subject: Top 5 Tax Tips - Tax Accountant Oakville On Canada [print this page] Do you want tips to minimize taxes? Are you an individual or business in Ontario Canada? Then these tax tips are a must read for you! Allan Madan, of Madan Chartered Accountant, is a Tax Accountant in Oakville Ontario Canada. Allan helps individuals and businesses, minimize taxes. In this interview, Allan shares a Top 5 Tax Tips list, that will help you reduce your taxes and save you money.
Tax Tip #1: Home Buyer's Plan
The home buyers plan (HBP) is an excellent way to finance a portion of your home, if you're a first time home buyer, says Oakville Tax Accountant, Allan Madan.
The actual HBP involves withdrawing money from your RRSP, up to $25,000, on a tax-free schedule to buy a home. In order to qualify for the HBP, you must also fulfill the following:
- You have to be a first time home buyer
- You have to enter into a written contract to buy a house or condo
- You must plan to occupy the home as your primary residence, within 12 months from the buy date
- You must buy the home by October 1st of the year after the year of withdrawal
- You must be a resident of Canada
The only catch is that you need to repay the funds withdrawn out of your RRSP over a period of time. In essence, you are paying back yourself. The repayment period begins the second year following the year of withdrawal and has to be repaid over a period of 15 years.
Tax Tip #2: Children's Fitness Tax Credit
The actual children's fitness tax credit is an under-utilized tax credit, says Allan Madan, Tax Accountant Oakville. The actual children's fitness tax credit can be obtained for fitness activities that the child has enrolled in. The credit is computed as 15% of the amount spent on qualifying fitness programs. The maximum amount that may be claimed for the children's fitness tax credit is $500 for each child younger than sixteen.
Tax Tip # 3: Child Care Expenses
Child care expenses tend to be tax deductible and therefore supply considerable tax relief to parents, according to Allan Madan, Tax Accountant Oakville. Qualifying child care expenses are sums paid to caregivers, daycare centers, camps, and boarding schools, for your child. The most child care expenses that you could claim for child care is:
- $7,000 for each child born in 2003 or later
- $4,000 for each child born in 1993 to 2002
- Parents with the lower income must claim the deduction.
Taxes Tip # 4: Car expenses
If you need your own car to carry-out the duties of work, as specified by your work contract, then you are entitled to deduct car expenses, including:
- Lease payments
- Capital cost allowance (or tax depreciation)
- Car parking
- 407 toll charges
- Fuel and oil
- Repairs and maintenance
"Don't forget in order to deduct car costs, if you are eligible", says Allan Madan, with the Tax Accountancy firm in Oakville Ontario Canada. However, you must prorate your vehicle expenses by the work use part. For instance, if you drove an overall total of 30,000 KM's in a year, 10,000 KM's of which were work related, then only 33% of the car costs could be deducted.
Additionally, you have to possess a completed type T2200, Declaration of Conditions of Employment, signed by your employer so that you can deduct car expenses on your personal tax return. Note, that any car costs which have been refunded through your company must recorded as part of your income.
Taxes Tip # 5: Home Office
If you are required to use your home office, as a condition of your work agreement, to carry out work duties, you'll be able to deduct home office expenses. Home office expenses include:
- Basic repairs for the home
- Tools for your home
- Rent paid for your home
"You'd be surprised by the tax refund you can get by claiming home office expenses", says Allan Madan, Tax Accountant Oakville.
The actual percentage of home office costs that you can withhold is actually calculated as follows:
(Square feet of home office / Feet square of home) x 100
For instance, if your home office comprises 20% of the total square feet of your home, you'll be able to deduct 20% of your home office costs.
Two additional conditions that you need to satisfy in order to withhold home office costs are:
- The home office space must be used for work purposes only. As such, your living area cannot be used as the home office.
-You must meet customers on a continuous basis at your home office or even function principally from (i.e. more than 50% of times) from your home office.
