Get the Tax Cuts Working for You ------ Reach out and Claim yours (Canadian Taxation)
Tax cuts are an essential part of the Government of Canada's effort to stimulate the economy and to create and maintain jobs
You may be able to save money by claiming any of the following tax credits:
• Children's fitness tax credit :The children's fitness tax credit is a non-refundable tax credit of up to $75 based on eligible fitness expenses (maximum $500) paid for each child who is under 16 years of age.
• First-time home buyers' tax credit: First-time home buyers can claim a non-refundable tax credit of $750 for the acquisition of a qualifying home.
• Pension income splitting: One of a wide range of tax cuts available. By choosing this option each tax year, pensioners can split up to 50% of eligible pension income with their spouse or common-law partner and reduce their overall tax paid.
• Public transit tax credit: The public transit tax credit is a non-refundable tax credit that helps individuals covers the cost of public transit.
• Tradesperson's Tools Deduction: Trades people can deduct from their income part of the cost of tools purchased throughout the year.
For more information visit Canada Revenue's web page for : Individuals
What is new for Canada's Federal Tax Filing for 2009?
What is new for Canada's Federal Tax Filing for Tax Year 2009?
Tax Cuts at your Fingertips, Reach out and Claim Yours!!
Claim the new home renovation tax credit (HRTC) administered by the Canada Revenue Agency. Keep all your receipts to prove it! That will give you a a home renovation maximum tax credit of one thousand, three hundred, and fifty dollars ($1,350).
And that's just for starters.
The new maximum for the HBP (Home Buyers Plan), one is able to withdraw twenty-five thousand dollars ($25,000) from your RRSP under the Home Buyers' Plan to put towards the purchase of a new home.
That's good news for the housing market.
And, with the new Home Buyer's Tax Credit, you are also eligible to claim another non-refundable tax credit of $750!
And then, of course, there are increases to many of the non-refundable tax credits that all of us may be able to claim.
For instance, amounts relating to dependents, and spouses or common-law partners.
The site has a ton of information. Just click on "Individuals" and get info that's specific to your tax situation, no matter who you are! Or, click on "Online services" to get all the info about the CRA's quick, easy, and secure services.
And some of the biggest news items are always in the Key Information, Announcements and Highlights sections right on the Home page.
You can file your return using NETFILE-certified software, and just filed it through NETFILE on the CRA Web site.
It is easy, secure, and barely took any time.
And, if you owe money, there's a new way to pay called My Payment.
Tax-planning should be a year round activity but even if you’ve been otherwise occupied this year, you still have time to save money on your 2009 taxes by using strategies like these.Be deadline savvy:File your tax return and make tax payments on time to avoid penalties and interest. Payments that qualify for tax credits and deductions should be made by December 31.Deduct to save:Take full advantage of all tax deductions including the most important – your Registered Retirement Savings Plan (RRSP) deduction. Be sure to fill up all your RRSP contribution room.
Give yourself all the credit:Make full use of tax credits to reduce your tax bill by:
• Pooling medical expenses on the tax return of the lower earning spouse.
• Pooling charitable donations or carrying them forward for up to five years to surpass the
$200 threshold that increases your credit.
• Using the spousal credit for the higher-earning spouse.
• Transferring the age, disability, tuition and/or education credits to a spouse or supporting
relative when not used by a dependent.
• Don’t forget the first time homebuyer, home renovations and moving expenses credits.
Split to save:Income-split by sharing pension income with a spouse, through a spousal RRSP or by paying a salary to (eligible) family members. Be RRSP savvy:If you’re turning 71 this year, you must wind up your RRSP and need to decide whether to take the cash (poor choice), or transfer the funds to investments held within a Registered Retirement Income Fund (RRIF) or annuity (much better choices). If you have earned income, you can continue making contributions to a spousal plan until your spouse reaches age 71. Save tax-free:Make up to a $5,000 contribution to a Tax-Free Savings Account (TFSA). The contribution isn’t tax deductible but money and interest inside your TFSA is tax-free and so are withdrawals that you can make at any time for any purpose. Amounts withdrawn are added to your TFSA contribution room for the following year. Make down investments pay off:Plan to sell money-losing investments by the December 31 settlement date, which creates capital losses than can offset capital gains.Buy now to save:If you’re self-employed and claiming the capital cost allowance (CCA) on depreciable assets, buy them before year end to speed up tax write-offs.Move to save:If you’re moving to a province with a lower tax rate, do it before December 31 and you’ll pay the lower rate for the full year. If you’re moving to a province with a higher tax rate, try to delay until 2010.
And here’s the best tax-saving tip of all: Talk to your advisor before year-end to be certain you make the most of the other tax-reduction strategies
This column presents general information only and is not a solicitation to buy or sell any investments. Contact a financial advisor for specific advice about your circumstances. Together with your financial advisor, you can explore strategies that is best suited to your financial situation.
How will you finance the downpayment of your new home-- Home Buyers Plan (HBP) or TFSA?
Options to Finance the Down Payment for your Home
When you are ready to buy a home. What are the options open to you to finance your downpayment?
You are now thinking seriously about buying your first home. Among your early considerations for this home purchase are: how much home you will be able to afford and how you are going to finance your purchase? You’ve heard about the Home Buyers Plan (HBP) and the new Tax-Free Savings Account (maybe you are among the early adopters who already have a TFSA) and you’re wondering which of these might be the best home financing option for you.
Let’s us take a look at the options:
• The HBP allows a first time homebuyer to make a tax-free withdrawal of up to $20,000 from a Registered Retirement Savings Plan (RRSP) for the down payment (the 2009 Federal Budget proposes to increase this amount to $25,000). There are strict eligibility requirements including meeting the definition of ‘first time home buyer’ and the amounts withdrawn from the RRSP must be repaid over a 15-year period to avoid being taxed on the full amount of the RRSP withdrawal.
• Your RRSP contributions are tax deductible but your TFSA contributions are not, so the funds you need for a down payment can accumulate more quickly in an RRSP than in a TFSA. Here’s an example:
Your marginal tax rate is 30% and you can afford to contribute $4,000 to your RRSP because of the tax deduction you receive but you can afford to contribute only $2,800 to your TFSA in after tax income because your TFSA contribution is not tax deductible and does not create any tax savings.
Assuming your RRSP and TFSA investments both earn a 5% annual return, after five years, you will have accumulated $23,800 in your RRSP and just $16,245 in your TFSA.
• On the other hand, there are no ‘first-time home buyer’ restrictions when you use a TFSA withdrawal to fund your down payment, there are no dollar limits on the amount you can use, and there is no requirement to repay your TFSA withdrawal so you won’t encounter tax issues down the road. Your TFSA withdrawal will create more contribution room in the year following the withdrawal and that could be a benefit.
• If you are able to maximize your RRSP contributions, you might consider using those tax savings to make TFSA contributions and eventually make your down payment using a combination of the HBP and a TFSA withdrawal. But because the TFSA is new, it could take you a number of years to build up enough of a TFSA balance to fund or partially fund your down payment.
These are your choices – whether it’s buying your first home, figuring out how to pay for it … or any other aspect of your financial life, a professional advisor can help you make the right choices for your situation.
This is presented for general information only. Consult your financial advisor for advice on the right choices for your financial situation.
