Various deductions and credits can help to reduce the amount of taxes payable to the Canada Revenue Agency (CRA) each year. Please take a few moments to review the following items, to ensure you do not miss out on any eligible expenses for you and your household. Please feel free to contact your Kemp Harvey Group office if you have any questions or concerns about whether you would qualify for any of these deductions and credits.
With the start of the university year approaching, many parents with children entering post secondary institutions for the first time are unsure how to report their child’s education expenses on their tax return.
It is not necessary to save receipts from the school in order to claim deductions to report on your tax return. Virtually all of the allowable expenses related to post secondary education can be determined using the T2202A form that is issued by the institution in February of the following calendar year.
You may want to retain the receipts which break down the largest payments to the institution, as they may be used to report a medical credit for the extended health benefit plan in which the students are enrolled.
Tuition credits can add up very quickly for a student. Eligible tuition fees are calculated using the actual dollars paid for your tuition and the other deductible expenses paid on enrolment.
Additional credits are available for the number of full time or part time months of attendance at school. If you attend school full time, you are eligible for an education and text book credit of $465 per month for each month of attendance. If you attend part time, you are eligible for a credit of $140 per month.
Because they can only transfer $5,000 of tuition credits to their parent or grandparent, it is important that students file their own tax returns each year to ensure they receive the remaining credit in future years.
If you attend school full time for eight months, the education credit alone is $3,720, before even considering the cost of tuition. Not filing a tax return every year could result in thousands of dollars of lost credits.
You can deduct expenses to move your child to university against taxable scholarships received. However, most scholarships to attend post secondary school are now tax free, particularly for full time students, so often times, this moving expense is not usable.
Many people are unaware that losses they incur from the sale of shares are deductible as a capital loss. This includes investments of shares in companies which have gone defunct and are now worthless. You may claim one half of the loss from the sale of those shares as a deduction against gains that you have earned on sales of other investments, or against any of your income in the year you pass away. If you forgot to report these amounts on your tax return in a prior year, you can still report them in the current year.
You can also re-file a previous year tax return, if it helps to reduce your income tax for that year.