KEY TAX PLANNING STRATEGIES FOR 2021
There are many tax planning strategies to reduce taxes but few of them includes:
- When you are on pension, you can split your pension income up to 50% of the income with your spouse and lower your overall tax bill and avoiding claw back on Old Age Security(OAS) for both or one of the spouse. In addition, both spouses can claim pension tax credit. Pension split can be done using the CRA form T1132 – Joint Election to Split Pension Income.
- Charitable donations will create a great tax benefit. All donations should be claimed on one return rather than having it in on individual returns. Donations should be claimed by the highest income spouse to get the maximum tax benefit. Entire family’s donations receipts should be claimed on the higher income spouse to maximize benefit. If you do not end up using the entire amount, it can be carried forward for 5 years on the same tax return.
- Medical expenses can be claimed for a period of 12 months. All medical expenses can be claimed on one return. In order to claim medical expense, total of entire family’s receipt should be more than 3% of the line 150 income. Anything less than that shall not be claimed and will not benefit the tax payer. You can select any 12 month period to claim the medical expenses.
- You can also claim deductions for child care expenses for after school costs and day care along with boarding schools and camp fees. Benefits will depend on child’s age – the younger the child, the greater the allowable expenses.
- You may be required to file the form T-1135 if you hold foreign assets in excess of CAD$100,000. You are required to disclose every year in your tax return. Please contact our office for further details.
- Now tax return requires that you disclose any relationship with USA (i.e. green card holder or a US Citizen). If you are having an affiliation with USA, you may be required to file a USA personal tax return as well. You may contact our office for any assistance with your cross-border tax filing requirements.