Tips for Tax Planning in Canada
In Canada, tax planning is all about building an understanding of various rules and regulations set by the CRA. The good news is there are ways to ease your tax returns. All you need is a plan in place to make an early preparation before the submission of your tax returns to the CRA. While there is no substitute for professional advice in this regard, you can have a plan of action in place within a certain timeframe by following the tips discussed below.
Getting Organized
When it comes to the filing of taxes, different territories and provinces in Canada have their own version of a rule book. Consequently, taxes and rates differ from one territory to the other in the country. So far as the resident status of an individual is concerned, it depends on the area in which an individual lives no matter whether or not they live there on a continuous basis.
Reporting Income
Other than any form of income generated from an employment, the CRA also makes it mandatory for individuals who come under its tax slab to report the earnings that come from additional sources. These sources are as follows:
- Taxable amount of dividends
- Rental income
- Elected split-pension amount
- Capital gains that are taxable
- Income from interest and investment
- Self-employed income which comes from business, farming, fishing, commission and so on
Why You Should Consider Having a Personal CRA Account
If the recommendations of some experts are anything to go by, then the registration of a personal CRA account can serve as a great resource for not just tax planning but also retirement planning. By virtue of the online service, taxpayers can monitor the information of their finances. Additionally, they can also track the following information:
- Statements
- Past returns
- RRSP contributions
- Updated assessments
- Canada Pension Plan
- Tax Free Savings account
- Disability tax credit
Apart from updating their current information, users and also apply for child benefits.
Keeping a Record of Your Finances
The CRA recommends Canadian taxpayers to have an organized record of their finances, including both their earnings and expenditure for the following reasons:
- Identification of the various sources of income
- A better understanding of tax credits and expenses
- Calculation of outstanding taxes without any hassle
- Prevention of legal issues or hassles arising out of a CRA audit
The absence of sufficient proof may prompt the CRA to calculate your income by other methods. Also, it can put your claims for credits and deductions at the risk of rejection by the CRA. Feel free to contact our experts in accounting services in North York Ontario for professional advice or assistance.