5 ways to ease the tax hit

Written by Marcy Ages | Vice President & Certified Professional Consultant on Aging  | November 24, 2015

asian businessman looking at tablet holding coffee cup smiling.

As the end of the year approaches, many of my colleagues have already been discussing the imminent arrival of “tax time” and what comes with it. Although you may not be affected by tax time as much as we are, now may be a good time for you to educate yourself on some of the lesser-known tax deductions and credits that you might qualify for.

Employment Expenses

Many people think that only self-employed individuals can deduct work expenses on their tax returns. This is actually not the case. If you are salaried or commissioned and your employer requires you to pay expenses to earn your employment income, you can deduct those costs. The following expenses qualify and can be deducted under employment expenses on line 229 of your tax return:

– Accounting and legal fees (applies to commission income only)
– Allowable motor vehicle expenses
– Travel and parking
– Supplies
– Salary-related (e.g., an assistant)
– Office rent or work space in the home

Your employer must issue a Declaration of Conditions of Employment (form T2200) for you to be able to deduct these expenses. Make sure to keep all of your receipts and a log book of any travel. For more information on what you can deduct, check out the CRA’s website.

Annual union, professional, or like dues

If you are paying dues for membership to a professional association to maintain your professional status, those amounts can be deducted on your tax return. Dues paid for membership to a union or an association of public servants are also deductible.

Professional or malpractice liability insurance premiums can be deducted when you are required to keep a professional status recognized by law, as in the case of most medical or legal professions.

All of the above dues can only be claimed if they are directly related to your employment.

Interest paid on student loans

If you are still paying off student loans, certain interest payments are deductible. Your loans must have been received under the Canada Student Loans Act, the Canada Student Financial Assistance Act or a similar provincial or territorial government law to qualify.

Interest paid on a personal loan or line of credit is not deductible even if the loan was used solely for education-related purposes. Also, interest paid on a student loan that has been combined with another kind of loan is not deductible, nor is interest paid on a student loan from another country.

You can claim interest paid in the current tax year and up to five years preceding. If you are still in school and don’t have enough income to use the deduction now, you can choose not to claim the interest and instead carry it forward for up to five years.

Child Disability Benefit

If you have a child who is eligible for the Disability Tax Credit and you are receiving the Canada Child Tax Benefit (CCTB), you may be able to receive the child disability benefit (CDB) as well. Your child must be under the age of 18, and the benefit is based on the family’s net income. The calculation also takes into account the number of children in the family.

Medical Expenses (Gluten-free products)

If you are one of the many people who suffer from celiac disease, you may not know that you can claim the incremental cost of buying gluten-free (GF) products as a medical expense. The CRA states that “the “incremental cost” is the difference in the cost of GF products compared to the cost of similar non-GF products.

You cannot claim this incremental cost on your tax return without the following supporting documentation:

• “a letter from a medical practitioner confirming the person suffers from celiac disease and requires GF products as a result of that disease;
• a receipt to support the cost of each GF product or intermediate product claimed; and
• a summary of each item purchased during the 12-month period for which the expenses are being claimed” *

Tutoring Services

If you have a child who has a learning disability, you may be able to deduct the cost of a tutor for after school lessons. To do this, you will need a letter from a doctor stating that the tutoring is necessary. In addition, to qualify, the tutor must not be related to your child.

These are just a few deductions and credits that you might be able to benefit from. If you think members of your family qualify for any of the above, consult a tax practitioner or financial planner for confirmation, and to see if you are eligible for any other deductions.

* resource Canada Revenue Website

Marcy Ages is a passionate, detail-driven provider of financial planning services, including investment management and tax preparation. As founder of The Care Network, Marcy also works with other service professionals to support high-net-worth individuals with their estate planning and assisted living issues.

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We are thrilled to announce that our fundraising total for the Live Different Builds program has just hit $33,000. This is more than double our original goal of $15,000!

Thank you. Your generous support has made this possible. We will continue to accept donations until November 30. You can do so here.

Warmest Regards from the T.E. Wealth Team



On January 28, 2016, a group of T.E. Wealth employees will be heading to the Dominican Republic to volunteer in the Live Different Builds program.

Live Different is a registered charitable organization that embraces the lifestyle of caring for others over caring for stuff. The Builds Program invites Canadians to impact the global community by working on build projects in developing countries, taking home the spirit of helping others and applying it locally by example.

To help our employees reach their fundraising goal of $15,000, please visit the donation web page. Donations can also be made by cheque (payable to “Live Different”), and forwarded to Paul Robinson c/o T.E. Wealth, 26 Wellington Street East, Suite 710, Toronto, Ontario M5E 1S2. Tax receipts will be issued for donations of $20 or more.

Thank you in advance for your support. Any amount will make a difference.

To learn more about Life Different, please click here.

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When MoneySense magazine first launched their Great TFSA Race in 2013, they wanted to see what Canadians had been able to do with the Tax Free Savings Account (TFSA) opportunity. Plenty, apparently, especially if you were willing to make a big bet when investing your contributions. By the time the 2014 Great TFSA Race rolled around, the magazine found a couple who had turned their combined $62,000 in contribution room into more than $1-million by putting it all in a single penny stock.* We certainly wouldn’t recommend taking this kind of risk, but the key with your TFSA is to emphasize growth. And thanks to an increase in the annual TFSA contribution limits to $10,000 starting this year, the TFSA has become a serious wealth creator – and completely tax-free!

