6 Ways to Save Money On Your Taxes

Save Money on Your Taxes

Most Canadian workers start each year with the hope of improving their finances – and then the April tax deadline comes around, leaving them feeling that they’ve been falling behind in their planning and subsequently missing out on potential deductions.

But, while they clearly don’t have as many options as those who are self-employed, employees can get a bit of tax relief for some of their unreimbursed business costs. It is, however, a lot more difficult to find items to work with.

Here’s what to look for.

Be Sure to Claim the Employment Tax Credit

It costs some people a fortune just getting to work. The employment tax credit is designed to help offset small portion of the work-related expenses incurred by employees. For 2014, the amount is calculated as the lesser of $1,127 and the amount of money you made during the year.

Oddly enough, you don’t have to actually incur expenses in order to claim this credit. And no receipts are required, assuming you’re actually out of pocket. You just have to be working for someone else.

Sure, you’re only going to save the price of a pair of decent theatre tickets ($1,127 x 15 per cent = $169.05 in federal tax) but it’s certainly a good place to start.

Also read: Top Tax Credits You May Not be Claiming>

Reduce Your Tax Deductions At Source

While it’s certainly a nice surprise, getting a large tax refund each year simply means you’ve remitted too much tax to the Canada Revenue Agency throughout the year, essentially giving the government an interest-free loan.

If you expect to claim any deductions or non-refundable tax credits that will reduce your tax bill – RRSP contributions, rental losses, child care expenses or charitable donations – consider using Form T1213 to ask your employer to reduce the taxes withheld from your pay throughout the year.

Get In Line For Some Recognition Awards

You’re entitled to receive up to $500 annually in non-cash gifts or awards from your employer with no tax owing on their value. So see if you can work something out.

You’ll be ok, tax-wise, provided that they’re not performance-related awards (e.g., an award given for meeting a sales or client contact target).

In addition to the $500 annual limit on general non-cash gifts and awards, an employee can also receive, free of tax, an additional non-cash long service or anniversary award of up to $500 – provided you’ve put in at least five years on the job.

Be Sure to Join the Local Gym

On-site workplace wellness programs are all the rage now. But your company may not be big enough to do more than put yoga in meeting rooms. The good news is that fitness memberships that are made available to employees by an employer who contracts with an outside facility aren’t considered to be taxable benefits – even if the employer has negotiated special rates for this service.

The CRA has agreed that such membership fees won’t be taxable if the employer pays an organization separately to provide the fitness facility; the contract is made directly between the employer and the fitness provider; and is available to all employees.

Get Some of those Payroll Premiums Back

As you may know, your employer has to take CPP premiums off your pay cheque every two weeks. However, job-hopping employees often end up paying too much over the course of the year.

That’s because each employer is obligated to withhold CPP without regard to what preceding companies may have done.

If you contributed more than you were required to ($2,425.50 in 2014), the CRA will refund the excess contributions to you, provided you’re on top of things.

The same goes if you had too much in EI premiums ($913.68 in 2014) deducted up from your pay in the year.  

Tally All your Union and Professional Dues

One of the deductions employees often miss is the cost of belonging to a union or to a professional body as well as the cost of carrying professional or malpractice insurance.

Annual union dues don’t include initiation fees, licences, special assessments, or charges for anything other than the organization’s ordinary operating costs, however.

If your employer pays the fees for your professional memberships or insurance, then they get to take the tax deduction, even if the receipt is in your name.

 

The good news is that you won’t be taxed on this benefit, as long as it was necessary that you maintain your professional status for your job, explains BDO Canada.

 

Related Topics

Personal Finance / Personal Finance News / Taxes / Uncategorized

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