Here are some highlights of important deadlines for tax returns, including documentation and planning to use common tax credits.
The deadline for Registered Retirement Savings Plan contributions is March 2 for them to be deducted on your 2019 tax return. This allows you to lower your taxable income for 2019 and save for the future.
You should receive most of your tax slips required to file your personal taxes by the end of February (T4s for wages and T5s for investments). However, if you have certain investments (such as mutual funds) you could receive T3 slips, which may not come until the end of March.
Do not miss any slips on your tax return or you could face large penalties. Ensure you keep all slips together and you are confident you have received them all before filing your taxes.
If you farm in your personal name, the deadline to file your taxes is extended to June 15 (from April 30). However, if you will owe the government tax money, you need to pay the amount owing by April 30 to avoid interest.
Common tax credits
If you incurred qualifying medical expenses during the year for yourself, your spouse or your dependent children, you may be able to claim a portion of these expenses for a tax credit. The minimum threshold for 2019 taxes is any amount that exceeds the lesser of three percent of your net income or $2,352.
A few tips for medical expenses include:
- Generally, you want to claim these on the lower income spouse.
- You can claim medical expenses for any 12-month period ending in 2019. If you had a large medical expense in December of 2018 that was not claimed, you may consider including this month on your 2019 tax return.
- As with a lot of farms, you may need to travel more than 40 kilometres for medical services not available in your area. Keep a log book of the travel with your receipts so they can be claimed. You may also require a letter from the doctor stating their services are not available in your area.
- Keep your receipts in order. This is a common credit in which the CRA asks for documentation.
If you have made any contributions to a registered charity during the year, you are eligible to claim a tax credit for them. To claim charitable donations, you must have the official receipt that shows the charity registration number. This is also a common area reviewed by the CRA.
A few tips for donation expenses include:
- Total donations of more than $200 in the year give you a much larger credit. You may carry forward donations for five years to pool them together to get this larger credit.
- You and your spouse are able to combine your donations to take advantage of the larger credit for over $200 of donations.
- For larger donations, you may consider gifting publicly traded securities versus cash because there may be greater tax savings.
Other tax deductions and credits you should consider include child-care expenses, post-secondary tuition fees for children, the disability tax credit and the first-time home buyer credit.
This is an overview of considerations for the upcoming tax season. To learn more about the types of credits and how to get the most out of your taxes, speak to a professional who can help guide you through the process.
Colin Miller would like to thank Riley Honess and Jaimie Soloway of KPMG for their assistance with writing this article.
Colin Miller is a chartered accountant and partner with KPMG’s tax practice in Lethbridge. Contact: email@example.com.