Changes as a result of Covid-19
- Deadline to file has been extended to June 1st
- If you have a balance owing the deadline for payment is August 31st
As the deadline looms for filing your 2019 tax returns, be sure to take advantage of the credits and deductions you are entitled to. Here are some common ways to reduce your tax bill:
- Pension income splitting
- RRSP contributions
- Spousal/dependent person credit
- Child Care Expenses/Summer camps
- Tuition, education amount, interest
- Disability credits
- Medical Expenses
- Charitable donations
If unused, some tax credits can be transferred to your spouse, parent or grandparent. As the Canadian tax system is very complex, consult a qualified tax professional for advice. You may find that the tax savings far outweigh the fees.
Getting a big refund? Or owe a lot? Talk to a financial planner about how to manage your taxes better next year.
Here are some ideas of what to do with that refund…
Pay down debt
Get rid of credit card debt. High interest on credit cards can derail anyone’s financial plan. Start with the highest rate first and then look for ways to transfer any remaining balance to a lower interest card or consolidation loan.
Make a lump sum mortgage payment
Using your tax refund to make a lump sum payment toward the principal of a mortgage could save thousands of dollars in interest over the term of the mortgage.
Make another RRSP contribution
Adding to your RRSP will reduce your tax bill again next year, and your money grows free until it is withdrawn.
Top-up your TFSA
Contributing to a Tax-Free SavingsAccount (TFSA) allows money to grow tax free.
Save for education
A $2,500 contribution to a RESP can earn a $500 grant from the government.
Take a vacation
If you have all of the above under control, and your financial plan is on track, then use your tax refund to spend some quality time with your family. While interest payments and taxes can be quantified, memories with your family are priceless. Talk to your financial planner about which option is best for you.