Each year, the government adjusts existing tax credits and introduces new ones. These new introductions help taxpayers minimize their tax obligations and decrease the burden of necessary expenses, while also encouraging people (and businesses) to make a difference.
This year, there are four newly introduced tax credits and strategies for individuals and businesses to be aware of:
Unlike tax deductions that reduce your taxable income, tax credits reduce your tax owing (your taxable income multiplied by the applicable tax rate).
Non-refundable tax credits are tax credits that can only be used to reduce your tax owing to $0. If there are still credits remaining once your tax owing equals $0, you will not be refunded the remaining amount.
2020 is here, which means it is time to finalize your 2019 taxes and start planning for 2020. As with every new year, 2020 has its own set of payment and filing deadlines that every Canadian taxpayer needs to know about.
Below is a listing of significant dates and any important information that you will want to make note of.
Every year, the government announces the current rates for Employment Insurance (EI) and Canada Pension Plan (CPP) for both employees and employers. Understanding these rates is the best way to optimize your tax return.
Below are the 2020 rates and maximums:
As the new 2020 tax year begins and the tax filing deadline for 2019 approaches, it is important to know the deadlines and limits for your various saving tools, specifically Registered Retirement Savings Plans (RRSPs) and Tax Free Savings Accounts (TFSAs) - two of the most common tools for planning your financial future.
Below are the significant dates and contribution limits for these two accounts:
In Canada, there are four main sources of retirement income – Registered Retirement Savings Plans (RRSPs), Tax-Free Savings Accounts (TFSAs), Old Age Security (OAS) and the Canadian Pension Plan (CPP).
Depending on when you begin withdrawing funds from these sources, and whether you are working full time, part-time or are fully retired, the after-tax income of $100 of income will vary greatly from one taxpayer to another.
As a result, determining when you should start withdrawing funds and how you should structure your income for retirement can seem daunting. To help you on your way to maximizing income and minimizing taxes, the Canadian Government has designed a calculator to assist taxpayers with just this.
As a self-employed individual, you should have spent the past year making purchases, selling goods/services and collecting paperwork to support any and all transactions.
Unfortunately, many business owners are so caught up in the day-to-day operations of their business that the importance of maintaining their books can get lost along the way. If you are one of these individuals, it is time for you to start pulling together all the paperwork you will need to file your return and maximize your after-tax outcome.
Registered Retirement Savings Plans (RRSPs) are a unique tax planning tool. The contributions made to an RRSP can be deducted from your taxable income and, unlike other tax planning tools, you have until March 1 of the following year to make contributions.
If, however, you will have turned 71 by December 31, 2019, you must make your contributions before the end of the year. This is due to the fact that all Canadians are required to collapse their RRSP by the end of the year in which they turn 71.
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