How to claw back some of the dollars destined for the taxman
Household debt is at an all-time high, inflation is on the rise, and budgets are being stretched thinner and thinner. You need to use every dollar you have, so why are you donating to the government?
We’re not talking about writing a charitable cheque to the Canada Revenue Agency; we’re talking about leaving money on the table in the form of unused tax credits. Some reports show that the government eats up more than 40 per cent of your income as-is, and it’s time to claw some of that back.
“A penny saved is a penny earned,” says Jeff Schwartz, executive director of Consolidated Credit Counseling Services of Canada. “The same is true for every dollar you add to your tax refund – these are valuable savings that can go toward paying down debt or growing your RRSP.”
Schwartz says his team of trained credit counsellors encourages Canadians to take more of an active role in their financial well-being.
“All too often Canadians practice a ‘hands-off’ approach to personal finance, and we miss out on valuable opportunities,” says Schwartz. “You work long hours to earn your pay cheque, why not do everything you can to keep it?”
If you read the first part of Consolidated Credit’s tax season series, you have all the necessary receipts and documents ready to file your taxes (and hopefully you are getting a slow and steady head start on next year’s taxes as well). Now its time to file – here are a few key tax credits that you do not want to forget about:
- Children’s fitness tax credit – You can claim up to $1,000 of fees related to the cost of registration or membership for physical activities for each of your children. This has extra financial benefits when you look at the big picture – many experts agree that a healthy lifestyle saves you money!
- Children’s arts tax credit – If your child prefers guitars to hockey sticks, you’re in luck. You can claim up to $500 per child in registration or membership fees for artistic and cultural activities.
- Interest paid on your student loans – Mention student loans around recent grads, and count the groans. Follow that up by informing them of the silver financial lining: you can claim the interest paid on government student loans (2015 or the preceding five years if unused). And keep that chin up – odds are, the investment you made in yourself will pay off in the long run.
- Moving expenses – If you moved to work or run a business at a new location, you can claim items from a long list of eligible moving expenses. Remember, you must file your taxes according to the province you were residing on December 31 of 2015 – and be aware that the provinces have different tax rates.
- Transit pass credit – If public transit is available to you, take it! You’ll save on auto costs like gas, maintenance, and insurance; and you’ll also be able to claim monthly and annual transit passes on your income tax. Your wallet (and Mother Earth) will thank you!
Make use of the available tax credits and maximize your potential tax refund. Be sure to read next week’s final installment in our tax season series where we break down the smartest ways to spend your refund!
If it seems impossible to take control of your finances because you are drowning in debt, it’s time to call to speak to a trained credit counsellor for free advice on how you can get back in charge. You can also get the ball rolling by using our Free Debt Analysis online.