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Media & Press

via The Globe and Mail | October 28, 2015

Lana and Larry are in their late 40s with two children, ages eight and 12. He brings in $107,000 a year, she’s a stay-at-home mom.

Recently, they left Toronto for a more expensive home in the country, “which will significantly cut into our ability to save,” Larry writes in an e-mail. Not only do they have a mortgage now, but their operating costs are much higher: “Double the property insurance, double the property tax, higher commuting costs … and a much greater proportion of our net worth is in the house, which also makes me nervous,” Larry writes. “Has the grander home screwed our retirement plans?”

Short-term, they want to renovate the kitchen, do some major landscaping and “enjoy life with our kids,” he says. They’d also like to travel a bit before the children grow up. “However, if an extra $5,000 per year in travel expenses means I have to work until I drop dead, then it doesn’t sound so appealing.”

Longer term, they want to help their children through university and save enough to maintain their lifestyle when Larry hangs up his hat. He’s resigned to the idea of working until age 65, “but I would like to stop sooner. It seems to me that I can’t afford to!”

We asked Matthew Ardrey, vice-president of T.E. Wealth in Toronto, to look at Larry and Lana’s situation.

What the expert says

Larry and Lana may be feeling pinched at the moment, but they are not in bad financial shape, Mr. Ardrey says. They took out a $100,000 mortgage to buy the larger home, which they are paying off at the rate of $6,360 a year. The mortgage rate – now 2.59 per cent – is estimated to rise to 5 per cent in five years and remain at that level for the duration. So if Larry retires in 2033 at age 65, they will still be making mortgage payments.

This is not a big problem. “Though being debt-free is a cornerstone of financial independence, their debt owing at Larry’s retirement will only be about $30,000,” Mr. Ardrey says. Their $530-a-month payments “are not that onerous.”

They have no room in their budget for the kitchen renovation and landscaping, so the planner assumes these renovations ($40,000) will be funded by dipping into their non-registered savings.

When they retire, Larry and Lana plan to spend $50,000 (after tax) in today’s dollars – very close to what they are spending today once debt repayment and savings are removed, Mr. Ardrey notes. They’d like to have another $10,000 a year for travel, which the planner has included in his plan to Larry’s age 80. Their projected spending is forecast to rise in line with inflation, which the planner estimates at 2 per cent a year.

Larry is saving $6,480 a year in his defined-contribution pension plan, which his employer matches dollar-for-dollar. He also contributes $6,480 a year to Lana’s spousal RRSP. In his plan, Mr. Ardrey assumes an average annual return on investment of 5 per cent (interest, dividends and capital gains) and a lifespan of 90 years. He assumes Larry begins collecting maximum Canada Pension Plan benefits at age 65. Lana will get 50 per cent of the maximum. He assumes their Old Age Security Pension benefits will be clawed back.

“Based on these assumptions, Larry and Lana will be able to meet their retirement goal comfortably,” the planner concludes. They would leave an estate of more than $2.5-million.

If they decided to spend all of their savings, leaving only their home and personal effects for their children, they could spend $78,000 a year in retirement in addition to the mortgage payments and travel expenses, the planner says. Alternatively, Larry could retire earlier. If he retired at age 60, their spending would be $57,000 a year instead of $78,000.

Another option would be for the couple to draw on their savings to pay off the mortgage now, Mr. Ardrey says. They’d have about $100,000 left (non-registered stock investments and Lana’s tax-free savings account) after paying for the renovations. They should review the capital-gains implications of selling stock, as well as any penalties for prepaying the mortgage.

“If they chose to pay off their debt now, leaving all other assumptions constant, they could spend $71,000 a year if Larry retired at age 65 and $54,000 a year if he quit at age 60, Mr. Ardrey says. While this lowers their future spending, it would give them access to more income now. He also recommends they diversify their investments, which are mainly in Canadian stocks, and consider using low-cost investment pools or exchange-traded funds.



The people: Larry, 46, Lana, 47, and their two children.

The problem: Has moving to an expensive home in the country jeopardized their financial security?

The plan: Cash in some savings to pay for the renovations and consider drawing on the remaining savings to pay off the mortgage now. Diversify investments more broadly and consider low-cost investment pools or exchange-traded funds.

The payoff: The ability to step back and realize that Larry is worrying needlessly and that their retirement goals are achievable.

Monthly net income: $6,647

Assets: Cash $10,000; stocks $100,000; her tax-free savings account $40,000; his RRSP $120,000; her RRSP $300,000; market value of his employer pension plan $300,000; children’s registered education savings plan $85,000; home $850,000. Total: $1.8-million

Monthly disbursements: Mortgage $530; property tax $550; water, sewer, garbage $100; home insurance $150; heat, hydro $200; maintenance $100; garden $100; transportation $800; grocery store $1,000; clothing $100; gifts, charitable $100; vacation, travel $200; other discretionary $327; grooming $50; dining out $100; pets $60; sports, hobbies $250; dentists, $100; health, dental insurance $50; disability insurance $90; telephone, TV, Internet $195; RRSP $540; RESP $415; his pension plan contributions $540. Total: $6,647

Liabilities: Mortgage $100,000 at 2.59 per cent

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