5 Easy Tax Saving Tips

By  Connies Financial Services |   | Posted in " Agricultural Accounting, Bookkeeping, Tax Planning, Tax Preparation "

tax saving tips

Tax savings are important to all of us. It pays to know and understand CRA rules so that you can take full advantage of all the tax savings programs, which you might qualify for. Here are a few specific tax savings programs that you should understand, because if you qualify for them, they can save you a bundle. The Following Are 5 Tax savings tips.

1. Claim all allowances and expenses.

The most crucial issue after reducing your income is to maximize your tax-deductible expenses. When you run your own business, then you can offset all costs that are 'wholly and exclusively in the course of your business' to legitimately maximize your taxable profit. You should also make use of the current tax news and capital allowance rules to offset the cost of equipment you have purchased to run the business. It is also easier to claim for expenses incurred in setting up the business. If you are employed, then the allowable expenses you can claim are nowhere near as generous, but you can still claim for the cost of membership of a professional organization and, in some circumstance, for the cost of working from home. And you should not forget that, if your T2200 shows an amount of reimbursed expenses, you must reduce your expenses by this amount if the amount is not included in your T4, Box 14 earnings.

2. Check your tax code.

The PAYE system works efficiently for employed taxpayers, but you should still check your tax code regularly particularly if you have changed your circumstances recently. There may be many reasons why your tax code is different from your colleagues, but the simple human error remains one of them, and a little understanding and checking can avoid problems and potentially save you overpaying tax. The time limit for claiming back overpaid tax is three years (10 if you apply for Tax Payer Relief), so do not delay in checking out any inconsistency.

3. Review your affairs annually.

Circumstances change, as well as tax regulations, and it is easy to miss out on certain tax breaks. A regular check of your affairs ought to save you missing out.

4. Maximize your savings.

Maximizing your RRSP and TFSA limits. There is an advantage to contributing to an RRSP early in the year, or monthly instead of waiting to the end of the year to top up that RRSP. Weighing your options between RRSP and TFSA if you have a Company Pension Plan is always a benefit.

5. Get professional advice.

Some simple personal discipline can implement some of the advice offered above. But for a complete review of your situation, you should consult an expert. If you run your own business, an accountant ought to be able to help you to save tax by claiming all allowable expenses, and ensure your affairs are structured in as tax-efficient manner as possible. Similarly, if your tax affairs are at all complex (say you are non-resident or have several employments) then advice in completing your tax return may well save you tax. An Independent Financial Advisor can also help with investment and pension issues. I would strongly advise you to find a trusted advisor and see how they can assist.