Canadian tax tips and facts you need to know for 2013
With Christmas over and the new year here, we can start to get excited for tax filling time! Here are some tips, facts and links to help you get ready for filling your 2013 income taxes and some tips to consider for 2014. Don’t forget to tune in to Ottawa Experts on January 13th at 8:30 pm on Rogers 22 where my guests and I will be sharing tips and strategies to reduce what you owe and answering your income tax questions live.
Things to consider before December 31st:
Contribute to a tax-free savings account(TSFA). You can make a total of $5,500 TFSA contributions for 2013, and if you haven’t contributed before, you can contribute up to $25,500 before the end of the year. You can also contribute to your spouses account without attracting the attribution rules.
RESPs. You can make registered education savings plan contributions before the end of the year. With a contribution of $2,500 per child under age 18, the federal government will contribute a grant of $500, and if you have prior non-contributory years, the annual grant can be as much as $1,000. You can watch this video I made about RESP’s and how they work.
Contribute to your RRSP. The deadline for making deductible 2013 RRSP contributions is March 3, 2014. If you turned 71 in 2013, makes sure you make your final RRSP contribution no later than December 31 (not 60 days after the end of the year). If you wold like to make the maximum contribution for the year or don’t have the cash now, check out this video on RRSP loans.
Pay any tax-deductible or tax-creditable expenses. A variety of expenses can only be claimed as deductions in a tax return if the amounts are paid by the end of the calendar year. That goes for interest, investment counsel/management fees, professional dues, spousal support and child-care costs. Political contributions, medical expenses, child fitness and arts program costs, tuition fees and transit pass costs that give rise to tax credits must also be paid in the year in order to be creditable.
Review your investment portfolio. You may want to sell securities that have lost money to reduce capital gains realized earlier in the year. If the losses realized exceed gains realized earlier in the year, they can be carried back and claimed against net gains in the preceding three years, and you should receive the related tax refund.
Make capital acquisitions for business. Self-employed individuals and unincorporated business owners expecting to make capital purchases for their business should consider buying before year end to get a depreciation deduction for 2013.
Donate to Charity. You have until Dec 31 to make your charitable donations in order for it to count under the 2014 tax year. Also when you file your taxes next year, make sure you file all the donations under one person. Here is an article on how to use a life insurance policy for a charitable donation.
Organize your Paper Work! If you like to stay on top with organizing your tax paperwork, it’s soon time to separate your 2013 receipts/paperwork from your upcoming 2014. What I like do is buy a file folder with labeled dividers and through out the year put all tax paperwork and receipts into their sections. This comes in handy when filing income taxes before the income tax deadline in April.
Remember to keep receipts. Although you are not required to include most receipts when filing, CRA randomly requests receipts as part of its post-assessment review.
Credits and deductions to remember for 2013
- First-time donor’s super credit – This new credit for first-time donors gives an extra 25% credit for cash donations when you claim your charitable donations tax credit. This means you can get a 40% federal credit for up to $200 in donations and a 54% credit for the part of donations that is over $200 but not more than $1,000. This is in addition to the provincial credit. For more information, go to www.cra.gc.ca/fdsc.
- Family caregiver amount – If you have a dependant with an impairment in physical or mental functions, the additional amount you may be able to claim has increased to $2,040 when calculating certain non-refundable tax credits. For more information, go to www.cra.gc.ca/familycaregiver.
- Pooled registered pension plan (PRPP) – The PRPP is a new retirement savings option for individuals, including those who are self-employed. For more information, go to www.cra.gc.ca/prpp.
- Adoption expenses – The period to claim adoption expenses has been extended for adoptions finalized in 2013 and later years.
- Investment tax credit – Eligibility for the mineral exploration tax credit has been extended to flow?through share agreements entered into before April 1, 2014.
- Tax-free savings account (TFSA) – The annual TFSA dollar limit increased to $5,500 on January 1, 2013, for the 2013 contribution year, and remains at that amount for the 2014 contribution year.
By Andrew W Bradley a licensed Insurance Broker and Financial Services Advisor helping Orleans families since 2011. Combining this with his previous working experience with the Canada Revenue Agency enables him to help a wide range of individuals, families and businesses. As an Independent Broker he devotes time to educating the consumer and implementing comprehensive financial plans for both individuals and businesses in areas including insurance and investments.
The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. I recommend that you obtain your own independent professional advice (preferably me) before making any decision in relation to your particular requirements or circumstances.