductible and they are not taxable when withdrawn.
- Compile all Tuition Fee and Education Credits. If you don’t need these deductions you can transfer up to $5,000 (indexed at $6,620 in Ontario) to parents who would welcome your generosity.
- Weigh the benefits of withdrawing from an RRSP to purchase a home. Individuals may withdraw up to $25,000 from their RRSP. Withdrawn amounts are repayable in equal annual sums over 15 years.
- Capitalize on family if you are a small business owner: Hire family members for legitimate work opportunities and write off the costs of their salaries.
- Income splitting. If you earn more than your spouse you could reduce your family’s combined tax bill by paying your spouse’s expenses, freeing up money that can then be used for investment purposes.
- Minimize overall tax liability of medical expenses. You can distribute the medical expenses claimed on behalf of each other to be advantageous for the lower-income spouse to claim allowable medical expenses.
- Take advantage of all eligible credits. The Public Transit Pass Credit; and both the Children’s Fitness and Arts Credits are all ones sometimes forgotten.
- Maximize charitable donations credits. Consider combining both donations if they total more than $200.
|
Follow