Whether you are in Toronto or anywhere else in Canada, you are always on the lookout to minimize your tax liability and increase your income. For this purpose, you need Tax planning in Toronto. But this is easier said than done. There are multiple factors that you need to consider if you want to minimize your taxes. One of the things that you have to do is to understand Canadian tax law.
Let us give you different tips concerning tax planning to save your money in Toronto and beyond.
1. Claim for Covid-19 Related Expenses:
If you have consumed money to work in the current pandemic situation, you can make work-related expenses claim with a T2200 form to qualify for certain deductions.
2. Self-Employed and Taxes:
As a self-employed individual, you will be taxed on your net income like this: Your total income excluding all your expenses. If you keep back 25% of your income from taxes, you can save your hard-earned money.
3. Capital Gains Tax:
If an investor sells a capital property for a profit, CRA (Canada Revenue Agency) applies a tax on half 50% of capital again. It would help if you were a regular charitable donor to mitigate your capital gains tax in Toronto.
4. The Best Investment:
TFSA contributions are not tax-deductible, and RRSP contributions are tax-deductible; still, both have advantages. TFSA contributions are made once you get after-tax income, so you do not need to pay taxes when you use those funds at a later date.
5. Dividing Investment Assets after a Divorce and Taxes:
Yes, if you get a divorce, the investment income has to be divided between the couple. However, it will not cost you in the form of taxes.
6. Child Support and Taxes:
Child support involves a payer and receiver that cannot be claimed by the person who pays it. What about the tax implications on the person receiving that support? As per Canadian law, the receiver does not need to pay taxes for the money received for child support.
7. Failing to Catch-up with Tax Returns:
We suggest that you never miss the deadline to file your personal income tax return. Otherwise, you would bear a penalty of 5% of your unpaid taxes, plus 1% a month for 12 months from your filing due date. The more you fail to file returns, the more the penalty will increase.
8. False Claims:
Tax will be doubled if you are making more money than listed on your income tax return; therefore, never lie about your earnings. This will help you avoid CRA taking any action against you.
9. Shared Investments and Taxes:
If you are splitting the earnings in investments with your partner, you can save money on taxes but do it by providing proof to CRA.
10. Claiming Your Children’s Charitable Donations:
If you have teens who work and get T4 slips & make charitable donations, you can claim those donations for your income tax return by filing together as a family.
11. Timing and Claiming Cottage Expenses:
If you own a cottage or rent it out, you will again need to consider tax planning in Toronto to save money. The right timing is key here.
12. Always Keep Your Tax Return Documents:
You should always keep your tax return documents with you to make a positive impression once the CRA reaches you for an audit. It is essential for you always to have a tax expert and save your money while paying taxes.
There are lots of things that you can do regarding tax planning in Toronto to save your money. Never forget that you should be following the Canadian tax laws to save your money and pay taxes in Toronto successfully. Lastly, always have a tax expert with you who can assist you in the best way to help you pay taxes with the best results for you. For more details, contact our professional consultants.
Sohail Afzal, CPA, CMA, MBA
Sohail Afzal, (CPA, CMA, MBA) is the founder & CEO of GTA Accounting Professional Corporation. He is a highly experienced Chartered Professional Accountant and businessman himself and understands the challenges that many businesses face when it comes to cash flow management. As an experienced business consultant & tax advisor, he is helping companies grow by providing the technical, financial, and contractual information necessary for strategic decision-making.