Part 1: Tax deductions, credits you need to know about
April 5, 2018
In this world nothing is certain but death and taxes, but as my father-in-law used to say, there is no reason why you should pay any more than you have to. A Government of Canada website provides a table with the 94 deductions and tax credits you may be able to claim to reduce the amount of tax you must pay.
You will also find information on where to claim these amounts on your income tax and benefit return or a related form or schedule. You can sort the table by line number or topic, and you can filter by key word. While your electronic tax program will prompt you to consider each of these, it is important to understand what you may be entitled to so you can find and retain the required supporting documentation.
Here are some common deductions and tax credits you should be aware of. Part 2 of this blog will be posted later this month.
- Line 208 – SPP, RRSP and PRPP deduction: Deductible Saskatchewan Pension Plan (SPP), registered retirement savings plan (RRSP) and pooled registered pension plan (PRPP) contributions can be used to reduce your tax. Any income you earn in SPP, your RRSP or PRPP is exempt from tax as long as the funds remain in the plan. However, you typically have to pay tax when you receive payments from these plans. For more information about RRSPs and PRPPs, see How much can I contribute and deduct? Members of SPP can contribute $6,000/year beginning in 2017 if they have sufficient RRSP contribution room.
- Line 314 – Pension income amount: You may be able to claim up to $2,000 if you reported eligible pension, superannuation, or annuity payments on line 115, line 116, or line 129 of your return. For a detailed list of eligible pension and annuity income, go to the Eligible Pension and Annuity Income (less than 65 years of age) chart or the Eligible Pension and Annuity Income (65 years of age or older) chart.
- Line 210 – Deduction for elected split-pension amount: If the transferring spouse or common-law partner has agreed with the receiving spouse or common-law partner to jointly elect to split his/her eligible pension income by completing Form T1032, Joint Election to Split Pension Income, the transferring spouse or common-law partner can deduct on this line the elected split-pension amount from line G of Form T1032. Only one joint election can be made for a tax year. If both you and your spouse or common-law partner have eligible pension income, you will have to decide who will act as the transferring spouse or common-law partner electing to allocate part of his/her eligible pension income to the receiving spouse or common-law partner.
- Line 301 – Age amount: Claim this amount if you were 65 years of age or older on December 31, 2017, and your net income (line 236 of your return) is less than $84,597.
Remember to claim the corresponding provincial or territorial non-refundable tax credit to which you are entitled, on line 5808 of your provincial or territorial Form 428.
If your net income was:- $36,430 or less, claim $7,225 on line 301 of Schedule 1, Federal Tax; or
- more than $36,430, but less than $84,597, complete the chart for line 301 on the Federal Worksheet to calculate your claim.
- Lines 330 and 331 – Eligible medical expenses: You can claim medical expenses paid for yourself, your spouse or common-law partner and certain related persons. Generally, total eligible medical expenses must first be reduced by 3% of your net income or $2,237, whichever is less. You can find a helpful video and a list of eligible common medical expenses here.
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| Written by Sheryl Smolkin | |
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Sheryl Smolkin LLB., LLM is a retired pension lawyer and President of Sheryl Smolkin & Associates Ltd. For over a decade, she has enjoyed a successful encore career as a freelance writer specializing in retirement, employee benefits and workplace issues. Sheryl and her husband Joel are empty-nesters, residing in Toronto with their cockapoo Rufus. |
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