Written by Marcy Ages | Vice President & Certified Professional Consultant on Aging | November 24, 2015
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.
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
– 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” *
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.Read more »