If you’re a member of the millennial cohort, now is a good time for you to educate yourself on some of the lesser-known tax deductions and credits that you might qualify for. These tips will help if you’re still paying off student loans, have work-related expenses, or if you have a diagnosed disease that requires you to purchase special food items.
Many people think that only self-employed individuals can deduct work-related expenses on their tax returns. This is actually not the case. If you’re 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 as an employment expense, check out the CRA’s website.*
Interest paid on student loans
If you’re 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’re 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.
Medical expenses (gluten-free products)
If you’re 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.
To claim this incremental cost on your tax return, you’ll need the following supporting documentation:
• A letter from a medical practitioner confirming you suffer from celiac disease and require GF products as a result
• Receipts for any GF products purchased
• A summary of each item purchased during the 12-month period for which the expenses are being claimed. This should indicate each GF item, its cost, the cost of it’s non-GF equivalent, and the sum total of the difference between the two.
A complete list of other health-related expenses can be viewed on the Government of Canada website.*
These are just a few deductions and credits that millennials could benefit from. If you think you qualify for any of the above, consult a tax practitioner or financial planner for confirmation and to see if you’re eligible for any other deductions.
*Rules differ in Quebec
Marcy Ages, Vice President & Certified Professional Consultant on Aging
T.E. Wealth, Toronto
This article was published in T.E. Wealth’s Strategies newsletter, March 2019 edition. Read the full edition here.