Canadian Tax Tips

• Contribute your excess cash balance up to $ 5,000 a year in a tax free saving account and earn the income from these investments tax free. TFSA will not be taxable even if the funds are withdrawn. (Canadian Tax Tips) 

• The RRSP contribution limit for 2008 is $20,000, and will be $21,000 for 2009, $22,000 for 2010, $22,450 for 2011 The limit has been indexed to average wage growthfrom 2011. 

• Contribution in a Registered Educational Savings Plan (RESP) can be made for 31 years (21 years previously). If beneficiary qualifies for disability tax credit then it will be 35 years. (25 years previously) The plan must terminate   after 35 years ( 40 years if beneficiary qualifies for disability tax credit)   Note there is no change in age for Canada Education Savings Grant which is 17 years or younger. (Canadian Tax Tips) 

• If you use your company’s air miles for personal use, you will be considered having received a benefit from your employer and taxed accordingly. To avoid paying additional tax use air miles received on behalf of the employer for business purposes only. However since 2009 the CRA will not consider these benefitsas taxable if they originate on the the tax payers own credit card, the points should not be converted to cash, the objective should not be to remunerate the employee and the plan should not be set up to avoid tax.

• If the employer arranges for the employees to purchase a discounted fitness pass then this would not be considered as a taxable benefit to the employee. (Canadian Tax Tips) 

• When running your business, consider employing family members full time, part time or some of the time and pay them a reasonable salary. Please make sure that proper documentation is available showing that the amount was reasonable and it was for work actually done. 

• Claim the fitness tax credit for your children under 16 who are enrolled in certain organized sports. (Canadian Tax Tips) 

• Claim the tax credit for eligible public transit passes. 

• You can claim your spouse’s or common-law partner’s dividend tax credit. This can be done when your spouse or common law partner does not have enough tax to claim the credits. In this case you will need to add the grossed up dividend to your income and then claim the dividend tax credit. Then you would not include the dividend income in your spouse’s or common-law partner’s income. 

The above tips may not necessarily apply to your circumstances and are merely a fraction of what can be advised, please contact us for further information.