Five Tips to Lower Your Tax Bill:
With the 2022 tax deadline fast approaching we thought it would be helpful to provide you with a recap of key things you should consider.
Your Personal Tax Filing Deadline for your 2022 taxes is Monday, May 1, 2023
For self-employed Business Tax Filing, the deadline is Thursday, June 15, 2023
Quarterly Deadlines for Personal Tax Installments are March 15, June 15, September 15, and December 15
Click here to view a summary of all key Tax Planning Facts and Figures
Tip #1: Tax-gain Donating
If you have found a charity you are passionate about and would like to support them financially, you can donate the appreciated securities from your non-registered portfolio "in-kind". This can also be done through a donor-advised fund.
This way you avoid all capital gains tax on the accrued appreciation, and you receive a tax receipt equal to the fair market value of the securities donated.
Tip #2: If Possible, Make Your Interest Tax Deductible
If you currently have a mortgage on your property and have sufficient capital in your investment portfolio to cover the mortgage amount. We recommend paying off your mortgage with your investments, you can then borrow the funds back by getting a secured line of credit.
This method enables you to write off your interest payments. The money you borrow to earn an income is generally tax deductible whereas the interest on consumer debt and your home mortgage is not.
Tip #3: Maximize All Registered Accounts
Another method of reducing your tax bill is by contributing to your registered investment accounts to claim various deductions. For example, contributing to your RRSP and TFSA can have a significant impact on your average tax rate and the tax you ultimately pay.
In 2023 the Canadian government announced a new registered account called the First Home Savings Account (FHSA) that will be available shortly. In essence, you can contribute up to $40,000 to help fund the purchase of a home where the capital can be withdrawn tax-free.
To learn more about these accounts and contribution limits: click here
Tip #4: New Tax Credits for 2022
1. Working From Home Expenses
Up to $500 WFH expenses, $2 per day flat rate or detailed method.
2. Air Quality Improvement Tax Credit
If self-employed or employed in a partnership in 2022, you may be eligible to claim a refundable tax credit equal to 25% of total ventilation expenses to improve ventilation or air quality at your place of business.
3. Disability Tax Credit
This applies to an individual diagnosed with Type 1 Diabetes for 2021 and later tax years (deemed to meet the two times and 14 hours per week requirement for life-sustaining therapy).
4. First-time Home Buyers' Tax Credit
The credit has increased to $10,000 for a qualifying home purchased after December 31, 2021.
To view a list of tax credits: click here
Tip #5: Know Your Tax Rate
It is important to know your tax rate to take full advantage of all the benefits registered accounts, deductions and tax credits provide. By understanding how much you are paying in tax per year, we can determine the savings you are entitled to.
To view your tax rate: click here
Access Your Tax Slips Online
Navigate to Wood Gundy Online, for access to your tax slips.
Note: ICS/AMA Annual Fee summary, ICS/AMA Realized gains/losses report and T3 from mutual fund company are mailed out separately and not available on Wood Gundy Online.