Our annual Tax Tips Guide is here to assist you in your tax planning, presenting some quick ideas and strategies for you to consider.
If you are employed
Reduce tax withheld at source:
If you will have large tax deductions available to you (e.g.,
RRSP contributions, tax shelters, interest, business losses, work
related car expenses, tuition credits, or alimony), apply in
advance to the CRA for a reduction of the payroll withholdings that
are withheld from your salary.
Minimize taxable employee benefits:
Arrange to receive non-taxable benefits from your employer
instead of taxable benefits where possible. Examples of non-taxable
benefits include: employer contributions to a registered pension
plan (the pension is taxable when you receive it); and
contributions to a "private health ser- vices plan," such
as those covering medical expenses, hospital charges and drugs not
covered by public health insurance and dental fees.
If you received interest-free or low- interest loans from your employer, the loans will generally result in a taxable benefit.
- Some of the benefit can be offset by an "interest" deduction if the loans are used for certain purposes.
- If not deductible, be sure to pay any interest payable on the loan for 2019 by January 30, 2020 to reduce or eliminate your taxable benefit.
- Consider renegotiating any home purchase loans from your employer in order to minimize taxable benefits by "locking in" the loan at a lower prescribed interest rate for a five-year term.
If your employer provides you with an automobile
The taxable benefit is based on original cost of the automobile
and does not decrease as the car ages. Consider purchasing the car
from the company by way of an interest-free loan from your employer
and personally claiming depreciation on the car.
Avoid employer-owned vehicles costing over $30,000.
You can reduce the taxable benefit if your automobile is used primarily (generally, greater than 50%) for business purposes and by keeping your personal use to less than 20,000 kilometers per year.
If you work in the U.S.
A Canadian resident who works in the U.S. may deduct contributions made to a U.S. pension plan, under certain circumstances, up to the taxpayer's RRSP deduction limit.
This will reduce the individual's unused RRSP contribution room.