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
   COVID changed a lot of things. One of them is how we can claim the Home Office Expenses Deduction. Temporarily simplified, it lets you claim $2 per day of remote work, up to $500 (or 250 days). No need to collect receipts, get signed forms from your employer or calculate the size of your home workspace the way you normally would.
   
   Who’s eligible: Employed Canadians who worked from home at least 50% of the time over four consecutive weeks during 2022 due to the pandemic.
   
   How to claim: Fill out Form T777S and enter your claim on Line 22900 of your return.

2. Childcare fees
   With childcare fees in BC topping on average $30 a day, this deduction is invaluable for parents. You can claim costs for daycare, babysitting services, and most day or overnight camps, up to a maximum of:
   

   • $8,000 for each child under 7

   • $5,000 for each child between ages 7 and 16

   • $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: 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 pay:
   

   • Interest on loans used 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)

   Then you can claim those amounts back on your tax return.
   
   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 and contacts

   • Laser eye surgery

   The list goes on. 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 $2,421 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 dependents, 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. When you combine the federal and BC Charitable Tax Credits, you can claim 20% back on the first $200 you donate and 43.7% on any amounts over that. 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: Enter the amount on Line 34900 of your 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.