While there are now numerous tax software packages that make tax filing simple and low cost, you still need to know some of the basic rules for proper tax filing and record keeping. Here are some of the most common things that I find get missed, especially when someone is preparing their own tax return. Not paying attention to these simple points could cost you a lot of money!
- Not claiming for public transit costs, such as your monthly bus pass. The definition for what is eligible was expanded in 2007. Check out transitpass.ca.
- Not claiming the child fitness tax credit – you can claim up to $500 per eligible child
- Forgetting to claim the capital gain or loss that occurs when you sell a mutual fund, stock or bond that is outside your Registered Savings Plan (RSP) or Tax Free Savings Account (TFSA). You need to keep track of this information – you don’t get a slip from your investment company, but you can usually get the information that you need for taxes from them.
- Forgetting to make an RSP contribution at least enough to cover your minimum Home Buyers’ Plan repayment. If you don’t make the minimum required payment, it will be added to your income and you will have to pay tax on this amount.
- Not following up on missing “T3, T4, and T5 Slips”. Even if you don’t get a copy of these slips, the tax department does. Any taxes owing as a result of these slips will eventually catch up with you by way of a reassessment. You could get hit with hefty interest payments and the excuse that you didn’t get the slip won’t help.
- Not keeping tax records, including all appropriate receipts and income records – a big, big problem if you are ever audited. Keep records for a minimum of 6 years.
- Self-employed: Lost or misplaced information needed to claim home office and business expenses (rent, mileage records, business expenses). Remember that self employed income and expenses are often subject to review and/or audits. Keeping accurate records is crucial.
- Couples: Not taking advantage of pension income-splitting for qualified pension income. Use form T1032 to claim.
Check out the Canada Revenue Agency website for more details. – Karin Mizgala
Karin Mizgala is a Vancouver-based fee-for-service financial planner with an MBA and a degree in psychology. She’s the President of LifeDesign Financial and co-founder of the Women’s Financial Learning Centre.