Spring into tax season...
As the deadline looms for filing your 2023 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
- NEW FHSA contributions
- Spousal/dependent person credit
- Childcare expenses/summer camps
- Tuition, education amount, interest
- Disability credits
- Medical expenses
- Charitable donations
- Professional or union dues
- Work from home
- NEW Ontario stay-cation tax credit
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. Also, be sure to alert your tax professional of any foreign property holdings you may have, including real estate, as you may be required to file Form T1135.
Getting a big refund? Or owe a lot? Talk to us about how to manage your taxes better next year.
Tax slips
Remember, if you have online access, and chose to go paperless, your tax slips are posted in the new client portal for you to access. Your slips will not be mailed to you. Our team is here to help so please reach out if you have any questions or trouble accessing your statements/slips.
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.
Replenish your “rainy day” fund
Once you have taken care of your high interest debt, you should replenish your emergency fund. Remember, you should have about three (3) months of expenses set aside for a rainy day.
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Adding to your RRSP will reduce your tax bill again next year, and your money grows tax-free until it is withdrawn.
Top-up your TFSA or FHSA
Contributing to a Tax-Free Savings Account (TFSA) is a great way to maximize tax-free growth. 2024 TFSA room is $7,000. If you are a first-time home buyer, take advantage of the First-Home Savings Account (FHSA). 2024 FHSA room is $8,000.
Save for education
If you have dependents, you should consider contributing to a RESP. 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 us about which option is best for you.
This information has been prepared by Jessica Mann, Wealth Advisor, iA Private Wealth Inc. and does not necessarily reflect the opinion of iA Private Wealth. The information contained in this email comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Investment Advisor can open accounts only in the provinces in which they are registered.
iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.
