The less you pay in tax (or, even better, the bigger the refund you get) the more money you keep for your goals. Yet, every year, Canadians leave millions of dollars in deductions and credits unclaimed. We want to ensure you’re not one of those people, so we’ve broken down some of the key tax breaks and strategies you can use to boost your savings.

RRSPs: your biggest tax strategy

The Registered Retirement Savings Plan (RRSP) comes with many benefits. But the biggest one is the fact that contributions are tax-deductible. That means every dollar you contribute to your RRSP reduces your taxable income. Since you can put in up to 18% of your earned income each year, that’s a potentially huge tax saving – all while setting yourself up for a great retirement.

2 more strategies to reduce your tax

1. Splitting your income
   Is your spouse or common-law partner likely to be in a lower tax bracket at retirement? Then you may want to open a Spousal RRSP. This is a type of RRSP where you make the contributions (within your contribution limit), but your partner is the owner.
   
   You won’t necessarily see the benefits of this strategy upfront but come retirement you will – because, when your partner withdraws that money, it’ll be taxed at their lower rate, and you’ll keep more of it for those big retirement plans you have together. The bonus is that it won’t impact your partner’s contribution room, so they can set aside even more for your goals.

2. Splitting your pension
   You can still owe tax even in retirement. But, if you have a spouse or common-law partner in a lower tax bracket, there’s a way to reduce it. Pension splitting lets you allocate up to 50% of your income to your partner. No funds are transferred between you, but the money is taxed at your partner’s lower rate, keeping your family’s overall tax bill down. Types of income you can split include:
   

   • Annuity payments from an RRSP

   • Payments from an RRIF

   • Life annuities from a pension plan

   CPP and OAS benefits are not eligible.

3 tax deductions you don’t want to miss

1. Home office expenses for employees
   As an employee, you may be able to claim certain home office expenses (work-space-in-the-home expenses, office supplies, and certain phone expenses). This deduction is claimed on your personal income tax return. Deductions reduce the amount of income you pay tax on.
   
   Who’s eligible: You're eligible for the tax deduction if your employer requires you to work from home, or you have voluntarily agreed to a remote work arrangement with your employer.
   
   How to claim: Your employer will need to fill out Form T2200 and you will need to include that in your tax return each year. See the Canada Revenue Agency website for more information.

2. Childcare fees
   With childcare fees in BC topping on average $65 a day, this deduction is important for parents. You can claim costs for daycare, babysitting services, sports schools, and most day or overnight camps, up to a maximum of:
   

   • $8,000 for each child under 7

   • $5,000 for each child ages 7 - 15

   • $5,000 for each child over 15 who has a physical or mental infirmity

   • $11,000 for each child who qualifies for the disability tax credit

   Just remember to collect the necessary supporting documents, such as receipts showing the services provided.
   
   Who’s eligible: Parents who paid childcare costs in order to work, attend school or run their business. The child being cared for must be under 16 unless they have a disability.
   
   How to claim: Complete Form T778 and enter the amount on Line 21400 of your return.

3. Carrying charges
   It’s no wonder this deduction gets overlooked. Its name isn’t exactly clear. But the basic gist is this – if you paid any of the following, you can claim those amounts back on your tax return.
   

   • Interest you paid on money you borrowed to fund investments

   • Fees for certain types of investing advice, like whether to buy or sell a specific share

   • Fees to manage your non-registered investments (except commissions and embedded fees)
     

   • Fees to have someone prepare or assist you in filing your tax return if you have income from a business or property
     

   Who’s eligible: Anyone who paid interest on investment loans or advisor fees for investing support.
   
   How to claim: Enter your total eligible fees on Line 22100 of your return.

2 key tax credits to consider claiming

1. Medical expenses
   People often overlook this credit because of its eligibility requirements. But you’d be surprised how quickly you can reach the threshold. There are all kinds of out-of-pocket costs you can claim, not just for you, but for your partner, children and dependents too, including:
   

   • Dental services (except cosmetic procedures)

   • Private health plan premiums and co-pays

   • Prescription drugs and medications

   • Prescription glasses, contact lenses, prescription swimming goggles

   • Laser eye surgery

   See the Canada Revenue Agency website for the full list of medical expenses you can claim. It may be worth tallying up your medical expenses this year to see if you qualify.
   
   Who’s eligible: Anyone with qualifying out-of-pocket medical expenses exceeding $2,759 or 3% of their net income (whichever is lowest).
   
   How to claim: Enter your total eligible expenses on –
   

   • Line 33099 for you, your spouse or common-law partner, and children under 18

   • Line 33199 for any other dependants, such as family members or children over 18

2. Donations
   Giving back to registered charities can boost your tax savings as well as your mood. You can claim part or all of the eligible amount of your gifts, up to the limit of 75% of your net income for the year. You can also carry amounts forward for up to 5 years to use in a higher income year.
   
   Who’s eligible: Anyone who’s donated to a registered charity or other eligible organization.
   
   How to claim: Complete a Schedule 9 and enter the amount on Line 34900 of your tax return.
   
   With endless nuances, tax is one of the most challenging financial topics to tackle. But, if you take the time to optimize your strategy, it can really pay off. The easiest way to do that is by partnering with our experts. They’ll look at your specific situation and help you create a personalized strategy that maximizes the money you keep for your plans.